M/s KDPL, a domestic company, engaged in manufacturing of certain products, declared its total income of 1,20,00,000/- in return of income filed for…

M/s KDPL, a domestic company, engaged in manufacturing of certain products, declared its total income of 1,20,00,000/- in return of income filed for the A.Y. 2024-25. During the assessment year, there was no other income other than the profits from manufacturing. In the return of income for assessment year 2024-25, M/s KDPL, claimed set off of brought forward business loss of 10,00,000/- which relates to A.Y. 2023-24. Return of income for A.Y. 2023-24 was filed on 31/12/2023. The claim of set off of said brought forward business loss was disallowed while processing of return of income for the assessment year 2024-25 and total income of 1,30,00,000/- was determined in the intimation issued u/s 143(1)(a). The return for assessment year 2024-25 in the case of KDPL was selected for scrutiny by issue of notice u/s 143(2) of the Income-tax Act. During the assessment proceeding, it is noticed by the Assessing Officer that the purchase of the raw material has been inflated by - 5,00,000/- by introducing bogus purchase invoices. From the facts given in the case study, choose correct answer to following Multiple Choice Questions (MCQ. No. 5, 6 & 7):