JASWANTLAL J SHAH, MUMBAI v. ASST CIT CEN CIR 32, MUMBAI

ITA 512/MUM/2018 | 2011-2012
Pronouncement Date: 06-05-2021 | Result: Partly Allowed

Appeal Details

RSA Number 51219914 RSA 2018
Assessee PAN AADPS2464H
Bench Mumbai
Appeal Number ITA 512/MUM/2018
Duration Of Justice 3 year(s) 3 month(s) 12 day(s)
Appellant JASWANTLAL J SHAH, MUMBAI
Respondent ASST CIT CEN CIR 32, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 06-05-2021
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted J
Tribunal Order Date 06-05-2021
Last Hearing Date 06-04-2020
First Hearing Date 06-04-2020
Assessment Year 2011-2012
Appeal Filed On 24-01-2018
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F MUMBAI $ %& %' BEFORE SHRI VIKAS AWASTHY JUDICIAL MEMBER & SHRI MANOJ KUMAR AGGARWAL ACCOUNTANT MEMBER . 510 / / 2018 (. . 2009-10 ) ITA NO.510/MUM/2018 (A.Y.2009-10) . 511 / / 2018 (. .2010-11 ) ITA NO.511/MUM/2018 (A.Y.2010-11) . 512 / / 2018 (. . 2011-12 ) ITA NO.512/MUM/2018 (A.Y.2011-12) MR JASWANTLAL J SHAH 60 BAPU KHOTE CROSS LANE MUMBAI 400 003 PAN: AADPS 2464H ...... 0 / APPELLANT VS. THE ACI CENTRAL CIRCLE -32 19 TH FLOOR AIR INDIA BUILDING NARIMAN POINT MUMBAI 400 021 ..... 12 / RESPONDENT 03/ APPELLANT BY : NONE 12 3/ RESPONDENT BY : MS. USHA GAIKWAD 42 / DATE OF HEARING : 10/02/2021 56 42 / DATE OF PRONOUNCEMENT : 06/05/2021 %/ ORDER PER VIKAS AWASTHY JM: THESE THREE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) -53 MUMBAI [I N SHORT THE CIT(A)] FOR THE ASSESSMENT YEARS 2009-10 2010-11 AND 2011-12 RESPECTIVELY. ALL THE 2 ITA NO.510/MUM/2018 (A.Y.2009-10) ITA NO.511/MUM/2018 (A.Y.2010-11) ITA NO.512/MUM/2018 (A.Y.2011-12) THREE IMPUGNED ORDERS ARE DATED 18/12/2017. SINCE THE ISSUES INVOLVED IN ALL THE THREE APPEALS GERMINATE FROM SAME SET OF FACTS THESE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION AND ARE DECIDED BY THI S COMMON ORDER. FOR THE SAKE OF CONVENIENCE THESE APPEALS ARE DECIDED IN SE RIATIM. ITA NO.510/MUM/2018 - A.Y. 2009-10: 2. THE ASSESSEE HAS ASSAILED THE ORDER OF CIT(A) BY RAISING FOLLOWING GROUNDS OF APPEAL. 1. THE IMPUGNED ASSESSMENT ORDER PASSED BY THE A.O . FOR A.Y. 2009-10 IS AB-INITIO VOID AS THE PRESENT A.O. HAS NO JURISDICTION TO PAS S THE ASSESSMENT ORDER FOR A.Y. 2009-10. 2. ADDITION OF RS.18 91 105/- MADE BY THE LD. ASSES SING OFFICER (THE AO FOR SHORT) ON ACCOUNT OF SO CALLED BOGUS PURCHASES HAS BEEN REST RICTED TO ONLY 12.5% OF THE TOTAL PURCHASE AMOUNT PRESUMING IT TO BE THE PROFIT MARG IN 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 CASE- LAW 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 ALTE R THE GROUNDS OF APPEAL MENTIONED ABOVE. 