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2016 (8) TMI 1476 - HC - Income TaxBogus purchases - addition u/s 69C - Tribunal deleted the addition - HELD THAT:- Tribunal recorded a finding of fact that though the two suppliers, viz. M/s. P. Jitendra & Co. and M/s. P.R. Diamonds, from whom the assessee had purchased polished diamonds, had stated that they had issued bogus bills to the assessee, no evidence was brought on record to prove that the assessee had received cash back from the said parties. The assessee maintained books of accounts, which have been audited. The purchases made from these two parties have been duly entered in the stock record. The books of the said two suppliers have also been audited and the sales made to the assessee find place in their books of accounts as well. Further, the sales made by the assessee have not been rejected by the Assessing Officer and payment towards the exports have been received by the assessee through banking channel. AO has made disallowance u/s.69C of the Act. However, in our opinion, the same is erroneous since Section 69C is applicable to cases where the source of expenditure has not been explained by assessee. Even if we take the plea that assessee has incurred the expenditure, it is a case where the source of expenditure is duly explained as the payment for the purchases has been made by the assessee out of its bank account. Therefore, the Tribunal rightly concluded that provisions of Section 69C of the Act will not apply to the case on hand. - Decided against revenue.
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