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2021 (5) TMI 56 - ITAT MUMBAIEstimation of income - bogus purchases - CIT(A) applied 3% on bogus purchase and deleted the addition made u/s 69C of the Act on account of peak credit of the transaction of bogus purchases - HELD THAT:- We notice from the record that Ld. CIT(A) has appreciated the whole facts in this case and given clear cut findings. It is finding on record by the AO that the purchases made by the assessee are unverified and falls under the category of bogus purchases and AO proceeded to make disallowance on the basis of presumed cash transaction and applied the peak credit in the case of purchase transaction. We notice that Ld. CIT(A) has correctly came to the conclusion that the correct way of dealing with bogus purchase issue is to estimate the profit margin on such purchases and not adding the entire amount of such purchases when the AO came to the conclusion that it is bogus purchases and by considering the decision of the various courts, AO can only disallow the estimated margin which assessee would have enjoyed in such practices of taking accommodation entries. We are in agreement with Ld. CIT(A) that AO cannot proceed to disallow the whole purchases or applied peak credit in cash transaction. However, we notice that Ld. CIT(A) appreciated to estimate the disallowance @ 3% instead of 2.5% proposed by AO and we observe that the revenue is in appeal objecting the findings of Ld. CIT(A). Therefore, we dismissed the Ground No. 1 raised by the revenue that AO cannot apply any other method other than estimating the disallowance on alleged purchases. CIT(A) has disallowed @ 3% whereas AO has disallowed @ 2.5% alonwith disallowing peak credit on cash transaction. Therefore, in our view, Ld. CIT(A) has proposed 3% is higher than the estimation made by AO. Accordingly, all the grounds raised by the revenue are dismissed. Validity of reopening of assessment u/s 147 - AO has taken sanction only from the then Addl. Commissioner instead of taking permission from Commissioner as per the provision of section 151(1) - HELD THAT:- In our considered view, the violation of section 151(1) of the Act is apparent on record and there is no necessity for this issue to go back to Ld. CIT(A) as submitted by Ld. DR. Respectfully following the decision in the case of Dhadda Exports [2015 (4) TMI 304 - RAJASTHAN HIGH COURT] and Ghanshyam K. Khabrani vrs. ACIT [2012 (3) TMI 266 - BOMBAY HIGH COURT] the AO has no jurisdiction to reopen the assessment, when there is violation to the statutory direction contained in section 151 of the Act. Accordingly, we allow ground no. 1 raised by the assessee
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