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2017 (12) TMI 1412 - AT - Income TaxAddition on account of bogus liabilities - Held that:- The existence of the liability appearing in the name of M/s. Subir Shellac Enterprise thus was duly established by the assessee by filing the relevant documentary evidence and the addition made by the Assessing Officer by treating the same as bogus liability merely on the basis of reply received from the said party in response to the letter issued under section 133(6), wherein the amount of purchases alone was confirmed in the said party, in our opinion, was rightly deleted by the ld. CIT(Appeals). We, therefore, uphold the impugned order of the ld. CIT(Appeals) giving relief to the assessee on this issue and dismiss Ground No. 1 of the Revenue’s appeal. Addition on account of cash purchases by treating the same as unproved - Held that:- No discrepancy whatsoever was pointed out by the Assessing Officer in the books of account of the assessee, the ld. CIT(Appeals) deleted the addition of ₹ 20,00,000/- made by the Assessing Officer by way of disallowance of cash purchases holding the same to be not maintainable. At the time of hearing before us, the ld. D.R. has not been able to rebut or controvert the findings of fact recorded by the ld. CIT(Appeals) while giving relief to the assessee on this issue. We, therefore, find no justifiable reason to interfere with the impugned order of the ld. CIT(Appeals) giving relief to the assessee on this issue and upholding the same, we dismiss Ground No. 2 of the Revenue’s appeal. Disallowance of alleged cash purchases - Held that:- Some disallowance on estimated basis is required to be made on account of the said purchases for the unverifiable element involved therein. Having regard to all the relevant facts of the case including the fact that the goods purchased by the assessee are in the nature of forest produce and the assessee has finally declared substantial loss, we are of the view that it would be fair and reasonable to make such disallowance to the extent of 10% of the purchases. We accordingly modify the impugned order of the ld. CIT(Appeals) on this issue and sustain the disallowance of ₹ 90,60,200/- made by the Assessing Officer to the extent of ₹ 9,06,020/-. Ground No. 3 of the Revenue’s appeal is thus partly allowed.
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