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2015 (12) TMI 1177 - AT - Income TaxAddition made under the head ‘bogus purchase’ - CIT(A) deleted the addition - whether where sale is genuine, purchase cannot be bogus, whereas no stock register and quantity wise details of purchase and sale is not available? - Held that:- It is clear from the order of the CIT(A) and the evidence on record that there was no valid basis to treat the entire purchases as bogus as was done by the AO. If purchases are being disallowed to the extent of ₹ 10,14,942/- what will happen to the corresponding sales being shown. The CIT(A) therefore was right in concluding that the A.O. was not justified in considering the entire purchases as bogus from these nine parties. The fact that the other parties avoided notices u/s. 133(6) of the Act could be because they were not disclosing sales made to the Assessee in their books of accounts. The AO at best could have rejected the books and estimated income of the assessee but he has not done so. Treating the entire purchases as bogus and making addition would result in absurd results in that the entire sale proceeds would get taxed as income. In the given facts and circumstances of the case, the addition made was rightly deleted by the CIT(A). We find no ground to interfere with the order of the CIT(A). - Decided against revenue Addition u/s.41(1) as cessation of liability - CIT(A) deleted the addition - Held that:- There was no evidence to show cessation of liability. Assessee still shows the liability in its books of accounts which itself is primafacie evidence that the liability exists.The transaction of purchase, if regarded as bogus then there is no liability in law and hence the question of applying section 41(1) will not arise for consideration.The sums in question has been repaid in the subsequent assessment years, thereby rendering the theory of cessation of liability not sustainable. - Decided against revenue
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