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2023 (3) TMI 1204 - AT - Income TaxEstimation of income - Bogus purchases - CIT-A sustained the addition to the extent of 20% of the additions made by the AO - HELD THAT:- Disallowance made by the ld. CIT(A) is merely ad hoc in nature. Sales/gross receipts are not disputed at any stage and for achieving the same assessee needs to incur expenditure. It is also brought to our notice that for assessment year 2008-09 in assessee’s own case [2015 (11) TMI 1887 - ITAT KOLKATA] similar type of disallowances of the purchases and expenses were made and this Tribunal after considering the facts of the case, regularly books of account maintained by the assessee, deleted the said disallowances We find that the assessee has shown a better net profit rate during the year which is 3.03% as compared to the net profit rate of 0.5% in the immediately preceding financial year which was also subjected to scrutiny proceedings and duly assessed u/s 143(3) of the Act. Also the subsequent assessment year was also subjected to scrutiny assessment and the Assessing Officer in the assessment order u/s 143(3) has examined the books of account of the assessee and accepted the net profit percentage of 2.39%. AO was not justified in making the addition towards bogus purchase and towards bogus expenditure. We hold that ld. CIT(A) erred in sustaining the addition by making ad hoc disallowance without specifying any defect in the books of accounts and records maintained by the assessee. We thus set aside the findings of the ld. CIT(A) sustaining ad hoc disallowance and delete the total additions made by the AO. Thus, grounds of appeal raised by the assessee are allowed and that of the Revenue are dismissed.
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