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2022 (5) TMI 223

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....olitary issue in this appeal regarding deletion of addition of Rs.5,10,43,140/- made by the learned Assessing Officer on account of bogus purchases from M/s Neelanchal Sales & Suppliers Pvt. Ltd. 03. The assessee is a company engaged in the business of manufacturing and trading and export of fabrics. It filed its return of income on 31st October, 2017 at Rs. 51,61,430/-. The return was processed under section 143(1) of the income-tax Act, 1961 (the Act). 04. A search under section 132 of the Act on Indo Count Industries Ltd. on 1st February, 2018, assessee was also covered in that search. Consequently, notice under section 153A of the Act was issued on 18th February, 2019. Assessee filed its return on 20th March, 2019 at Rs.51,61,430/-. ....

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....Sales & Suppliers Pvt. Ltd. did not have any godown for storage of fabrics. The learned Assessing Officer therefore held that purchase made by assessee from M/s Neelanchal Sales & Suppliers Pvt. Ltd. is only an accommodation entry. Accordingly, he disallowed total purchase of Rs.5,10,43,140/-. 08. The assessment order under section 143(3) read with section 143A of the income tax Act, 1961 (the Act) was passed on 26th December, 2019, determining the total income of the assessee at Rs.5,62,04,570/-. 09. On appeal before the learned CIT(A), the addition was deleted. Therefore, learned Assessing Officer is in appeal before us. 010. The learned Departmental Representative submitted that (i) the material purchased by M/s Neelanchal Sales & S....

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....has also entered into transactions with other companies of group entities. During the course of search and survey on the assessee company, statement of Shri Suhel Saraf, was recorded which showed that assessee had purchased fabric of Rs. 5,10,43,140/- from M/s M/s Neelanchal Sales & Suppliers Pvt. Ltd. Assessing Officer held it to be bogus. The ld AO was shown invoices, confirmation, delivery challan, transportation bills and proof of payments to M/s Neelanchal Sales & Suppliers Pvt. Ltd. 013. The learned CIT(A) has deleted the addition for following reasons (i) all the purchases are duly supported with purchase bills, delivery challan, transportation bill and confirmation of the parties. (ii) Shri Suhel Saraf has never stated that pur....