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2016 (8) TMI 1154 - AT - Income TaxAddition made u/s.69C - bogus purchases - Held that:- Once the AO does not doubt the sales corresponding purchases have to be accepted-there cannot be any sales of goods without the purchases. In such circumstances, in our opinion, entire purchases cannot be added to the total income of the assessee nor the provisions of section 69/69C could be invoked.For not discharging the initial burden of proof,the FAA had restricted the addition to 10% of the total purchases. We find that the Hon’ble Gujarat High Court has dealt with the similar issue in the case of Sathyanarayan P. Rathi (2013 (6) TMI 257 - GUJARAT HIGH COURT ) held that only the profit embedded in the transaction should be taxed. In our opinion, considering the peculiar facts of the case,his order does not suffer from any legal or factual infirmity,as far as deleting the addition of ₹ 2.27 Crores is concerned.We would discuss the issue of estimating the profit element embedded in the transaction,while adjudicating the appeal filed by the assessee.As far as the appeal of the AO is concerned,it is sufficient to say that effective ground of appeal has to be decided against AO.
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