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2015 (7) TMI 528 - AT - Income TaxAddition on account of bogus purchases - CIT(A)deleted the addition - Held that:- No defects have been found in the stock register nor any defects have been pointed out by the A.O. in the audited books of accounts maintained by the assessee. Despite search and seizure no adverse material was found to substantiate the disallowance made by the A.O. The so called spot enquiry done by the Inspector has no credence as no details have been filed before us, nor was the assessee confronted with the manner in which spot enquiry was conducted, the persons who conducted the spot enquiry or the material gathered by the Revenue in the spot enquiry. Thus the Revenue cannot place reliance on this enquiry. The purchases which are disallowed relate to cement and steel which are essential for the purpose of construction. No enquiries are made with the banks, other statutory authorities on the identity of the parties. Details such as whether sales tax authorities have accepted the quantum of purchases made by the assessee have not been obtained Identity could be ascertained by the AO, both from the banker and the sales tax authorities. Under the circumstances we have to uphold the contentions of the assessee, that the finding of the AO, that the assessee has not furnished full details, is factually in correct. Coming to the identity of the parties we find that all the parties are registered with sales tax department and have charged VAT in each of the bills. All these parties have bank accounts and payments were made through account payee cheques. Evidence of material having been received by the assessee, has been filed. As regards the fact that the assessee was not able to produce the parties, we agree with the contentions of the assessee that non production of the parties cannot be a ground of disallowance of all the purchases as the persons from whom purchases are made could not always be in the control of the assessee, specifically when they are unrelated parties and volume and quality of evidence produced by the assessee is such that non production of the party from whom the assessee purchased cannot lead to a conclusion that the purchases are not genuine. Thus we uphold the finding of the Ld.CIT(A) on the deletion of the disallowance which was treated as bogus purchases by the A.O - Decided in favour of assessee. G.P. addition - Rejection of books - Held that:- As no defects have been pointed out in the books of accounts, we uphold the contentions of the assessee and vacate the finding of the Ld.CIT(A) on estimation of gross profit. The direction given to the AO to recompute the assessee’s gross profit @ 27% instead of at 16% is hereby vacated and this ground of the assessee is allowed. - Decided in favour of assessee.
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