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2022 (11) TMI 461 - AT - Income TaxAssessment u/s.153C - Additions towards purchases from unregistered dealers - As observed that when the survey was conducted u/s.133A of the Act, the AO cannot frame the assessment u/s.153C - HELD THAT:- In this case, there is no dispute with regard to the fact that absolutely there is no incriminating material was found during the course of search in the case of M/s.BGAL, which pertains to the assessee and which shows undisclosed income pertains to these assessment years. Therefore, we are of the considered view that the AO ought not to have made assessment u/s.153C of the Act, and made additions towards purchases made from unregistered dealers. The Ld.CIT(A) has rightly apprised the facts and held that the action of the AO in framing the assessment u/s.153C of the Act, was only survey u/s.133A of the Act, conducted is legally incorrect. Additions made towards purchases from unregistered dealers - The assessee has declared purchases made from unregistered dealers in the VAT returns filed for the respect month and paid relevant VAT on said purchases. The assessee had also made 90% of payments against said purchase through proper banking channel. Although, the assessee has made small portion of payment by cash in excess of prescribed limit, but in our considered view, payment made by the assessee does not hit by provisions of Sec.40A(3) of the Act, because, any payment made to a cottage industry is excluded u/r.6DD(f) of IT Rules. Therefore, we are of the considered view that the AO is erred in invoking the provisions of Sec.40A(3) of the Act, for payments made in cash in excess of prescribed limit, even though, the case of the assessee comes u/r.6DD(f) of IT Rules. As regards remaining purchases on which payment made through proper banking channel, the assessee had filed complete details including name and address of the person from whom purchase was made, payment details and also filed relevant VAT returns to prove that said purchases were declared to Commercial Tax Authorities and paid applicable VAT - additions made by the AO cannot be sustained. CIT(A) after considering relevant facts has rightly deleted additions made by the AO and thus, we are inclined to uphold the findings of the Ld.CIT(A) and dismiss the appeal filed by the Revenue.
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