2015 (1) TMI 828 - GUJARAT HIGH COURT

Bogus purchases - oil cakes shown as purchases by the assessee from 33 parties were not genuine transactions - Tribunal allowed the assessee’s alternative claim (in spite of assessee’s purchases) to the extent of 7Rs.88,03,614/- having been made outstide assessee’s books of account constituted exceptions for purposes of Rule 6 DD(j) and were not hit by Sec.40A(3) - Held that:- In the present case the provisions of Section 40A(3) would not be applicable and even if they are held to be applicable, the expenditure would be covered by the exceptions provided in Rule 6DD(j) of the Rules. It is a matter of fact that the goods were not received from the parties from whom it is shown to have been purchased but, such material was received from a different source which is exclusively within the knowledge of the assessee and none else. Therefore, it is evident that the assessee had inflated the expenditure in question by showing higher amount of purchase price through the fictitious invoices in the names of 33 bogus suppliers. Considering the overall factual scenario, the Tribunal was justified in disallowing 25% of the purchase price. - Decided against the assessee

Levy of penalty under Section 271(1)(c) - Held that:- The only condition which was required to be fulfilled for getting the immunity, after the search proceedings got over, was that the assessee had to pay the tax together with interest in respect of such undisclosed income up to the date of payment. Clause (2) did not prescribe the time limit within which the assessee should pay tax on income disclosed in the statement u/s.132(4) and thus, the assessee was entitled to immunity under clause (2) of Explanation 5 to section 271(1)(c). - Decided in favour of assessee.