Assessee is private limited co and engaged in business of manufacturing of spare parts of vehicles etc. Search U/Sec. 132 has conducted on the ground that assesssee has effected the purchases from the parties which are only providing accomodation bills and there GST numbers were cancelled subsequently due their involvement in issuing fake invoices. During the course of assessement proceedings assessee submits that it purchases are genuine and duly supported by all evidences such as invoice, material inwards note, payments by banking  channel, transport receipts. When the asssessee effected purchases the supplier GST number was valid and same was also later on.  Assessee also submitted that it had maintained quantity accounts of consumption of material and if is held that purchases are considered as non genuine the results of the assessee are absert.  Alternatively but without prejudice  it is submitted that entire purchases should not be disallowed but only profit element to the extent of 10% of such purchases be disallowed . However AO has not appreciated the submissions of assessee and assessed the income by disallowing the all purchases effected from the parties u/Sec. 69C and also took alternate stand that even if additions is not sustained U/Sec 69C, the addition is to be considered as inflated purchases and entire purchases should be considered as added U/Sec. 37 of the Act.

Whether action of AO is justified in law.

Pl guide .