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2018 (5) TMI 2106 - AT - Income TaxBogus purchases - as per DR two companies are only issuing accommodating entries without there being actual sale and therefore, the AO was justified in disallowing the bogus purchases - HELD THAT:- As assessee has made the payments to the parties through banking channels and therefore, the party was rightly identified. Further, the assessee has made the sales of these items and offered the income therefrom to tax. Once the Department accepts the sale, it cannot disallow the corresponding purchases. When all the documents were on the file of the AO, he ought to have verified the genuineness of the sale instead of depending solely on the statement of the Rajendra Jain Group. In view of the same, we deem it fit and proper to remit the issue to the file of the AO for verification of the documents filed by the assessee and if it is found that the payment has been made by the assessee through banking channels and the purchases and sales have also been recorded in the books and the net profit has been offered to tax, then there cannot be any disallowance of the purchases. Appeal of the assessee is treated as allowed for statistical purposes.
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