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2017 (9) TMI 1916 - AT - Income TaxEstimation of income - bogus purchases - CIT(A) reduced it to 25% - HELD THAT:- In this case the sales have not been doubted it is settled law that when sales are not doubted, 100% disallowance for bogus purchase cannot be done. This proposition is supported from Hon’ble jurisdictional High Court decision in the case of Nikunj Eximp Enterprises [2013 (1) TMI 88 - BOMBAY HIGH COURT] - However, the facts of the present case indicate that assessee has made purchase from the grey market. Making purchases through the grey market gives the assessee selling on account of non-payment of tax and others at the expense of the exchequer. In such situation in considered opinion on the facts and circumstances of the case the 12.5% disallowance out of the bogus purchases meets the end of justice. This is following the decision of Hon’ble Gujarat High Court in the case of Simit P Seth [2013 (10) TMI 1028 - GUJARAT HIGH COURT] followed by the ITAT Mumbai Benches in a number of cases. We order of learned CIT(A) and direct that the disallowance be limited to 12.5% of the bogus purchase. Appeal filed by the assessee is partly allowed.
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