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2017 (12) TMI 1797 - AT - Income TaxEstimation of income - Bogus purchases - HELD THAT:- When sales are not doubted, 100% disallowance for bogus purchase cannot be done. The rationale being no sales is possible without actual purchases. This proposition is supported from the Hon'ble jurisdictional High Court decision in the case of Nikunj Eximp Enterprises [2014 (7) TMI 559 - BOMBAY HIGH COURT]. 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 savings on account of non-payment of tax and others at the expense of the exchequer. In such situation, in my considered opinion, on the facts and in circumstances of the case, 12.5% disallowance out of the bogus purchases meets the end of justice. This proposition draws support from the Hon’ble Gujarat High Court decision in the case of CIT vs Simit P. Sheth [2013 (10) TMI 1028 - GUJARAT HIGH COURT]. Accordingly, direct that disallowance be limited to 12.5% of bogus purchase. Appeal filed by the assessee stands partly allowed.
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