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2016 (8) TMI 59 - AT - Income TaxAddition u/s 69C - source of the expenditure - purchase of goods - accommodation entries - Held that:- Section 69C of the Act stipulates that the deemed income(where the source of the expenditure is not explained)cannot be allowed as a deduction under any head of income. In other words, even if the assessee can justify the expenditure, but cannot explain its source, the section disentitles him from claiming a deduction on the deemed income under any head of income. In short, what is postulated in section 69C of the Act is that first of all the assessee must have incurred that expenditure and thereafter, if the explanation offered by the assessee about the source of such expenditure is not found satisfactory by the AO, the amount may be added to his income. In the case before us, expenditure has been incurred for purchasing goods and the assessee had explained the sources. It is not the case of expenditure that was incurred by the it was not entered in the books of accounts. The AO has nowhere held that as to how the explanation offered by the assessee about the source of the expenditure was unsatisfactory. Therefore, in our opinion, the AO had wrongly invoked the provisions of the section 69C of the Act. Considering the above, effective GOA, raised by the AO is decided against him. - Decided in favour of assessee
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