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2017 (10) TMI 876 - ITAT DELHIAddition being 11% of the business expenditure u/s. 69 - Held that:- Assessing Officer has not brought on record any reasons for inclusion of manufacturing expenses which include fabrication and embroidery expenses and wages for working out the percentage of disallowance. There is not even a whisper as to why the Assessing Officer has chosen to include these expenses for making the disallowance. In the absence of reasons or any justification for disbelieving the genuineness of the manufacturing expenses, we are of the view that there is no basis for including the sum of ₹ 173.82 lacs for disallowance, the inclusion of manufacturing expenses in the disallowance. Keeping in view of the facts and circumstances of the case, we are of the view that there is no need to interfere in the impugned order on this issue, hence we uphold the same. With regard to the bogus purchases it is a fact that the purchases are hypothecated with the bank and in the absence of purchases i.e. stock, the banker would generally not give the loan to the appellant. The existence of Shri Anil Nagpal. proprietor of M/s Baba Finishers has also been adequately proved, in view of his physical presence before me as also the particulars of Permanent Account Number card and passport shown to me. That Shri Anil Nagpal is an Incometax assessee and has filed his Income-tax returns is also an undisputed fact. For the relevant year, his balance sheet, profit and loss accounts disclose transactions with the appellant company. In the light of these evidences, the appellant has satisfactorily discharged its onus of proving that the purchases made from the two parties were genuine and were liable for deduction under section 37(1) of the Income-tax Act. The Assessing Officer on the other hand has not been able to rebut the evidences Finished by the assessee. The Inspectors report stating the non-existence of E-64, Chankaya Palace, Janak Puri, New Delhi has been adequately rebutted by the evidences Finished by the Ld. Counsel as discussed above which prove the existence of E-64, Chankaya Palace, Janak Puri, New Delhi and the carrying of the business by Shri Anil Nagpal. Thus it was held that the address has satisfactorily discharged its onus and the Assessing Officer has failed to make out a justifiable case for disallowance of 11.77% of the consumables as bogus/inflated or unproved. As above, it has been already held that the inclusion of manufacturing expenses for determining the disallowance was totally unjustified. In effect it was rightly held there is no case for making the disallowance of ₹ 1,90,25 OO. Therefore, the disallowance made by the Assessing Officer was rightly deleted, which does not need any interference on our part. Appeal of the Revenue is dismissed.
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