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2022 (9) TMI 706 - AT - Income TaxEstimation of income - Unproved purchases - Addition on account of purchases by way of bogus bills - Addition is restricted to 12.5% of disputed purchases - HELD THAT:- It is evident that the AO has not raised any doubt regarding the above claim of the assessee. Further, it cannot be doubted that without the purchase of construction material the construction activity as claimed to be restarted by the assessee cannot be carried out. It appears to be a case of bogus bills arranged from aforesaid entity and construction material purchase from somewhere else at low cost. Entire bogus purchases cannot be added in such a suggestion. Considering the business activities of the assessee and the nature of material purchased from the hawala dealers, we are of the view that a reasonable disallowance of the purchases would meet the possibility of revenue leakage. Addition as restricted to 12.5% of disputed purchases - We find that the same is in line with the judgment of Hon‟ble jurisdictional High Court in PCIT vs Paramshakti Distributors Ltd. [2019 (7) TMI 838 - BOMBAY HIGH COURT]. Apart from the ledger account of M/s Sai International Impex in books of assessee, no other evidence is brought on record to support the assessee’s claim that purchases were only to an extent from the said entity and accordingly, plea of the assessee is rejected in this regard. Therefore, we direct the AO to restrict the addition to 12.5% of alleged bogus purchases. As a result, the sole ground raised in present appeal is partly allowed. Addition on account of insurance payment on the policy of the Directors - CIT(A) held that such payment is the personal liability of the Director and therefore, cannot be said to have been incurred wholly and exclusively for the purpose of the construction business of the assessee and thus not allowable under section 37(1) - HELD THAT:- - Considering the material available on record, we find no infirmity in the impugned order passed by the CIT(A) on this issue. As a result, ground no.2, raised in assessee’s appeal, is dismissed.
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