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2018 (10) TMI 496 - AT - Income TaxBogus purchases - assessee could not conclusively substantiate the purchases made - Held that:- There could be no sale without actual purchase of material since the assessee was engaged in contract work. The sales turnover achieved by the assessee has not been disputed by the revenue and the payments were through banking channels. The assessee was in possession of primary purchases documents. The assessee could not conclusively substantiate the purchases made by him and failed to produce any of the party to confirm the transactions. The delivery of the material could not be substantiated and even the quantitative details could not be provided by the assessee. All these factors cast a serious doubt on assessee’s claim. Therefore, in such a situation, the addition, which could be made, was to account for profit element embedded in these purchase transactions to factorize for profit earned by assessee against possible purchase of material in the grey market and undue benefit of VAT against such bogus purchases. Therefore, we estimate the same @12.5% of alleged bogus purchases of ₹ 65.99 Lacs which comes to ₹ 8.25 Lacs. The balance additions stand deleted. The grounds and the appeal stand partly allowed. Commission Expenditure - assessee claimed the aforesaid expenditure as commission payment to an entity namely Corporate Alliances - Held that:- AR has submitted that the commission has been paid against independent professional services rendered by the said entity to the assessee and the same was not merely in the nature of liasioning services. Our attention has been drawn to the profile of the said entity to submit that it was independent professional entity and was not merely acting as an agent of the assessee. The supporting documents in the shape of invoices, agreement, engagement letter etc. have been placed on record. It is also noted that similar additions made by Ld. AO in AY 2009-10 has been deleted by Ld. first appellate authority, finding substance in assessee’s claim. Therefore finding strength in the arguments of Ld. AR, the issue stand remitted back to the file of Ld. AO for re-adjudication - The ground stand allowed for statistical purposes. Addition u/s 28(iv) - AR has pleaded to admission of additional evidences in terms of Rule 29 of the Income Tax Tribunal Rules, 1963 vide application dated 18/09/2018 - Held that:- These evidences are in the shape of ledger accounts of the four sundry creditors to demonstrate that the liabilities have subsequently been discharged by the assessee by way of bank payments. These evidences, if found authenticated and admissible, would run contrary to the findings of Ld. AO. Therefore, while admitting the same, this issue is also restored to the file of Ld. AO for adjudication in the light of additional evidences submitted before us. The requisite information / explanation /other evidences, in this regard, shall be adduced by the assessee before Ld. AO. - Ground allowed for statistical purposes.
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