3. IN GROUND NO.1 OF THE APPEAL THE ASSESSEE HAS A SSAILED THE JURISDICTION OF ASSESSING OFFICER TO PASS THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2009-10. THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS THE REL EVANT EXTRACT OF SAME IS REPRODUCED HEREIN BELOW: 1. THE LD. COMMISSIONER OF INCOME TAX-APPEALS - I S NOT JUSTIFIED IN LAW TO HOLD THAT THE TRANSFER OF THE CASE FROM THE DY.CIT-15(2) TO D Y.CIT CENTRAL CIRCLE- 32 ON THE BASIS OF THE ORDER DATED 01-07-2005 SIGNED BY THE I TO (HQ) -15 IS CORRECT LEGAL AND IN CONFORMITY WITH THE PRO VISIONS OF S.I 27 OF THE ACT. 2. AN ORDER U/S 127 OF THE ACT MUST BE COMMUNICA TED UNDER THE SIGNATURE OF THE COMPETENT AUTHORITY TO CLEARLY INDICATE THAT THERE HAS BEEN AN AGREEMENT BETWEEN THE CIT HAVING JURISDICTION OVER THE CASE AND THE C IT HAVING JURISDICTION OVER THE TRANSFEREE AO. SUCH AGREEMENT MUST BE COMMUNICATED TO THE ASSESSEE. 3 ITA NO.510/MUM/2018 (A.Y.2009-10) ITA NO.511/MUM/2018 (A.Y.2010-11) ITA NO.512/MUM/2018 (A.Y.2011-12) 3. THEREFORE THE IMPUGNED ORDERS DATED 24-01-2014 FOR AY 2009-10 DATED 25-03- 2013 FOR AY 2010-11 AND DATED 29-01-2014 FOR AY 201 1-12 ARE LIABLE TO BE QUASHED AND SET ASIDE. CASES RELIED UPON: 1. RENTWORK INDIA P. LTD VS PR.CIT-14 (BOM. HC ) WRIT PETITION NO. (L) 1944 OF 2017 DECIDED ON 11-10 -2017 2. NOORUL ISLAM EDUCATIONAL TRUST VS. CIT-1 (2016) 388 ITR 489 3. AJANTHA INDUSTRIES AND ORS. VS CBDT AND ORS (197 6) 102 ITR 281 (SC) 4. MS. USHA GAIKWAD REPRESENTING THE DEPARTMENT VEH EMENTLY DEFENDED THE IMPUGNED ORDER AND PRAYED FOR DISMISSING APPEAL OF THE ASSESSEE. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTING THE FINDINGS OF CIT(A) IN UPHOLDING JURISDICTION OF THE ASSESSING OFFICER IN PASSING THE ASSESSMENT ORDER POINTED THAT THE ASSESSING OFFICERS JURISDICTION H AS BEEN CHANGED BY THE COMPETENT AUTHORITY VIDE ORDER DATED 01/07/2005 PAS SED UNDER SECTION 127 OF THE INCOME TAX ACT 1961 ( IN SHORT THE ACT). THE LD. DEPARTMENTAL REPRESENTATIVE REFERRED TO THE PROVISIONS OF SUB-SE CTION (3) TO SECTION 127 OF THE ACT TO CONTEND THAT WHEN JURISDICTION OF ASSESS ING OFFICER IS TRANSFERRED WITHIN THE SAME CITY OPPORTUNITY OF HEARING IS NOT REQUIRED TO BE GIVEN TO THE ASSESSEE. THE LD. DEPARTMENTAL REPRESENTATIVE FURTH ER POINTED THAT SIMILAR OBJECTION WAS TAKEN BY THE ASSESSEE IN ASSESSMENT Y EARS 2005-06 2006-07 & 2008-09 IN ITA NO.2599/MUM/2014 ITA NO.2444/MUM/20 11 & ITA NO.8274/MUM/2011 RESPECTIVELY. THE TRIBUNAL VIDE O RDER DATED 08/05/2017 COMMON FOR AFORESAID ASSESSMENT YEARS DISMISSED ASS ESSEES GROUND CHALLENGING THE JURISDICTION OF ASSESSING OFFICER O N IDENTICAL SET OF FACTS. THE LD. DR TO BUTTRESS HER SUBMISSIONS ALSO PLACED RELIANCE ON THE FOLLOWING DECISIONS: - SHREE RAM VESSEL SCRAP (P) LTD. VS CIT 32 TAXMANN .COM 120 (GUJ.) & - ADVANTAGE STRATEGIC CONSULTING (P) LTD. VS. PCIT 88 TAXMANN.COM 104 (MAD.) 4 ITA NO.510/MUM/2018 (A.Y.2009-10) ITA NO.511/MUM/2018 (A.Y.2010-11) ITA NO.512/MUM/2018 (A.Y.2011-12) 5. WE HAVE CONSIDERED THE SUBMISSIONS OF RIVAL SIDE S AND HAVE EXAMINED THE ORDERS OF AUTHORITIES BELOW. IN GROUND NO.1 OF APPEAL THE ASSESSEE HAS IMPUGNED THE VALIDITY OF ASSESSMENT ORDER ON THE GR OUND THAT THE ASSESSING OFFICER HAS NO JURISDICTION TO PASS THE ASSESSMENT ORDER. THE