TMI Blog2018 (1) TMI 1293X X X X Extracts X X X X X X X X Extracts X X X X ..... e return of income filed for the relevant assessment year. Since the aforesaid claim of the assessee requires factual verification and the assessee has to bring proper evidence on record to prove its claim, we restore the issue to the file of the Assessing Officer for fresh adjudication after due opportunity of being heard to the assessee. In case assessee’s claim that the recipients have offered the interest paid to them as income in the relevant assessment year is found to be correct, no disallowance under section.40(a)(ia) should be made. With the aforesaid observations, the ground is allowed for statistical purposes. Addition on account of bogus purchases - quantum of disallowance to be made out of bogus purchases - Held that:- It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educted tax at source while making such payment. He therefore, called upon the assessee to explain why the interest paid should not be disallowed under section.40(a)(ia) of the Act. 5. In reply, though, the assessee justified its action in not deducting tax at source on the interest paid, however, the Assessing Officer rejecting the explanation of the assessee, disallowed an amount of ₹.49,18,527/ under section.40(a)(ia) of the Act. The disallowance made by the Assessing Officer was also sustained by the First Appellate Authority. 6. The ld. Authorized Representative submitted before us, the payees/ recipients of interest paid by the assessee have included the amount in computing their taxable income, therefore, as per second p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of the Act, the onus is on the assessee to demonstrate through documentary evidence that the recipients have offered the amount paid to them, without deducting tax at source, as income in the return of income filed for the relevant assessment year. 11. Since the aforesaid claim of the assessee requires factual verification and the assessee has to bring proper evidence on record to prove its claim, we restore the issue to the file of the Assessing Officer for fresh adjudication after due opportunity of being heard to the assessee. In case assessee s claim that the recipients have offered the interest paid to them as income in the relevant assessment year is found to be correct, no disallowance under section.40(a)(ia) should be made. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of purchases is doubtful the profit element embedded in such purchases can be considered for addition. Accordingly, he quantified the disallowance at 20% of the alleged bogus purchases. 16. The only submission by the learned Authorized Representative before us is, the disallowance of 20% is on a much higher side and should be suitably scaled down. Learned Departmental Representative relied upon the observations of the Commissioner (Appeals). 17. We have heard rival contentions and perused material on record. The issue before us is the quantum of disallowance to be made out of bogus purchases. As could be seen, learned Commissioner (Appeals) has disallowed 20% out of the alleged bogus purchases. However, it is a fact that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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