Sham iron scrap purchase claim rejected as unsupported verification showed undisclosed sources and upheld addition.

A claimed deduction for iron scrap purchases was rejected where verification showed that no genuine purchase had been made from the named party and the scrap was found to have come from undisclosed sources. The related transportation charges were also found unsupported by the evidence. On those facts, the transaction was treated as sham and the addition for investment in iron scrap purchases was upheld. The matter was held to turn purely on factual findings, without any debatable question of law.

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Issues: Whether, on the facts and in the circumstances of the case, the assessee was entitled to deduction of the cost of iron scrap allegedly used in manufacture, where the Tribunal had upheld the finding that no purchase was made from the named Jabalpur party and the scrap came from undisclosed sources.

Analysis: The claim of purchase from the Jabalpur party and the related transportation charges was examined on verification and found not genuine. The transaction was treated as sham, and the addition made towards investment in purchase of iron scrap from undisclosed sources was upheld. The matter turned purely on facts and did not give rise to any debatable question of law.

Conclusion: The assessee was not entitled to the claimed deduction, and the question was answered in favour of the Revenue and against the assessee.

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