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2017 (10) TMI 64 - AT - Income TaxBogus purchases - addition u/s 69C - Held that:- AO added the entire amount of bogus purchases to the total income of the assessee and the assessee could not prove the genuineness of the purchases from the concerned parties by producing the necessary documentary evidences. The notices issued to the parties u/s 133(6) were returned unserved. CIT(A) deleted the addition to the extent of 90% of the bogus purchases. We further noticed that the AO during the assessment proceedings accepted the sales which were made out of the hawala purchases. In a case where the assessee obtains bogus bills, the purchase are generally made from grey market and the assessee saves in the form of non payment of VAT and other incidental levies. Addition has be made on percentage basis in order to cover the leakages of revenue in such cases which the ld. CIT(A) has rightly done. Therefore, order passed by the CIT(A) sustaining the addition to the extent of 10% of bogus purchases to recover the revenue leakages is correct and needed to be upheld. We, therefore, inclined to confirm the order of CIT(A) by dismissing the appeal of the assessee. Levy of penalty u/s 271A - default committed u/s 44A - Held that:- In the present case, we find that the auditor of the company have not made any adverse comments on the books of account maintained by the assessee and duly certified the books of the assessee. Under these circumstances, we are not in agreement with the conclusion drawn by the CIT(A) that the penalty u/s 271A is rightly imposed by the AO. We hold that the CIT(A) has wrongly upheld the order of the AO. Therefore, we set aside the same and direct the AO to delete the penalty. Resultantly the appeal of the assessee is allowed.
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