2016 (9) TMI 1517 - HC - Income Tax

Bogus purchases - disallowance of 15% of the purchases made from SKS - trading addition - non rejection of books of accounts - HELD THAT - Admit on the following substantial questions of law - (i) Whether in sustaining the disallowance of 15% of the purchases made from SKS, the finding of the Tribunal is erroneous and perverse in having relied alone on the oral statement recorded during search operation over and above the documentary evidence proving such purchases made after payment through banking channel having paid requisite VAT followed by delivery of goods? (ii) Whether the Tribunal was justified in sustaining the trading addition by disallowing 15% purchases made from SKS where the books of accounts of the appellant were not rejected u/s. 145 of the Income-tax Act, 1961?

Summary

The High Court of Rajasthan admitted the case for consideration of substantial questions of law regarding the disallowance of 15% of purchases made from SKS. The Tribunal's reliance on oral statements during a search operation was questioned in light of documentary evidence showing payments through banking channels and VAT compliance. The Tribunal's decision to disallow purchases without rejecting the appellant's books of accounts under section 145 of the Income-tax Act was also challenged.