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2021 (2) TMI 939 - ITAT DELHIBogus purchases - certain names were appearing who had been considered as entities not dealing in actual business but only issuing bills to accommodate various parties like the assessee company - HELD THAT:- As gone through the items purchases by these parties and found that the items consists of hard discs, air span antennas, alberain bmax CPE –IDU 10, CD writers, Cisco port switches, Cisco port Ethernet modules, delink ports switches and modem, DVD drive writer, infinite wireless systems. As gone through the quantitative details of the purchased and sale of the sale of goods in quantity and item wise. We find that the goods have been duly purchased and sold to Tulip Telecom Ltd. We have also examined the value of the total purchases made and also the receipts of sale out of such purchases and the profit earned thereof. Entire purchase from these parties is to the tune of ₹ 37,52,68,800/- whereas the sale receipts from that sales which have been duly accounted were to the tune of ₹ 38,27,42,200/-. We find that a profit of ₹ 74,37,422/- has been earned by the assessee from these transactions and duly offered to tax. Under these circumstances, it cannot be said that the purchase have been bogus especially when the quantitative details have been tallied item wise and the sale proceeds have been taken into P&L account and the profit earned on such transaction is offered to tax. They could not have been any sales without purchase of the items. Hence, we are unable to accept the contention of the revenue. The appeal of the assessee on this ground is allowed. Disallowance of interest on advance to Sister concerns - whether in relation to disallowance of interest made u/s.36(1)(iii) of the Act, the action of the AO is correct or not? - HELD THAT:- The issue of disallowance of interest has reached finality with the judgment of Hon’ble Supreme Court in the case of Hero Cycles (P.) Ltd. Vs. CIT, Ludhiana[2015 (11) TMI 1314 - SUPREME COURT] is that where the assessee had sufficient own interest free funds along with interest bearing funds and had made or advanced sums for non business purposes without charging any interest, the presumption that would arise is that the investment had been made out of interest free funds generated or available with the assessee, is still a good law in the light of the decision of the Hon’ble Apex Court in the case of Hero Cycles Ltd. (supra). - Decided in favour of assessee. Undisclosed rental income - as argued that no show-cause notice has been given with regard to the addition made - HELD THAT:-As revenue could not dispute the contentions of the assessed by the way of production of any show cause notice issued. Hence the addition made by the AO is hereby directed to be deleted for failure to follow the principles of natural justice. The appeal of the assessee on this ground is allowed. Assessment u/s 153A - HELD THAT:- The assessment is not an abated assessment. There is no dispute that the additions made were not based on any seized material. Hence, in view of the judgment of the Hon’ble Delhi High Court in the case CIT vs. Kabul Chawla ([2015 (9) TMI 80 - DELHI HIGH COURT] the appeal of the department is treated dismissed.
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