The Tribunal reaffirmed that once expenditure is shown to be wholly and exclusively for business, section 37(1) disallowance cannot survive. Suspicion cannot override documentary and commercial reality.
The Tribunal held that when purchases are conclusively proved to be sham accommodation entries, the entire amount is disallowable under section 69C. Mere invoices and bank payments cannot override incriminating search evidence and admissions.
ITAT Mumbai ruled that Form 26AS is not conclusive when deduction of tax is otherwise established. Denial of TDS credit would amount to double taxation, which Section 205 expressly prohibits.
The Tribunal deleted on-money additions where the tax department failed to establish a clear nexus between the assessee and alleged cash entries. Suspicion or unverified third-party material was held insufficient in law.
The tribunal held that Maximum Marginal Rate implies tax at the highest slab rate of 30%, not automatic levy of 37% surcharge. Surcharge must strictly follow slab thresholds prescribed in the Finance Act.
The ruling states that the appellate authority must decide grounds on merits after examining evidence, even if the assessee was non-cooperative. The case was sent back for reconsideration subject to costs.
The Tribunal held that additions based solely on third-party statements and Excel data seized from another person cannot survive without independent corroboration. Denial of effective cross-examination rendered the section 69C addition unsustainable.
ITAT ruled that disallowing full purchases while also taxing corresponding sales is legally unsustainable. A uniform 6% gross profit estimation on alleged non-genuine transactions was upheld as a fair and pragmatic approach.
Whether additions under sections 68 and 69C can be made without seized material. In search cases, completed assessments cannot be disturbed unless incriminating material is found during the search.
The AO relied on human probability, abnormal price movement and third-party material. ITAT held that without direct evidence against the assessee, LTCG cannot be branded sham.
