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2015 (11) TMI 427 - ITAT JAIPURDisallowance of purchase of consumable goods, i.e., cotton, gauze and bandage, etc. - ingenuine and unverifiable purchases - Held that:- The authorities below have relied on the statements of managing director, accountant and proprietor of SKS Shri Jayant Khandelwal. Statement of Shri Khandelwal was neither supplied nor the cross-examination was given to the assessee, consequently the statement of Shri Khandelwal may not be held as reliable evidence against the assessee. However the statements of the managing director and accountant have neither been retracted nor effectively controverted, consequently they remain valid piece of evidence in this behalf. The assessee has endeavoured to demonstrate that the copious consumption of cotton gauze, bandages, etc., has not been disputed ; books of account are properly maintained and not rejected by the lower authorities. As compared to the assessment year 2009-10 the assessee's gross receipts, gross profit and net profit percentage have gone up and at the same time percentage consumption of cotton has gone down ; this data also has not been disputed in any manner by the Revenue, the assessee claims that no cotton was purchased from SKS in 2009-10. In this circumstance an alternate plea is advanced that a suitable estimate of disallowance be adopted instead of total disallowance. Reliance is placed on our consolidated order in the case of Anuj Kumar Varshney (supra) ; in this case the addition qua unverifiable purchases of semi-precious stones has been held to be at 15 per cent. of such unverifiable purchases. Looking at the entirety of facts and circumstances, i.e., the books of account being not rejected and consumption of cotton having comparatively decreased, we are inclined to follow our judgment in the case of Anuj Kumar Varshney (2015 (4) TMI 533 - ITAT JAIPUR) and direct to restrict the disallowance to 15 per cent. of purchases from SKS. Thus the assessee's appeals are partly allowed. Claim of interest under section 36(1)(iii) disallowed - Held that:- The assessee had at its disposal sufficient funds available in the form of share capital, reserves and other interest-free funds, etc., which are more than alleged advances/investments.The nature of such advances/investments as explained and considered by the learned Commissioner of Income-tax (Appeals) leave no room for any doubt that the alleged advances/investments were for the purposes of the assessee's hospital activities and medical professions. Thus no disallowance of interest under section 36(1)(iii) is justified. - Decided in favour of assessee.
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