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2016 (9) TMI 1276 - AT - Income TaxBogus purchases - AO has made an addition relying on the official website of the Sales Tax Department, Government of Maharashtra regarding suspicion parities providing accommodation entries - Held that:- In response to the show cause notice issued by the AO, the assessee has supplied copy of bills, cop of the bank statement to prove that payment made for purchases, and copy of ledger accounts of all eight parties. The assessee is an individual carrying on a proprietary business in the name of M/s Noble Construction Company, undertaking construction work of dams and canals on behalf of Government of Maharashtra in the interior part of the State. In the interior parts the goods are not available easily. The Government contracts are time barring contract and the work is required to be completed on time. Accordingly, when the material is required in emergency the telephonic orders are placed upon the parties who supply the materials at site. The corresponding consumption of materials in respect of which the purchases were affected by the assessee firm have not been doubted by ld. AO. Neither any document information has been provided by the AO nor he has given any opportunity to the assessee to cross examine the said party and AO has concluded that the purchases by assessee company from the said party is bogus merely on the basis of information from Sales Tax Department. The AO has not conducted any independent enquires for making the addition especially since the assessee has discharged its primary onus of showing books of account, payment by way of account payee cheque and producing bills for purchase of goods. From the record we found that the gross profit of the assessee has been consistently growing year after year which is depicted in the table below and which has been accepted by the Department. The accounts of the appellant were duly audited u/s 44AB of the Act and the same have not been rejected by AO. However from the above table it is evident that assessee has been declaring higher gross profit during the year under consideration as compared to the GP rate shown in earlier years. Thus we do not find any infirmity in the order of CIT(A) sustaining addition of ₹ 3 lakhs out of total purchases.
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