ITO 20 (1)(1), MUMBAI vs. ALIAKBAR HAIDERALI MUKHI, MUMBAI

This appeal in A.Y.2011-12 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-32, Mumbai in appeal No.CIT(A)-32, Mumbai/10543/2018-19 dated 19/07/2019 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 27/12/2018 by the ld. Income Tax Officer-20(1)(1), Mumbai (hereinafter referred to as ld. AO).

Though the revenue has raised the several grounds, we find that only issue involved in this appeal of the revenue is with regard to addition made on account of bogus purchases.

We have heard rival submissions and perused the materials available on record. We find that assessee is an individual and proprietor of M/s. Metal Profile and engaged in the business of trading in Iron and Steel items comprising of M.S. Angles, M.S. Channels, M.S. Flats, M.S. Sheets, M.S. Tee Angles and TMT base. We find that the ld. AO observed that assessee had made purchases from various parties totaling to Rs.3,87,81,204/- which are listed in page 2 of the assessment order. These parties according to the ld. AO appeared as tainted dealers in the website of Sales Tax department of Government of Maharashtra which information was apparently passed on to the Income Tax department which ultimately triggered the reopening of assessment in the case of this assessee. In the course of assessment proceedings, the ld. AO sought to verify the veracity of aforesaid purchases made by the assessee. The assessee furnished the copies of purchase invoices from the aforesaid suppliers together with the copy of their ledger account. The ld. AO issued notices u/s.133(6) of the Act to those tainted suppliers which were returned unserved by the postal authorities. The assessee also submitted copy of bank statements vide letter dated 17/10/2018 duly highlighting the payments made to those suppliers by account payee cheques. The assessee also furnished the details of corresponding sales made by him out of the purchases made from those suppliers. However, the ld. AO dismissed this plea of the assessee that corresponding sales made by the assessee out of disputed purchases were not filed by the assessee. However, the ld. AO proceeded to treat the profit element embedded in the value of aforesaid purchases @25% of Rs.3,87,81,204/- which worked out to Rs.96,95,301/- and made an addition towards unexplained expenditure u/s.69C of the Act in the assessment.

We find that assessee has given before the ld. AO the details of purchase invoices, copy of ledger account of the suppliers from whom supplies were made, details of corresponding sales made out of disputed purchases, total quantitative details of goods purchased and sold thereof and evidences in the bank statements showing payments made by account payee cheques to the disputed suppliers. We find that assessee has provided the following GP ratio before the ld. CIT(A) which has been taken due cognizance by the ld. CIT(A) while deciding the issue as under:-

In the result, appeal of the Revenue is dismissed.