SHORT CONTENTION OF THE ASSESSEE IS THAT BEFORE CHANGING JURISDICTIO N OF THE ASSESSING OFFICER UNDER SECTION 127 OF THE ACT THE SAME WAS NOT COMM UNICATED TO THE ASSESSEE. THE PROVISIONS OF SECTION 127(1) & (2) OF THE ACT M ANDATE THAT THE COMPETENT AUTHORITY AFTER GIVING REASONABLE OPPORTUNITY OF HE ARING 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. HO WEVER SUB-SECTION (3) TO SECTION 127 PROVIDES AN EXCEPTION TO THE ABOVE STAT UTORY PROVISION I.E. WHERE THE JURISDICTION OF ASSESSING OFFICER IS TRANSFERRE D FROM ONE ASSESSING OFFICER TO ANOTHER ASSESSING OFFICER WITHIN THE SAME CITY LOC ALITY OR PLACE THERE IS NO MANDATORY REQUIREMENT TO PROVIDE OPPORTUNITY OF HEA RING TO THE ASSESSEE. FOR THE SAKE OF READY REFERENCE THE RELEVANT PROVISIONS OF SUBSECTION (3) TO SECTION 127 OF THE ACT ARE REPRODUCED HEREIN BELOW:- (3) NOTHING IN SUB-SECTION (1) OR SUB-SECTION (2) SHALL BE DEEMED TO REQUIRE ANY SUCH OPPORTUNITY TO BE GIVEN WHERE THE TRANSFER IS FROM ANY ASSESSING OFFICER OR ASSESSING OFFICERS (WHETHER WITH OR WITHOUT CONCURRENT JURISD ICTION) TO ANY OTHER ASSESSING OFFICER OR ASSESSING OFFICERS (WHETHER WITH OR WITH OUT CONCURRENT JURISDICTION) AND THE OFFICES OF ALL SUCH OFFICERS ARE SITUATED IN THE SA ME CITY LOCALITY OR PLACE. IN THE PRESENT CASE UNDISPUTEDLY THE ASSESSEES CA SE HAS BEEN TRANSFERRED FROM DCIT-15(2) MUMBAI TO ACIT CENTRAL CIRCLE-32 MUMBAI I.E. THE CHANGE IN JURISDICTION OF ASSESSING OFFICER IS WITHIN THE SAM E CITY. HENCE THERE WAS NO STATUTORY REQUIREMENT FOR NOTICE OR PRIOR INTIMATIO N FOR CHANGE IN JURISDICTION TO THE ASSESSEE. 5 ITA NO.510/MUM/2018 (A.Y.2009-10) ITA NO.511/MUM/2018 (A.Y.2010-11) ITA NO.512/MUM/2018 (A.Y.2011-12) 5.1. WE HAVE ALSO CONSIDERED THE CASE LAWS ON WHICH THE ASSESSEE HAS PLACED RELIANCE. WE FIND THAT IN ALL THE THREE DECISIONS R ELIED BY ASSESSEE THE TRANSFER OF JURISDICTION OF THE ASSESSING OFFICER WAS EITHER COVERED BY THE PROVISIONS OF SUB-SECTION (1) OR SUBSECTION (2) OF SECTION 127 OF THE ACT. THUS THE SAID DECISIONS DOES NOT PROVIDE ANY SUPPORT TO THE CONTE NTS OF THE ASSESSEE BEING FACTUALLY AT VARIANCE. IN THE CASE OF ADVANTAGE STRATEGIC CONSULTING (P) LTD. VS. PCIT (SUPRA) THE HONBLE MADRAS HIGH COURT AFTER CONSIDERING V ARIOUS DECISIONS (INCLUDING THE DECISIONS RELIED BY THE AS SESSEE HEREIN) HELD THAT WHERE THE JURISDICTION OF ASSESSING OFFICER IS TRAN SFERRED WITHIN THE SAME CITY THE ASSESSEE CANNOT PLED FOR OPPORTUNITY TO BE GRAN TED BEFORE AN ORDER OF TRANSFER AS THERE IS NO SUCH STATUTORY REQUIREMENT UNDER THE ACT RATHER THE SAID PROCEDURE HAS BEEN SPECIFICALLY EXCLUDED. 5.2. WE FURTHER FIND THAT THE CO-ORDINATE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE 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. 