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2015 (7) TMI 160 - AT - Income TaxDisallowance of 50% of the so called bogus purchases - Held that:- The payments have been made by account payee cheques. The suppliers have confirmed to have supplied the goods in response to the notice issued u/s.133(6). The assessee has produced third party evidences such as gate receipts of the respective companies certifying the receipt of goods in their premises. The companies where the assessee has executed the work are well known reputed companies and without the work carried out at their site they would not have made the payment to the assessee. Further, although it is the allegation of the AO that huge cash was withdrawn after the cheques were deposited, however, there is no evidence whatsoever to show that the money has come back to the assessee in some form or other. Even during the course of survey at the premises of the assessee, no incriminating materials were found to show that assessee was involved in accommodation entries. No excess cash was found. Further, the assessee has maintained proper books of accounts. The goods purchased have entered into the books of account and material consumed have also been entered into the books of account giving the quantitative details. Perusal of the orders of the authorities below and the rival submissions made by both the sides indicate that while the entire purchases cannot be treated as bogus, at the same time the entire purchases also cannot be allowed as genuine. If we allow such type of transactions as genuine it will be against assessees who meticulously maintain full records, produce the parties before the AO on being directed and produce the necessary details to substantiate their transactions. We therefore agree with the finding given by the Ld.CIT(A) that there are strengths and weaknesses in the evidences and the arguments of both the sides and it is not possible to hold either the AO or the assessee as fully correct in their claims. From the various details furnished by the assessee we find the assessee has given site-wise profitability statement vis-à-vis the disallowance made by the AO if the addition so sustained by the AO is accepted, then the GP rate in 2 cases is above 99%, in one case it is about 98%, in 2 cases it is almost 93% and in 1 case it is 95% which appears to be absurd as compared to assessees engaged in similar line of business. Considering the totality of the facts of the case, we are of the considered opinion that disallowance of lumpsum amount of ₹ 75 Lakhs (Rupees Seventy Five Lakhs only) for A.Y. 2007-08 and ₹ 50 lakhs (Rupees Fifty Lakhs only) for A.Y. 2008-09 as against disallowance of ₹ 7.12 crores in A.Y. 2007-08 and ₹ 2.48 crores in A.Y. 2008-09 by the AO will meet the ends of justice. - Decided in favour of assessee partly.
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