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2019 (8) TMI 540 - AT - Income TaxBogus purchases - Information from the Jaipur Investigation Wing was received that certain persons were issuing bogus bills and were charging 0.5% commission on the same - HELD THAT:- Investigation Wing has provided information to the A.O. that assessee made purchases from above two parties of ₹ 22,00,016/-, however, the actual purchases made by the assessee are of ₹ 17,45,000/- only. This fact is mentioned in the assessment order itself and Ld. CIT(A) also allowed the relief to the assessee to that extent. Therefore, the information provided by the Jaipur Investigation Wing was also doubtful. The right to rebut to such adverse material should have been provided to assessee for explanation of assessee. These facts are sufficient to hold that the material collected by Jaipur Investigation Wing cannot be used in evidence against the assessee. Further the assessee produced copies of the purchase bills, U.P. Trade Tax Department and bank statements to prove that purchases are made from these parties through purchase bills and through banking channel. All items of purchases have been declared to U.P. Trade Tax Department and in the declaration even the weight of the items have been mentioned. The A.O. did not make any investigation on the same and without any investigation disbelieved the documentary evidences produced on record. These facts are sufficient to prove the explanation of assessee that assessee made genuine purchases and such fact of purchase have also been mentioned in the quantitative details of the closing stock. We are of the view that there was no justification to consider the purchases made by the assessee to be bogus purchases. We, accordingly, set aside the Orders of the authorities below and delete the addition - Ground of appeal of assessee allowed. Penalty u/s 271(1)(c) - HELD THAT:- Since the addition on account of bogus purchases have been deleted which is the basis for levy of the penalty under section 271(1)(c) of the I.T. Act, we are of the view that no penalty is leviable against the assessee. In view of this, we set aside the Orders of the authorities below and cancel the penalty.
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