6. IN GROUND NO.2 OF APPEAL THE ASSESSEE HAS ASSAI LED ADDITION ON ACCOUNT OF BOGUS PURCHASES. THE ASSESSEE IS A TRADER IN FER ROUS AND NON-FERROUS METALS. ON THE BASIS OF INFORMATION RECEIVED FROM THE SALES TAX DEPARTMENT GOVERNMENT OF MAHARASHTRA ASSESSMENT FOR ASSESSMEN T YEAR 2009-10 IN THE CASE OF ASSESSEE WAS REOPENED. AS PER THE INFORMATI ON RECEIVED THE ASSESSEE HAD OBTAINED BOGUS PURCHASE BILLS AGGREGATING TO RS .18 91 105/- FROM VARIOUS DEALERS DECLARED AS HAWALA OPERATORS. THE ASSESSE E COULD NOT PROVE GENUINENESS OF THE DEALERS AS THE NOTICE ISSUED BY THE ASSESSING OFFICER UNDER 6 ITA NO.510/MUM/2018 (A.Y.2009-10) ITA NO.511/MUM/2018 (A.Y.2010-11) ITA NO.512/MUM/2018 (A.Y.2011-12) SECTION 133(6) OF THE ACT ON THE ADDRESSES FURNISHE D BY THE ASSESSEE WERE RETURNED BACK UNSERVED BY THE POSTAL AUTHORITIES WI TH 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 RE CEIPTS 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 O NUS IN PROVING GENUINENESS OF PURCHASES. IN THE ABSENCE OF COGENT EVIDENCE TH E ASSESSING OFFICER MADE ADDITION OF THE ENTIRE SUCH BOGUS PURCHASES. IN FIR ST APPELLATE PROCEEDINGS THE CIT(A) RESTRICTED THE ADDITION TO 12.5% OF SUCH PU RCHASES. 6.1. UNDISPUTEDLY DURING ASSESSMENT PROCEEDINGS T HE ASSESSING OFFICER ACCEPTED THE SALES DECLARED BY THE ASSESSEE. WITHOU T PURCHASES THERE CANNOT BE SALES. THE HON'BLE BOMBAY HIGH COURT IN THE CASE PCIT VS. PARAMSHAKHTI DISTRIBUTORS PVT. LTD. IN INCOME TAX APPEAL NO.413 OF 2017 DECIDED ON 15/07/2019 HAS HELD THAT IT IS ONLY THE PROFIT EMBEDDED IN SUC H TRANSACTIONS THAT HAS TO BE DISALLOWED. THE ENTIRE ALLEGED BOGUS PURCHASES CANNOT BE ADDED. THE G.P. IN TRADING OF FERROUS AND NON-FERR OUS METALS GENERALLY RANGE BETWEEN 5% TO 8%. THE 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 RESTRI CT G.P. ON BOGUS PURCHASES TO 6%. THE FINDINGS OF CIT(A) ON THIS ISSUE ARE MODIFI ED TO THAT EXTENT. CONSEQUENTLY GROUND NO.2 OF THE APPEAL IS PARTLY A LLOWED. 7. THE GROUND NO.3 & 4 OF APPEAL ARE GENERAL IN NAT URE HENCE REQUIRES NO ADJUDICATION. 7 ITA NO.510/MUM/2018 (A.Y.2009-10) ITA NO.511/MUM/2018 (A.Y.2010-11) ITA NO.512/MUM/2018 (A.Y.2011-12) 8. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLO WED IN THE TERMS AFORESAID. ITA NO.511/MUM/2018 - A.Y.2010-11: 9. THE ASSESSEE HAS ASSAILED THE ORDER OF CIT(A) BY RAISING FOLLOWING GROUNDS OF APPEAL. 1. THE IMPUGNED ASSESSMENT ORDER PASSED BY THE A.O . FOR A.Y. 2010-11 IS AB -INITIO VOID AS' THE PRESENT A.O. HAS NO JURISDICTION TO P ASS THE ASSESSMENT ORDER FOR A.Y. 2010-11. 2. ADDITION OF RS.80 22 203/- ON ACCOUNT OF UNDISC LOSED PEAK CASH IS FACTUALLY AND LEGALLY INCORRECT. 3. THE LD.CIT-APPEALS-53 MUMBAI FAILED TO CON SIDER THE SUBMISSIONS AND THE CASE-LAW SUBMITTED BY THE APPELLANT AND THE CIT-AP PEALS ERRONEOUSLY CONFIRMED THE FINDINGS OF THE DY. CIT CENTRAL CIRCLE-32 MUMBAI. 4. THE APPELLANT CRAVES LEAVE TO ADD AMEND OR ALTE R THE GROUNDS OF APPEAL MENTIONED ABOVE. 