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2017 (11) TMI 1138 - AT - Income TaxDisallowance u/s 69C on account unexplained purchases - CIT-A restricting the disallowance to 15% against the peak credit made by AO detected during the course of survey u/s 133A of the Act - Held that:- Admittedly, there cannot be sale without purchases. Admittedly, in such type of cases, there is no option but to estimate the profit which depends upon the subjective/objective approach of an individual and the material facts available on record. In the appeal for Assessment Year 2007-08, the Ld. Assessing Officer disallowed ₹ 23,34,801/- on account of alleged bogus purchases by invoking the provisions of section 69C of the Act on the plea that the assessee could not substantiate the genuineness of the purchases and thus the income was assessed at ₹ 1,15,53,461/-. Likewise, for Assessment Year 2008-09, the income was assessed at ₹ 1,27,79,350/- and for Assessment Year 2009-10, it was assessed at ₹ 4,25,21,584/-. For Assessment Year 2010-11, the income was assessed at ₹ 6,31,87,980/-. The Ld. Assessing Officer took the year-wise peak credit as has been mentioned in the respective assessment order. It is noted that while adjudicating the issue, the Ld. Commissioner of Income Tax (Appeal) sought remand report from the Ld. Assessing Officer and the same was duly considered. Admittedly, the necessary documents just like purchase bills, sale invoices, process flow chart, contract agreements, inspection notes inward and outward register of the material and the disputed purchases were debited to sewage treatment plant and the authenticity of the documents was not disputed by the Ld. Assessing Officer. Thus, we find no infirmity in the conclusion of the Ld. Commissioner of Income Tax (Appeal), because, the assessee has proved consumption, consequently, this ground of the Revenue is without any merit, therefore, dismissed. Allow deduction u/s 80IA of the Act in respect of addition made u/s 69C - Crux of arguments on behalf of the assessee is that any disallowance of purchases made in the assessment order would increase in profit and gains eligible business as a result of which the assessee would be entitle to claim the increased deduction u/s 80IA(4)- Held that:- We find that finally, the Assessing Officer was directed to re-compute the profit and gains of STP Unit. We may add here that considering the language of section 80IA, the Ld. Assessing Officer is directed to examine the factual matrix and also whether the assessee has satisfied/fulfilled the conditions enumerated in the section then decide in accordance with law. This ground of the Revenue is allowed for statistical purposes.
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