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2012 (10) TMI 517 - AT - Income TaxUnexplained purchase u/s 69C - disallowance of 100% of expenditure and depreciation - CIT(A) deleted the addition - Held that:- As decided in COMMISSIONER OF INCOME TAX-V Versus M/S RADHIKA CREATION [2010 (4) TMI 100 - DELHI HIGH COURT] Section 69C clearly refers to the “source of the expenditure” and not to the expenditure itself - No material as such was found during the search and seizure operations and it is only in the special audit directed by the Assessing Officer, who was unable to find any material at the time of search, that the authenticity of the expenditures were doubted. In this case the fact that all the sales made by the assessee stood recorded in the assessee’s books of account, which included the sales and purchase vouchers and stock registers maintained by the assessee on a day-to-day basis. These books of account were duly produced before the AO who examined them, on examination, no negative observation thereagainst was recorded. Most of the customers were assessed to income-tax. Sales were made against the opening stock. The purchases made during the year and the sales were but conversion of stock. The profit therefrom had already been taxed. The sale transactions were got confirmed by the Assessing Officer on a test check basis but more inquiries were made - Thus source of the expenditure incurred in purchases is obviously explained - Decided in favour of assessee.
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