INCOME TAX ACT, 1961

Section 69

Income from undisclosed sources - Addition under section 69 - Alleged bogus purchases - Sales being accepted by AO

AO received information that assessee received accommodation entries from an entity 'R' in respect of material purchased by him. Accordingly, the AO made addition on account of payments towards bogus purchases. CIT(A) observed that the AO had not pointed out any defects in assessee's sales records and in books of account, accordingly, he deleted the said addition.Held: It was found that sales made by the assessee had been accepted by the AO. Once the sales have been accepted, it necessary falls that the assessee had also made purchases and it cannot, therefore, be held that bogus purchases were made. Further, no material evidence was brought out by the AO to indicate that 'R' provided accommodation entries to the assessee. Accordingly, the addition made on account of bogus purchases was deleted.