10. THE GROUND NO. 1 OF THE APPEAL IS IDENTICAL TO THE GROUND NO.1 RAISED IN THE APPEAL FOR ASSESSMENT YEAR 2009-10. THE ASSESS EE HAS ASSAILED CHANGE IN JURISDICTION OF THE ASSESSING OFFICER ON SAME SET O F FACTS. SINCE THE GROUND RAISED IN APPEAL AND THE FACTS GERMANE TO THE ISSUE ARE IDENTICAL TO THE ONE ALREADY ADJUDICATED BY US IN THE APPEAL OF ASSESSE E FOR ASSESSMENT YEAR 2009- 10 THE FINDINGS GIVEN BY US IN ASSESSMENT YEAR 200 9-10 WOULD MUTATIS MUTANDIS APPLY TO THE GROUND NO.1 RAISED IN APPEAL FOR ASSE SSMENT YEAR 2010- 11. THUS GROUND NO.1 OF APPEAL IS DISMISSED. 11. IN GROUND NO.2 OF APPEAL THE ASSESSEE HAS ASSA ILED ADDITION MADE ON ACCOUNT OF BOGUS PURCHASES. THE ASSESSEE HAS ALLEGE DLY OBTAINED BOGUS PURCHASE BILLS AGGREGATING FROM VARIOUS HAWALA OPER ATORS. THE ASSESSING OFFICER HAS MADE ADDITION OF RS.80 22 203/- ON THE BASIS OF PEAK PURCHASES IN CASH. THE CIT(A) HAS UPHELD THE FINDINGS OF ASSESSI NG OFFICER. IT IS RELEVANT TO 8 ITA NO.510/MUM/2018 (A.Y.2009-10) ITA NO.511/MUM/2018 (A.Y.2010-11) ITA NO.512/MUM/2018 (A.Y.2011-12) MENTION HERE THAT THE ASSESSING OFFICER WHILE MAKIN G THE ADDITION ON ACCOUNT OF BOGUS PURCHASES HAS NOT DISPUTED THE SALES DECLA RED BY THE ASSESSEE. THE ASSESSING OFFICER HAS ERRED IN MAKING ADDITION BY T AKING PEAK CASH OF ALLEGED BOGUS PURCHASES WITHOUT REJECTING THE SALES. THE AD DITION HAS BEEN MADE BY THE ASSESSING OFFICER MERELY ON SURMISES AND CONJEC TURES. THE ASSESSEE IS IN THE TRADING OF FERROUS AND NON-FERROUS METALS. GENE RALLY THE G.P IN TRADING OF FERROUS AND NON-FERROUS RANGES BETWEEN 5% TO 8%. T AKING INTO CONSIDERATION ENTIRETY OF FACTS WE RESTRICT THE ADDITION ON ACCO UNT 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 NA TURE HENCE REQUIRE NO ADJUDICATION. 13. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLO WED. ITA NO.512/MUM/2018 - A.Y.2011-12: 14. THE ASSESSEE IN APPEAL HAS RAISED FOLLOWING GRO UNDS: 1. THE IMPUGNED ASSESSMENT ORDER PASSED BY THE A.O . FOR A. Y. 2011-12 IS AB- INITIO VOID AS THE PRESENT A.0. HAS NO JURISDICTION TO PAS S THE ASSESSMENT ORDER FOR A.Y. 2011-12. 2. ADDITION OF RS.56 69 240/-BY INVOKING RULE 8D RW S 14A BY THE AO AS AGAINST THE TAX FREE INCOME OF RS 14 70 968/-CLAIMED BY THE APP ELLANT WAS REDUCED TO RS 38 23 485/-.THIS ACTION OF THE LD. CIT-A (53) MUMBA I IS FACTUALLY AND LEGALLY INCORRECT. THE LD. CIT-APPEALS FAILED TO CONSIDER T HE SUBMISSIONS AND THE CASE-LAW SUBMITTED BY THE APPELLANT. 3. AN ADDITION ON ACCOUNT OF DEEMED RENT OF RS.2 38 000/-HAS BEEN MADE BY THE LD. AO. IT HAS BEEN CONFIRMED BY THE LD. CIT-APPEALS ER RONEOUSLY. THE FINDINGS OF THE ASST. CIT CENTRAL CIRCLE-32 MUMBAI BASED ON CONJE CTURES ONLY. 4. ADDITION OF RS 36 50 738/- HAS BEEN MADE BY THE LD.AO ON ACCOUNT OF SO CALLED BOGUS PURCHASES. THE LD. CIT APPEALS HAS RESTRICTED THE ADDITION TO 12.5% OF THIS AMOUNT TAKING THE PROFIT MARGIN TO BE 12.5%.THE PR OFIT MARGIN OF THE APPELLANT HAS BEEN BETWEEN 1.5 TO 3% ONLY DURING THE YEAR IN QUES TION. 9 ITA NO.510/MUM/2018 (A.Y.2009-10) ITA NO.511/MUM/2018 (A.Y.2010-11) ITA NO.512/MUM/2018 (A.Y.2011-12) 5. HON'BLE TRIBUNAL MAY BE PLEASED TO CONSIDER THE RECORDS AND SUBMISSIONS OF THE CASE AND DO JUSTICE TO THE APPELLANT. 