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2017 (3) TMI 813 - ITAT MUMBAIBogus purchases - Held that:- The assessee has failed to place on record any material evidence to controvert the findings of the learned CIT(A). In this view of the matter, we uphold the order of the CIT(A) on these issues of deleting the addition made on account of consideration for bogus purchases and in bringing to tax in the assessee’s hands the profits embedded in the bogus purchases @ of 12.5% of the cost of the said purchases amounting to ₹ 28,07,058/- since the direct one to one relationship /nexus between the said purchases and utilisation thereof have not been established by the assessee either before us or the learned CIT(A). Addition under section 41(1) - Held that:- In the case on hand, admittedly there were 25 creditors of the assessee to whom ₹ 1,52,29,070/- was outstanding for more than three years and in some cases 8-9 years. According to the assessee, it was unable to pay these creditors due to certain liquidity problems, but the said amounts were undoubtedly acknowledged by the assessee as payable to these parties as reflected in its Balance Sheet as on 31.03.2011. It is seen that many of the creditors had also initiated legal proceedings for recovery of their outstanding amounts and in some cases there was disputes as to the amounts payable/receivable. In our view, in this factual matrix of the case on hand it is clear that it was neither a case of cessation nor remission of liability and therefore the AO had wrongly invoked the provisions of section 41(1) of the Act. Prior period expenses - Held that:- No reason to interfere with the finding rendered by the learned CIT(A) in allowing the assessee’s claim for allowing its claim of prior period expenses as the appellant's business of construction and this has to be treated as normal business practice which appellant was following in the earlier years
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