TMI Blog2015 (8) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... total rental income to be brought to tax shall be ₹ 312960 as held by FAA. We uphold the findings of FAA. We order accordingly. Bogus purchases and sales - FAA held that both bogus purchase to the tune of ₹ 915564 and also bogus sales of ₹ 1605440 are to be added to the income of the assessee - FAA held that the sales are being credited in the books of accounts of the assessee and is treated as un-explained credit u/s 68 of the Act as income of the assessee - Held that:- The assessee is engaged in the business of trading of fabric under name and style of proerietory concern Surya Enterprises. The assessee has made purchase and sale with the parties as mentioned above and hence primary onus is on the assessee to establish that these purchase/sale are genuine. The assessee has merely produced invoices and ledger account. The ledger account of M/s Samundra Polycoats and Supreme Agencies(only these two ledger accounts are submitted before us) reveal that there was an opening balance existing as credit to these parties as on 1-4-2005 which has been mainly squared with the sale of fabric transaction in the month of March 2006, ie at the fag end of financial year(even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is intending to claim deduction u/s 24(b) of the Act vide additional ground raised before us. We restore this issue to the file of assessing officer to verify the claim of the assessee as to the quantum of interest payable and also the property with respect to which such interest is claimed to have been payable before allowing the claim of the assessee for deduction u/s 24(b) of the Act . Rejecting the financial results shown in the books of accounts u/s 143(3) and estimating gross profit at 5% of the total turnover - Held that:- The CIT(A) has categorically noted that Assessing Officer has made specific enquiries and treated the relevant purchases and sales as bogus. At the same time the AO also rejected the books of accounts maintained and estimated gross profit. As per the CIT(A) making of specific additions on one hand and estimating gross profits after rejecting the books of account cannot be done simultaneously. We find no error in the said approach of the CIT(A), which we hereby affirm. Thus, on this aspect Revenue fails. - I .T.A. No. 30/Mum/2011, I .T.A. No. 871/Mum/2011 - - - Dated:- 31-7-2015 - SHRI G.S.PANNU AND SHRI SANJAY GARG, JJ. For The Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... X 2) to an associated/related concern while cost of acquisition was ₹ 80.88 lacs . The assessing officer made enquiries and based on the same arrived at a conclusion that the prevailing rent in the area is ₹ 1,20,000 per month for both the Galas and held that the fair rent value ought to be adopted ₹ 14,40,000 per annum as rental for both the Galas. 3.1 Aggrieved by the order of Assessing Officer, the assessee carried the matter to first appellant authority(hereinafter called FAA) by filing first appeal and made written submissions . The remand report was called by FAA from the Assessing Officer . In the remand report, the Assessing Officer submitted that information u/s 133(6) of the Act was called from Navyug Industrial Premises Co-op. Society Limited who has furnished information but the same is incomplete and selective. The assessing officer also stated that one party Sh Bharat Raste , in whose case rent was stated by the society at ₹ 9500 per month , is assessed by Revenue at rental income of ₹ 1,10,000 per month . Further, the said assessee Sh Bharat Raste has not challenged the addition in appeal and paid taxes on the same. Hence, The Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ALV of the property to ₹ 3,12,960/- instead of ₹ 14,40,000/- considered by the AO. Since the said cross ground of the Revenue is similar to the ground of appeal of the assessee, the cross grounds are being taken together. 4. The Ld. DR relied upon the orders of the Assessing Officer in support of the case of Revenue. 5. We have heard the rival contentions and perused the material on record . We have observed that the actual rent received by the assessee is higher than municipal rateable value . The FAA has accepted the rent @Rs 16 per square feet per month based on the information submitted in remand proceedings to the Assessing Officer by the Navyug Co-op Society where the Galas of the assessee are situated. We have also observed that the Assessing Officer adopted the rent of ₹ 120000 per month without bringing on record any evidence or cogent material on record . The FAA on the other hand has relied upon cogent material and evidences being information supplied by the society where s Galas are situated to arrive at the figure of fair rent ₹ 16 per square feet per month based on the rent agreement entered in April 2006 by parties not related to each o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed copy of ledger account and invoices of these parties. Thus , the assessee failed to submit the delivery challans, bank statement, IT particulars etc as desired by Assessing Officer to substantiate these sales and purchases. The Assessing Officer , made addition of bogus purchase of ₹ 915564 . The Assessing Officer also held that bogus sales to the tune of ₹ 1605440 to be reduced from total sales in the assessment of the assessee. The assessee carried the matter to the FAA who called for remand report from Assessing Officer and again no details except ledger account and invoices were submitted by the assessee.. The FAA held that both bogus purchase to the tune of ₹ 915564 and also bogus sales of ₹ 1605440 are to be added to the income of the assessee . The FAA held that the sales are being credited in the books of accounts of the assessee and is treated as un-explained credit u/s 68 of the Act as income of the assessee. 6.1 Aggrieved by the orders of FAA, the assessee is in appeal before us. The Ld. Representative for the assessee contended that these are genuine purchases and sales are made in normal course of business. The assessee s counsel submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales made to Josh Advertising of ₹ 688000 and M/s G L Investment of ₹ 3,00,000 aggregating to ₹ 9,88,000 is already treated as bogus sales and added u/s 68 of the Act by FAA and hence the same cannot be added again which will lead to double addition of the same amount. 10. Ld DR had relied upon the order of CIT(A) in support of the case of Revenue. 11. We have perused the material on record and heard contentions of rival parties. It is not clear from the records that the addition of ₹ 9,88,000 is the same addition as held to be bogus sale as referred to in ground no 3 of ground of appeal with respect to sales made to Josh Advertising of ₹ 688000 and M/s G L Investment of ₹ 3,00,000 aggregating to ₹ 9,88,000 .We set aside the addition and restore the matter to the file of Assessing Officer to verify that the addition of ₹ 9,88,000 is same as is held to be bogus sale to Josh Advertising of ₹ 688000 and M/s G L Investment of ₹ 3,00,000 aggregating to ₹ 9,88,000 as per ground no3 of ground of appeal. If it be so , then the addition would stand deleted, as otherwise it will lead to adding the same amount twice.We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n borrowing for purchase, construction , repair etc of house property . However, from the records,it is not clear about the quantum of interest payable and also about the property on which the assessee is intending to claim deduction u/s 24(b) of the Act vide additional ground raised before us. We restore this issue to the file of assessing officer to verify the claim of the assessee as to the quantum of interest payable and also the property with respect to which such interest is claimed to have been payable before allowing the claim of the assessee for deduction u/s 24(b) of the Act . We order accordingly. 16. In the cross appeal of the Revenue, the only other issue remaining is arising from the action of the AO of rejecting the financial results shown in the books of accounts under section 143(3) of the Act and estimating gross profit at 5% of the total turnover. The CIT(A) noticed that the Assessing Officer had made specific additions on various points and, therefore, the overall addition made by application of 5% to the turnover were not justified. 16.1 At the time of hearing Ld.D.R submitted that the Assessing Officer had found various discrepancies in the books account ..... X X X X Extracts X X X X X X X X Extracts X X X X
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