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2022 (6) TMI 903 - HC - Income TaxEstimation of income - Bogus purchases - CIT-A Directed the Assessing Officer to disallow 12.5% bogus purchases and to add 12.5% of the amount of purchases as income of the Appellant - ITAT deleted the addition - HELD THAT:- he argument advanced is that the bogus purchases ought to have been disallowed in totality. The learned counsel for the parties have placed before us the decisions of the Division Bench in the cases of Pr. Commissioner of Income Tax v. M/s.Mohommad Haji Adam & Co. [2019 (2) TMI 1632 - BOMBAY HIGH COURT] AND M/S. PARAMSHAKTI DISTRIBUTORS PVT. LTD. [2019 (7) TMI 838 - BOMBAY HIGH COURT] wherein as observed that if the factum of sales has been accepted by the Department then even if it is established that there were bogus purchases, it is not necessary that entire amount should be added to the income of the Assessee as there cannot be a sale without purchase. The facts of the present case are identical wherein the sales have been accepted. Therefore, in light of the aforesaid decisions first question of law does not survive for consideration. Addition u/s. 41(1) - cessation of liability - tribunal deleted the penalty - as per revenue the said liabilities were not payable as they stood barred by limitation - HELD THAT:- As decided in JAIN EXPORTS PVT. LTD. [2013 (5) TMI 690 - DELHI HIGH COURT] after following the decisions concluded that merely because the liability is barred by limitation, it does not cease to be a debt. This view is also taken by this Court in the case of CIT v. Indian Rayon and Industries Ltd. [2010 (3) TMI 299 - BOMBAY HIGH COURT] Therefore, the submission made by the Appellant that because the liability is barred by the period of limitation the same would be treated as income and added under section 41(1) of the Act cannot be accepted as no other decision contrary to the above is shown to us. Thus, the second question of law does not survive for consideration. Revenue appeal dismissed.
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