6. THE APPELLANT CRAVES LEAVE TO ADD AMEND OR ALTE R THE GROUNDS OF APPEAL MENTIONED ABOVE. 15. THE GROUND NO.1 IS IDENTICAL TO THE GROUND RAIS ED IN ASSESSMENT YEAR 2009-10 AND 2010-11. FOR PARITY OF REASONS THE GR OUND NO.1 OF THE APPEAL IS DISMISSED. 16. IN GROUND NO.2 OF APPEAL THE ASSESSEE HAS ASSA ILED DISALLOWANCE MADE UNDER SECTION 14A R.W.R. 8D. DURING THE PERIOD RELE VANT TO ASSESSMENT YEAR UNDER APPEAL THE ASSESSEE HAS EARNED EXEMPT INCOME OF RS.7 35 484/-. NO SUO-MOTU DISALLOWANCE HAS BEEN MADE BY THE ASSESSEE FOR EARNING EXEMPT INCOME. THE ASSESSING OFFICER INVOKED THE PROVISION S OF RULE 8D AND MADE DISALLOWANCE OF RS.56 69 240/-. IN FIRST APPELLATE PROCEEDINGS THE CIT(A) AFTER EXAMINING THE FACTS HAS REDUCED THE DISALLOWANCE IN RESPECT OF INTEREST EXPENDITURE UNDER RULE 8D(2)(II) BY RESTRICT IT TO RS.36 34 288/- I.E. TO THE EXTENT INTEREST EXPENSES CLAIMED AS AGAINST DISALL OWANCE OF RS.54 80 043/- MADE BY THE ASSESSING OFFICER. THE TOTAL DISALLOWA NCE MADE BY CIT(A) UNDER SECTION 14A R.W.R. 8D IS RS.38 23 485/-. IT IS NO MORE RES-INTEGRA THAT DISALLOWANCE UNDER S ECTION 14A CANNOT EXCEED THE EXEMPT INCOME EARNED. THEREFORE WE DIR ECT THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE UNDER SECTION 14A TO T HE EXTENT EXEMPT INCOME EARNED BY THE ASSESSEE DURING THE PERIOD RELEVANT T O 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 ASSA ILED ADDITION OF RS.2 38 000/- ON ACCOUNT OF DEEMED RENT. ON PERUS AL OF RECORDS WE FIND THAT THE ASSESSEE HAS THREE PROPERTIES I.E. BUNGALOW AT DEOLALI SHOP AT AHMEDABAD 10 ITA NO.510/MUM/2018 (A.Y.2009-10) ITA NO.511/MUM/2018 (A.Y.2010-11) ITA NO.512/MUM/2018 (A.Y.2011-12) AND FLAT AT ABHILASHA CHS LTD. MUMBAI (SELF-OCCUPI ED). THE ASSESSING OFFICER DETERMINED DEEMED RENTAL INCOME FROM HOUSE PROPERTY IN RESPECT BUNGALOW AT DEOLALI RS.1 68 000/- AND SHOP AT AHMADABAD AT R S.70 000/- (TOTAL RS.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 UP HELD THE FINDINGS OF ASSESSING OFFICER. WE FIND THAT THE ISSUE OF DEEME D RENT IS RECURRING. SIMILAR ADDITION WAS MADE BY THE ASSESSING OFFICER IN AY 20 08-09 AND 2009-10 ON SAME SET OF FACTS. AFTER BEING UNSUCCESSFUL BEFORE THE CIT(A) THE ASSESSEE CARRIED THE ISSUE IN APPEAL BEFORE THE TRIBUNAL. IT WOULD BE RELEVANT TO MENTION HERE THAT THE ISSUE WAS AGITATED BY THE ASSESSEE IN APPEAL FOR AY 2008-09 AND 2009-10 BEFORE THE TRIBUNAL IN PROCEEDING ARISING F ROM ASSESSMENT MADE UNDER SECTION 143(3) OF THE ACT. THE TRIBUNAL IN IT A NO. 2598/MUM/2014 FOR AY2009-10 DECIDED ON 08/05/2017 AFTER EXAMINING THE FACTS REJECTED THE CONTENTIONS OF THE ASSESSEE BY OBSERVING AS UNDER: 22. