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2021 (2) TMI 533 - AT - Income TaxBogus purchases - No opportunity to the assessee to cross examine those parties - HELD THAT:- Assessee is indulged in submitting bogus purchases in order to reduce the profit margin against the sales made by them. It is fact on record that AO has not doubted the sales transactions and AO has disallowed the purchase from the above said 2 parties. Considering the facts that they have not made any sales to the assessee, however assessee has filed copy of the purchases, which are placed on record, AO should have given opportunity to the assessee to cross examine those parties. Since assessee has made a plea before Ld. CIT(A) and Ld. CIT(A) should have given an opportunity or adjudicate on this issue. Therefore, for the sake of natural justice, we are inclined to sustain the addition @ 6% similar to the other alleged purchases. Addition of labour charges - HELD THAT:- We notice that AO has made a general comment on this expenditure that these were not verifiable independently and made disallowance on adhoc basic with observation that assessee has self made vouchers and incurred expenditure in cash. It is the duty of the AO to verify the vouchers and check that whether this expenditure was actually incurred for the purpose of business or not. If it is not, he cannot proceed to disallow on adhoc basis without there being any reason. Therefore, we are inclined to treat the whole expenditure as incurred for the purpose of business. Accordingly, ground no. 2 raised by the assessee is allowed. Addition of 10% of the motor car expenses since there is no record on utilization of the vehicle - HELD THAT:- Ld. CIT(A) has already given substantial relief and reasonable. Therefore, we see no reason to grant any further relief to the assessee. Accordingly, ground no. 3 raised by assessee is dismissed.
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