Bogus sales and inflated profits were upheld as income from other sources, with section 80IB deduction denied.

Bogus sales were found where purchasers denied transactions, section 133(6) notices remained unserved, and the assessee failed to rebut the Revenue's enquiries with satisfactory evidence. The appellate authority further treated the receipt pattern, including cash receipts below the prescribed threshold and demand drafts purchased in cash, as indicative of fabricated sales and inflated profits. On those factual findings, the Tribunal upheld assessment of the resulting profit as income from other sources and sustained denial of deduction under section 80IB on the impugned amounts.

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Issues: Whether the sales recorded by the assessee for the relevant assessment years were bogus and whether the profit shown on such sales could be treated as income from other sources with denial of deduction under section 80IB.

Analysis: Enquiries made by the Assessing Officer revealed that some of the alleged purchasers denied transactions with the assessee, while notices issued to other alleged purchasers under section 133(6) of the Income-tax Act, 1961 returned unserved. The assessee did not furnish a satisfactory explanation to rebut these findings. The appellate authority further found that the receipts against the alleged sales were shown either in cash below the prescribed threshold or through demand drafts purchased in cash in a manner suggesting fabrication of sales and inflation of profits to claim excessive deduction under section 80IB of the Income-tax Act, 1961. The Tribunal found no material to dislodge these factual findings.

Conclusion: The sales were rightly treated as bogus, the profit thereon was correctly assessed as income from other sources, and deduction under section 80IB was rightly denied on such amounts.

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