Case Law Details
Smt. Lata Garg Vs DCIT (ITAT Delhi)
Facts- The assessee is an individual and derived income from salary, income from house property, income from business or profession and income from other sources. It was alleged that there were certain bogus purchases. Accordingly, AO alleged adding the same to the total income of the assessee.
Conclusion- It is an admitted fact that the sales declared by the assessee has not been disturbed. The assessment order indicates that letters were served upon certain parties which proves their existence. The books of account were also audited and auditors have not given any adverse remarks. All the payments have been made through banking channels. The assessee had produced the stock register showing relevant entries of the items purchased and issued for consumption in job work and the items were tallying and no discrepancy in the stock was found at the time of survey. Under these circumstances, we are of the considered opinion that disallowance of 20% of the purchases appears to be on the higher side especially when some of the parties to whom letters were issued were served and the payments have been made through banking channel.
Considering the totality of the facts and circumstances of the case and in the interest of justice, the disallowance of 2% of the total purchases under the facts and circumstances of the case, in our opinion, will meet the ends of justice.
the Hon’ble Delhi High Court in the case of CIT vs Sonal Constructions has accepted the theory of benefit of telescoping. Accordingly, it is held that in case there is an addition on account of bogus purchases, such additional income should be available to the assessee to meet the expenses towards commission.
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