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2018 (5) TMI 338 - AT - Income TaxAddition of 25% of the total amount of bogus purchases - Held that:- Assessee has engaged into dealings in the grey market. Dealings in the grey market give the assessee various savings at the expense of the Exchequer. Hence, on the overall consideration of facts and circumstances and following the decision in the case of CIT vs Simit P. Sheth [2013 (10) TMI 1028 - GUJARAT HIGH COURT] we hold that a disallowance of 12.5% of the bogus purchase would meet the end of justice - Decided partly in favour of assessee Addition on account of excess interest paid to the related parties on the borrowings - Held that:- AO has not pointed out any evidence to establish that the interest rate paid was excessive, there is no justification of reducing the interest to 12%. CIT (A) ought to have deleted the addition. We, therefore, find merit in the argument of the Ld. counsel that the Ld. CIT (A) has wrongly confirmed the addition made by the AO. In our considered opinion, the finding of the Ld. CIT (A) is not based on any evidence on record. We therefore, set aside the findings of the Ld. CIT (A) and delete the addition and direct the AO to delete the addition of ₹ 54,000/- made on account of interest expenses. Addition of 20% of the total amount of expenses claimed by the assessee - Held that:- AO has pointed out that entries in the ledger are not supported by any bills or vouchers. The assessee had even not maintained the log book for the vehicles. The AO has further pointed out that in all these expenses personal element involved cannot be ruled out. Since, the assessee has failed to substantiate its claim by adducing corroborative evidence, the Ld. CIT (A) has rightly confirmed the disallowance to the extent of 20% on the expenses claimed. Hence, we do not find any infirmity in the findings of the Ld. CIT (A). We therefore uphold the findings of the Ld. CIT (A) and dismiss this ground of appeal of the assessee.
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