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| The Tax Publishers2020 TaxPub(DT) 0342 (Mum-Trib) INCOME TAX ACT, 1961
Section 69C
Where CIT(A) held that the genuineness of purchases was not proved, however, entire purchases could not be disallowed and only depreciation was to be disallowed as assessee had capitalised the purchases in its books of account and claimed only depreciation, thus, CIT(A) had rightly disallowed only to the extent to deprecation on such purchases and deleted the rest of disallowance of purchases.
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Income from undisclosed source - Addition under section 69C - Bogus purchases under section 69C - Disallowance of depreciation
AO noticed that as per the information of investigation wing of the department M/s. M and M/s. R were providing accommodation entries and assessee was one of the beneficiaries. Assessee was asked to furnish the details with regard to purchases made from these two companies. However, AO was not satisfied with the details submitted by assessee and treated the purchases as not verifiable and therefore genuineness of purchases could not be established. CIT(A) though accepted the contention of AO that purchases were not genuine, alternative submission of assessee that since assessee had claimed only depreciation the entire purchases could not be disallowed was accepted. Held: On a perusal of the order of CIT(A), it was found that CIT(A) held that the genuineness of purchases was not proved. However, entire purchases could not be disallowed and only depreciation was to be disallowed as the assessee had capitalised the purchases in its books of account and claimed only depreciation. Since genuineness of purchases could not be verified as the suppliers were not traceable in the addresses given as reported by Inspector on his physical inspection, CIT(A) had rightly disallowed only to the extent to deprecation on such purchases and deleted the rest of the disallowance of purchases.
REFERRED :
FAVOUR : Against the assessee
A.Y. :
INCOME TAX ACT, 1961
Section 271(1)(c)
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