The assessee, a partnership firm engaged in manufacturing and trading of cut and polished diamonds, was issued a notice under section 148 based on Investigation Wing information following search\/survey in the Bhawarlal Jain group, alleging accommodation purchase entries. In response, the assessee furnished purchase bills, stock register, sales and purchase registers, bank statements evidencing payments through banking channels, export invoices and shipping bills, and bank realisation advices, and correlated the impugned purchases to export sales with proceeds realised through banking channels. The AO treated the purchases from two parties as bogus and made a 100% disallowance of Rs. 46.46 lakhs. On appeal to the ITAT, the ITAT held that where assessee was alleged to have made bogus purchases from two entities based on third party investigation, but furnished all purchase and sales records, payment proofs and export documents correlating purchases with export sales and sales were not doubted, entire purchases could not be disallowed, and only the profit element relating to the disputed purchases could be added to income. Thus, addition was to be restricted to the profit element, i.e., the difference in gross profit on undisputed purchases and disputed purchases. [AY. 2010-11]<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 69C: Unexplained expenditure-AO treated two purchase parties as bogus and made 100% disallowance-Bhawarlal Jain group-Since sales had not been doubted and without purchases, there cannot be any sales, no adverse inference could be made insofar as the export of diamonds was concerned, for which all documentary evidence was placed on record-Addition was restricted to profit element. [S. 69C, 133A, 148]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[21],"tags":[],"class_list":["post-62537","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-ggF","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/62537","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=62537"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/62537\/revisions"}],"predecessor-version":[{"id":62538,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/62537\/revisions\/62538"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=62537"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=62537"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=62537"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}