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2019 (8) TMI 1772 - AT - Income TaxEstimation of income - unexplained purchases - HELD THAT:- The assessee produced complete details before the authorities below in which no deficiency have been pointed-out. The assessee need not to prove source of the source i.e., purchase made by the purchaser parties i.e., Damor concerns. The assessee also established common practice in Textile Sector in Surat for supply of goods at door step of consumer. Thus, the initial burden upon assessee to prove the genuine purchases have been discharged by assessee. The assessee has fully discharged its onus of proving the purchases by giving names, addresses, confirmation, PAN, bills and invoices, details of payment by account payee cheques, ITRs and Audit reports of its suppliers. Merely because further suppliers to Damor family did not respond to the notice of the assessing officer is no ground to reject the explanation of assessee. Since in the case of assessee no incriminating material was found to prove bogus purchases, therefore, the decision in the case of M/s. N.K. Proteins Limited [2017 (1) TMI 1090 - SC ORDER] would not apply. We do not find it to be a fit case where even gross profit rate of 5% be applied against the assessee as per Judgment of Hon’ble Gujarat High Court in the case of Mayank Diamonds Pvt. Ltd., [2014 (11) TMI 812 - GUJARAT HIGH COURT] - In view of the above discussion, we set aside the Orders of the authorities below and delete the entire addition. - Decided in favour of assessee. Disallowance u/s 14A - AO disallowed proportionate interest expenses under Rule 8D - assessee submitted before assessing officer that there is no exempted income earned during the year and, therefore, the disallowance made by the assessing officer is wholly erroneous - HELD THAT:- It is clear that since assessee has not earned any exempt income during assessment year under appeal, therefore, there is no question of applicability of provisions of Section 14A of the I.T. Act in the matter. Similarly, in the case of Cheminvest Ltd. [2015 (9) TMI 238 - DELHI HIGH COURT] held that “when no exempt income received or receivable in assessment year under appeal, no disallowance under section 14A is required.” In view of the above legal proposition, we set aside the Orders of the authorities below and delete the entire addition. - Decided in favour of assessee. Disallowance on account of claims of bad debts - HELD THAT:- It is not in dispute that the amount in question claimed as bad debt is written-off as irrecoverable in the accounts of the assessee. Therefore, issue is covered by the Judgment of Hon’ble Supreme Court in the case of TRF Limited [2010 (2) TMI 211 - SUPREME COURT]. In view of the facts explained by Learned Counsel for the Assessee which are not controverted by Ld. D.R. in the light of Judgment of Hon’ble Supreme Court in the case of TRF Limited (supra), we set aside the Orders of the authorities below and delete the entire addition.
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