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT AS PER BALANCE SHEET OF THE ASSESSEE AO SEEN THAT THE ASSESSEE POSSESSED THREE HOUSE PROPERTIES AS PER THE DETAILS OF FIXED ASSETS I.E. BUNGALOW AT DEOLALI F LAT AT ABHILASHA CHS LTD. AND SHOP AT AHMEDABAD OUT OF WHICH THE FLAT AT ABHILASHA CHS LT D. MUMBAI WAS A SELF OCCUPIED PROPERTY. ACCORDINGLY THE ASSESSEE WAS ASKED VIDE LETTER DATED 12.12.2011 TO SHOW CAUSE AS TO WHY THE BUNGALOW AT DEOLALI AND THE SHO P AT AHMEDABAD SHOULD NOT BE TREATED AS DEEMED LET OUT PROPERTIES WITHIN THE MEA NING OF PROVISIONS OF SECTION 23(4) OF THE ACT. THE ASSESSEE VIDE LETTER DATED 15 .12.2011 CLAIMED THAT HIS SHOP IN AHMEDABAD AND THE HOUSE IN DEOLALI WERE IN BAD DIL APIDATED AND UN-TENANTABLE CONDITION AND THAT THESE REMAINED VACANT AND NO REN T WAS EARNED AS IT WAS NOT POSSIBLE TO LET OUT THE PROPERTIES. THUS IT WAS CO NTENDED THAT NO RENTAL INCOME COULD HAVE BEEN EARNED FROM THESE PROPERTIES. 23. THE AO OBSERVED THAT SECTION 23(4) CLEARLY STAT ES THAT WHERE THE PROPERTY REFERRED TO IN SECTION 23(2) CONSISTS OF MORE THAN ONE HOUSE THE ANNUAL VALUE OF THE HOUSE OR HOUSES OTHER THAN THE HOUSE IN RESPECT OF WHICH THE ASSESSEE HAS EXERCISED AN OPTION UNDER CLAUSE 23(4)(A) SHALL BE DETERMINE D UNDER SUB-SECTION (1) AS IF SUCH HOUSE OR HOUSES HAD BEEN LET. HENCE IT WAS HELD TH AT THE BUNGALOW AT DEOLALI AND THE SHOP AT AHMEDABAD WERE LIABLE TO BE TREATED AS DEEMED LET OUT PROPERTIES. IT WAS OBSERVED THAT THE ASSESSEE HAD NOT SHOWN ANY RE NTAL INCOME FROM THE DEOLALI 11 ITA NO.510/MUM/2018 (A.Y.2009-10) ITA NO.511/MUM/2018 (A.Y.2010-11) ITA NO.512/MUM/2018 (A.Y.2011-12) BUNGALOW AS WELL AS THE AHMEDABAD SHOP. AO FOLLOWED REASONING GIVEN IN THE ASSESSMENT YEAR 2007-08 AND 2008-09 AND ADDED RS.1 68 000/- TO TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF RENT FROM THOSE PROPERTI ES. 24. THE ASSESSEE HAD FURNISHED COPY OF THE PURCHASE DEED (IN GUJARATI LANGUAGE) IN RESPECT OF THE SHOP AT AHMEDABAD WHICH SEEMED TO HA VE BEEN EXECUTED ON 25.09.2008. THE ANNUAL VALUE OF THE SHOP AT AHMEDAB AD WAS DETERMINED BY THE AO. AT RS.75 000/-. SINCE THE ASSESSEE HAD ACQUIRED THE SAID SHOP IN SEPTEMBER 2008 THE VALUE WAS COMPUTED FOR 7 MONTHS AT RS.43 750/- WHIC H WAS ALSO TREATED AS INCOME OF THE ASSESSEE FROM HOUSE PROPERTY. 25. BY THE IMPUGNED ORDER CIT(A) CONFIRMED THE ACTI ON OF THE AO AFTER OBSERVING AS UNDER:- 6.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELL ANT AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE FOR CONSID ERATION 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 EARLIE R AY.S 2007-08 AND 2008- 09 THE ALV OF THE HOUSE AT DEOLALI WAS ASSESSED AT RS. 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 H OUSE AT RS.1 68 000/-. THOUGH THE APPELLANT CLAIMS TO HAVE SUBMITTED MUNICIPAL VA LUATION OF THE HOUSE AT DEOLALI IT IS FOUND THAT NO SUCH DOCUMENTS HAVE AC TUALLY BEEN PLACED ON RECORD. WITHOUT PREJUDICE TO THE ABOVE THE APPELLANT HAS AL SO NOT BROUGHT ON RECORD ANY JUDICIAL AUTHORITIES HOLDING THAT THE AL V OF THE PR OPERTIES COVERED BY SECTION 23(4) HAS TO BE TAKEN ON THE BASIS OF THE MUNICIPAL RATEABLE VALUE RATHER THAN THE FAIR RENT. AS REGARDS THE SHOP AT AHMEDABAD IT IS SEEN THAT THE APPELLANT