TMI Blog2021 (5) TMI 656X X X X Extracts X X X X X X X X Extracts X X X X ..... in assessment years 2005-06, 2006-07 and 2008-09 (supra) has dismissed identical ground raised by the assessee challenging jurisdiction of Assessing Officer on same set of facts. We find no infirmity in the impugned order. The ground No.1 of appeal is without any merit, hence, the same is dismissed. Estimation of income - Bogus purchases - assessee is a trader in ferrous and non-ferrous metals - HELD THAT:- Undisputedly, during assessment proceedings, the Assessing Officer accepted the sales declared by the assessee. Without purchases there cannot be sales. The Hon'ble Bombay High Court in the case PCIT vs. Paramshakhti Distributors Pvt. Ltd [ 2019 (7) TMI 838 - BOMBAY HIGH COURT] has held that it is only the profit embedded in such transactions that has to be disallowed. The entire alleged bogus purchases cannot be added. The G.P. in trading of ferrous and non-ferrous metals generally range between 5% to 8%. CIT(A) has estimated G.P. on bogus purchases at 12.5%. The estimation of G.P. by the CIT(A) in our considered opinion is on higher side. To meet the ends of justice, we restrict G.P. on bogus purchases to 6%. The findings of CIT(A) on this issue are modified to that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he present A.O. has no jurisdiction to pass the Assessment Order for A.Y. 2009-10. 2. Addition of ₹ 18,91,105/- made by the Ld. Assessing Officer (The AO for short) on account of so called bogus purchases, has been restricted to only 12.5% of the total purchase amount, presuming it to be the profit margin of the appellant, which is factually and legally incorrect. The profit margin of the appellant is about 1.5 to 3% only during the A.Y. 3. The Ld.CIT-Appeals-53, Mumbai failed to consider the submissions and the caselaw submitted by the Appellant. He has failed to do complete justice in the case of the appellant. 4. The Appellant craves leave to add, amend or alter the Grounds of Appeal mentioned above. 3. In ground no.1 of the appeal, the assessee has assailed the jurisdiction of Assessing Officer to pass the assessment order for assessment year 2009-10. The assessee has filed written submissions, the relevant extract of same is reproduced herein below: 1. The Ld. Commissioner of Income Tax-Appeals - is not justified in law to hold that the transfer of the case from the Dy.CIT-15(2) to Dy.CIT, Central Circle- 32, on the basis of the order dated 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he orders of authorities below. In ground No.1 of appeal, the assessee has impugned the validity of assessment order on the ground that the Assessing Officer has no jurisdiction to pass the assessment order. The short contention of the assessee is that before changing jurisdiction of the Assessing Officer under section 127 of the Act, the same was not communicated to the assessee. The provisions of section 127(1) (2) of the Act mandate that the competent authority after giving reasonable opportunity of hearing to the assessee and after recording the reasons for doing so shall pass the order transferring jurisdiction of any case from one Assessing Officer subordinate to him to any other Assessing Officer also subordinate to him. However, sub-section (3) to section 127 provides an exception to the above statutory provision i.e. where the jurisdiction of Assessing Officer is transferred from one Assessing Officer to another Assessing Officer within the same city, locality or place, there is no mandatory requirement to provide opportunity of hearing to the assessee. For the sake of ready reference the relevant provisions of subsection (3) to section 127 of the Act are reproduced h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per the information received, the assessee had obtained bogus purchase bills aggregating to ₹ 18,91,105/- from various dealers declared as hawala operators. The assessee could not prove genuineness of the dealers as the notice issued by the Assessing Officer under section 133(6) of the Act on the addresses furnished by the assessee were returned back unserved by the postal authorities with remarks not known or left . No confirmations were either filed by the assessee from the said dealers. No documentary evidence in the form of transport receipts, proof of delivery stock register etc. were furnished by the assessee to prove trail of goods. In other words, the assessee failed to discharge his onus in proving genuineness of purchases. In the absence of cogent evidence, the Assessing Officer made addition of the entire such bogus purchases. In first appellate proceedings, the CIT(A) restricted the addition to 12.5% of such purchases. 6.1. Undisputedly, during assessment proceedings, the Assessing Officer accepted the sales declared by the assessee. Without purchases there cannot be sales. The Hon'ble Bombay High Court in the case PCIT vs. Paramshakhti Distributor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 80,22,203/- on the basis of peak purchases in cash. The CIT(A) has upheld the findings of Assessing Officer. It is relevant to mention here that the Assessing Officer while making the addition on account of bogus purchases has not disputed the sales declared by the assessee. The Assessing Officer has erred in making addition by taking peak cash of alleged bogus purchases without rejecting the sales. The addition has been made by the Assessing Officer merely on surmises and conjectures. The assessee is in the trading of ferrous and non-ferrous metals. Generally, the G.P in trading of ferrous and non-ferrous ranges between 5% to 8%. Taking into consideration entirety of facts, we restrict the addition on account of bogus purchases by estimating G.P. at 6% of the total bogus purchases. The findings of the CIT(A) on this issue are set-aside and ground No.2 of the appeal is partly allowed. 12. The ground No.3 4 of appeal are general in nature, hence, require no adjudication. 13. In the result, appeal of the assessee is partly allowed. ITA No.512/Mum/2018 - A.Y.2011-12: 14. The assessee in appeal has raised following grounds: 1. The impugned assessment order pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer to restrict the disallowance under section 14A to the extent, exempt income earned by the assessee during the period relevant to assessment year 2011-12. The ground No.2 of the appeal is partly allowed in the terms aforesaid. 17. In ground No.3 of appeal, the assessee has assailed addition of ₹ 2,38,000/- on account of deemed rent. On perusal of records we find that the assessee has three properties i.e. Bungalow at Deolali, Shop at Ahmedabad and flat at Abhilasha CHS Ltd., Mumbai (self-occupied). The Assessing Officer determined deemed rental income from house property in respect bungalow at Deolali ₹ 1,68,000/- and Shop at Ahmadabad at ₹ 70,000/- (Total ₹ 2,38,000/-). The assessee assailed computation of deemed rent on the aforesaid properties before the CIT(A). The CIT(A) following the order of Tribunal for assessment year 2008-09 and 2009-10 upheld the findings of Assessing Officer. We find that the issue of deemed rent is recurring. Similar addition was made by the Assessing Officer in AY 2008-09 and 2009-10 on same set of facts. After being unsuccessful before the CIT(A), the assessee carried the issue in appeal before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the assessee had acquired the said shop in September, 2008, the value was computed for 7 months at ₹ 43,750/- which was also treated as income of the assessee from house property. 25. By the impugned order CIT(A) confirmed the action of the AO after observing as under:- 6.3 I have considered the submissions of the appellant and perused the materials available on record. The issue for consideration is determination of annual letting value (AL V) of the house at Deolali and the shop at Ahmedabad. It is observed from the record that even in the earlier AY.s 2007-08 and 2008- 09, the ALV of the house at Deolali was assessed at ₹ 1,68,000/-. It is also observed that my predecessor has vide his order for AY.2007-08 dated 01.10.2010 upheld the action of the AO in computing ALV of the said house at ₹ 1,68,000/-. Though the appellant claims to have submitted municipal valuation of the house at Deolali, it is found that no such documents have actually been placed on record. Without prejudice to the above, the appellant has also not brought on record any judicial authorities holding that the AL V of the properties covered by Section 23(4) has to be taken on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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