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2020 (12) TMI 522 - AT - Income TaxHawala purchases - Addition on the basis of alleged statement given to sales tax department - non-response by the concerned suppliers to the notice of the AO - HELD THAT:- The assessee has duly submitted the purchase invoices and payments were also done through banking channel. It also noted that the assessee has done contract work and as per the contract specification assessee was required to provide materials and labour. No discussion whatsoever is there in the orders of the authorities below regarding the disallowance of the contact work executed by the assessee. In this view of the matter ratio from Hon'ble Bombay High Court in the case of Nikunj Eximp Enterprises P. Ltd. [2013 (1) TMI 88 - BOMBAY HIGH COURT] and several other case laws are applicable, that 100% disallowance in such cases is not permissible. Accordingly, assessee has done purchases from grey market. In our considered opinion 12.5% disallowance in this case would meet the end of justice. We direct accordingly. On similar reasoning we disallow 12.5% of the labour expenditure in this regard. Disallowance under section 40(a)(ia) - HELD THAT:- We note that this issue was also remanded by the learned CIT(A) to the AO, but we note that the Assessing Officer has not properly examined the issue. Accordingly, we remit this issue to the file of the Assessing Officer. The Assessing Officer is directed to consider the issue afresh after giving the assessee proper opportunity of being heard.
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