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2019 (11) TMI 641 - AT - Income TaxBogus purchases u/s 69C - HELD THAT:- AO has found that parties from whom the assessee has made purchases were not existed at the given addresses and the assessee also could not produce those parties for verification and also could not provide their current location and addresses. Even the notices issued u/s. 133(6) by the assessing officer could not be served on the addresses given as per the bills produced by the assessee. CIT(A) has given a substantial relief to the assessee on the ground that sale of gold jewelry items were reflected in the P & L account and the addition of entire purchases cannot be made. CIT(A)’s decision to restrict the disallowance to 10% of such purchases on the reasoning that assessee has earned extra profit from the purchases made from un-registered parties is justified. Therefore, we do not find any merit in the appeal of the assessee and the same is dismissed. Disallowance out of interest - HELD THAT:- As counsel has contended that during the course of assessment proceedings vide letter dated 22-04-2010 the details of interest free fund along with copies of ledger account placed in the paper book from serial no. 76 to 90 were submitted and the same were not considered by the assessing officer and CIT(A) before deciding this issue. We have observed that the assessee has submitted such details of interest free funds from Aryavati Impax Pvt. Ltd., Aravati Commodity Pvt. Ltd. and other parties with complete detail of bank account and date of transactions. These undisputed facts were not contradicted by the assessing officer and ld. CIT(A), therefore, the decision of ld. CIT(A) is not justified. Disallowance u/s.14A - HELD THAT:- During the course of appellate proceedings, the ld. counsel has placed reliance on the decision of Hon’ble Jurisdictional High Court of Gujarat in the case of Corrtech Energy Pvt. Ltd. [2014 (3) TMI 856 - GUJARAT HIGH COURT] wherein it is held if no exempt income is earned then no disallowance can be made u/s. 14A of the act. Respectfully following the decision of Hon’ble Gujarat High Court, we consider that the decision of ld. CIT(A) in sustaining the addition in respect of fact that no exempt income was earned is not justified , therefore, the appeal of the assessee is allowed on this issue. Addition to closing stock u/s. 145A - HELD THAT:- We consider that assessee has consistently followed the exclusive method and VAT was not debited as expenses in the P & L account and these facts were not contradicted by the lower authorities. Therefore, the appeal of the assessee on this issue is allowed.
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