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2021 (7) TMI 285 - AT - Income TaxEstimation of income - Bogus purchases - HELD THAT:- Since, in the instant case, the sale of the assessee has not been disturbed by the AO, treating the same as bogus, therefore, the entire bogus purchase could not have been added to the total income of the assessee. Since the assessee has already declared profit on account of sales against such bogus purchases which is more than the GP rate declared by the assessee at 1%, therefore, on this count also no addition is called for in the instant case. If the AO treats the purchase as bogus, then, the sales also is bogus and since such bogus purchase has been sold at a price higher than cost of such bogus purchase and the assessee has already offered income out of such bogus purchases, therefore, in our opinion, no separate addition on account of such bogus purchase is called for especially in absence of any incriminating material found during the course of search for the impugned assessment year. In this view of the matter, we set aside the order of the CIT(A) and direct the AO to delete the addition. Disallowance u/s 14A - HELD THAT:- As in the case of Cheminvest [2015 (9) TMI 238 - DELHI HIGH COURT] has held that no disallowance u/s 14A can be made in a year in which no exempt income has been earned or received by the assessee. Similar view has been taken in the case of PCIT vs. Oil Industries Development Board, [2018 (2) TMI 1861 - DELHI HIGH COURT] and in various other decisions relied on by the assessee. Since, admittedly, the assessee in the instant case has not received any dividend income during the year, a fact stated before the lower authorities and not controverted by them, we are of the considered opinion that no disallowance u/s 14A is called for. The order of the CIT(A) on this issue is accordingly set aside and the grounds raised by the assessee are allowed.
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