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2017 (9) TMI 1404 - AT - Income TaxBogus purchases - proof of genuineness of purchases - Held that:- Basic precondition for invoking the section 69C is that the expenditure incurred by the assessee should be out of books of accounts. Here, the payments to the suppliers, as stated earlier, have been made by cheques. So, it cannot be held that expenses were incurred by the assessee outside the books of accounts. Section 69C was introduced in to the statute with a specific purpose. A bare reading of the section makes it clear that if the assessee incurred any expenditure, but offered no explanation about the source of such expenditure or part thereof, or the explanation so offered is not satisfactory, such expenditure may be deemed to be the income of the assessee. We hold that the FAA was not justified in confirming the order of the AO partly and retaining the addition to the extent of 25% of the sales. The orders of the AO and FAA are not valid because of violation of principles of natural justice. Besides, the addition made u/s. 69C is also not maintainable. So, reversing the order of the FAA, we decide the effective ground of appeal in favour of the assessee.
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