2016 (1) TMI 1312

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....agitated the action of the Ld. CIT(A) in sustaining the addition at the rate of 15% of the purchases allegedly made by the assessee from suspicious dealers whose names were listed in the website of the Sales Tax Department. 3. The Revenue, on the other hand, has agitated the action of the Ld. CIT(A) in restricting the addition to the 15% of the purchases as against the total addition of Rs. 1,07,71,713/- made by the Assessing Officer (hereinafter referred to as the AO) holding the purchases made by the assessee from the suspicious dealers as bogus and adding the same into the income of the assessee as unexplained expenditure. 4. The brief facts of the case are that the AO during the assessment proceedings noted that the assessee had d....

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.... as unexplained investment and since it was a part of the books of account and a part of the business of the assessee, profit thereupon should be brought to tax. He therefore held that 15% of such purchases be added to the income of the assessee and thereby profit declared be increased. The assessee thus has come in appeal before us agitating the sustaining of addition @ 15% of the purchases whereas the revenue has come in appeal against the relief granted by the CIT(A) to the assessee. 6. The Ld. A.R. of the assessee, before us, has submitted that the statement if any, of the suspicious dealers were allegedly made before the Sales Tax Authorities, however, no such statement had been recorded in this respect by the Income Tax Authorities....

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....plied the goods to the assessee for free. When it is not so, solely on the basis of unconfronted and general statements of alleged suppliers made before sales tax authorities, addition u/s 69C under the circumstances on account of purchases is not warranted at all. The Hon'ble Gujarat High Court in the case of "CIT vs. M.K. Brothers" (1987) 163 ITR 249 has held that where there was nothing to indicate that the amount given by the assessee for the purchases made had come back to the assessee in any other form and where there was no evidence that the said concerns gave bogus vouchers to the assessee and even the statements made by the alleged suppliers in no way implicate the transaction with the assessee then under such circumstances it cann....