DOES NOT HAVE A CONSISTENT OR COHERENT STAND. ON THE ONE HAND IT IS CLAIMED THAT THE SAID SHOP IS IN A BAD DILAPIDATED AND UNTENANTABLE CONDITION WHICH REMAINED VACANT DURING THE PERIOD AND ON THE OTHER HAND IT IS SAID TO HAVE BEEN USED FOR THE PURPOSE OF BUSINESS OF THE APPELLANT. THERE IS NOTHING ON RECORD TO INDICATE THAT THE APPELLANT IS CARRYING ON ANY BUSINESS AT A HMEDABAD. IN VIEW OF THE ABOVE DISCUSSION I DO NOT FIND ANY LEGAL OR FACTUA L ERROR OR INFIRMITY IN THE ACTION OF THE A.O. IN ASSESSING THE ALV OF THE HOUSE/ BUNG ALOW AT DEOLALI AND THE SHOP AT AHMEDABAD AT RS.1 68 OOO/- AND RS.43 750/- RESPE CTIVELY. THE ADDITIONS MADE BY THE AO IN THIS REGARD ARE ACCORDINGLY CONFI RMED. GROUND NO.3 RAISED BY THE APPELLANT IS THUS DISMISSED. 26. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT AO & CIT(A) HAS RECORDED DETAILED FINDING TO SUPPORT ALV OF HOUSE AND SHOPS SO ARRIVED AT. NOTHING WAS PLACED BEFORE US BY LEARNED AR TO CONTROVERT THE FINDINGS OF LOWER AUTHORITIES. ACCORDINGLY WE DO NOT FIND ANY REASON TO DEVIATE FROM THE FINDI NGS RECORDED BY LOWER AUTHORITIES. SINCE NO CHANGE IN FACTS IN THE IMPUGNED ASSESSMEN T YEAR HAS BEEN BROUGHT BEFORE US WE FIND NO REASON TO TAKE A DIFFERENT VI EW. THUS THE GROUND NO.3 OF THE APPEAL IS DISMISSED SANS-MERIT. 12 ITA NO.510/MUM/2018 (A.Y.2009-10) ITA NO.511/MUM/2018 (A.Y.2010-11) ITA NO.512/MUM/2018 (A.Y.2011-12) 18. IN GROUND NO.4 OF APPEAL THE ASSESSEE HAS ASSA ILED ADDITION ON ACCOUNT OF BOGUS PURCHASES. DURING THE PERIOD RELEVANT TO A SSESSMENT YEAR UNDER APPEAL THE ASSESSEE HAS ALLEGEDLY OBTAINED BOGUS P URCHASE ENTRIES AGGREGATING TO RS.36 50 738/-. SINCE THE ASSESSEE FAILED TO PROVE GENUINENESS OF PURCHASES AND THE DEALERS THE ASSESSING OFFICER MADE ADDITION OF THE ENTIRE ALLEGED BOGUS PURCHASES. IN FIRST APPELLATE PROCEE DINGS THE CIT(A) RESTRICTED THE ADDITION TO 12.5%. THE ISSUE IN PRESENT APPEAL IS IDENTICAL TO THE ONE ADJUDICATED BY US IN THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2009-10. FOR PARITY OF REASONS WE RESTRICT G.P. TO 6% OF THE BOGUS PURCHASES. THE FINDINGS OF CIT(A) ARE MODIFIED TO THAT EXTENT AND GROUND NO.4 OF THE APPEAL IS PARTLY ALLOWED. 19. THE GROUND NO.5 & 6 OF APPEAL ARE GENERAL IN NA TURE HENCE REQUIRE NO ADJUDICATION. 20. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLO WED . 21. TO SUM-UP APPEAL OF THE ASSESSEE FOR ASSESSMEN T YEAR 2009-10 2010-11 AND 2011-12 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY TH E 6 TH DAY OF MAY 2021. SD/- SD/- (MANOJ KUMAR AGGARWAL) (VIKAS AWASTHY) %& / ACCOUNTANT MEMBER / JUDICIAL MEMBER / MUMBAI 8 / DATED : 06/05/2021 VM SR. PS(O/S) 13 ITA NO.510/MUM/2018 (A.Y.2009-10) ITA NO.511/MUM/2018 (A.Y.2010-11) ITA NO.512/MUM/2018 (A.Y.2011-12) COPY OF THE ORDER FORWARDED TO : 1. 0 / THE APPELLANT 2. 12 / THE RESPONDENT. 3. 92 ( )/ THE CIT(A)- 4. 92 CIT 5. :; 12 . . . / DR ITAT MUMBAI 6. ;<=> / GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT MUMBAI