Tribunal held that the assessee had done major works for the Government departments and they confirmed the authenticity of the work. The assessee continuously declared a net profit in the range of 1.71% to 4.65% and the disallowance made by the AO if accepted would increase the net profit to the tune of 25.15% which was abnormal. The suppliers of these goods had no permanent place for carrying on the business. There were no defects in the books of account of the assessee. The disallowance confirmed by the CIT(A) of Rs. 15 lakhs was to be reduced to Rs. 5 lakhs (ITA No. 60 & CO. No. 10/Chd/2017 dt. 02-11-2017) (AY. 2011-12)
IHR Associates v. Dy. CIT (2018) 61 ITR 70 (Chd)(Trib.)
S. 37(1) : Business expenditure – Bogus purcahses -The assessee was doing major works for Govt. Departments and the said Departments also confirmed the authenticity of work and merely because the assessee could not produce the parties, purchases could be held as non-genuine.Disallowance was confiremd of only Rs 5 lakhs . [ S.131 , 145 ]