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2020 (7) TMI 836 - AT - Income TaxBogus purchase - information of Sales Tax Department and consequential disallowance of freight and lorry hire charges - HELD THAT:- No reason to come to a conclusion that the purchases in this case of an intermediary are fake or bogus. We find that all the parties in question are registered with the VAT Authorities and that payments have been made through cheques. Except for the fact that the assessee could not be found by the Inspector of the Income Tax Department for service of notice and the mention by the Sales tax Authorities that there is mis-match in the numbers of trucks and that some are non-transport trucks, the revenue has no evidence whatsoever to support this disallowance. When one to one reconciliation of purchase and sales is made by the assessee, no disallowance can be made. Quantitative reconciliation of stock is not challenged by the Revenue. Hence, in view of the above discussion, we delete the addition made on account of bogus purchases. Consequently, the disallowance made on account of transport payments are also deleted. Rejection of the books of the accounts by the AO - HELD THAT:- We find that the AO his order rejected the books of accounts for the sole reason that he came to the conclusion that the purchases were bogus. As we have held otherwise, the rejection of books of accounts by the Assessing Officer is bad in law. Even otherwise, we find that though the Assessing Officer rejected the books of accounts, the entire assessment has been based on these very books of accounts only. Thus we allow Ground No. 4 of the assessee.
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