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2020 (4) TMI 889 - AT - Income TaxEstimation of income - bogus purchases - CIT-A sustained 12.5% disallowance - HELD THAT:- In this case the sales have not been doubted it is settled law that when sales are not doubted, hundred percent disallowance for bogus purchase cannot be done. The rationale being no sales is possible without actual purchases. This proposition is supported from decision in the case of Nikunj eximp enterprises [2014 (7) TMI 559 - BOMBAY HIGH COURT] In this case the honourable High Court has upheld hundred percent allowance for the purchases said to be bogus when sales are not doubted. 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 savings on account of non-payment of tax and others at the expense of the exchequer - in the absence of any enquiry by the AO from the alleged bogus supplies in my considered opinion on the facts and circumstances of the case the 2% disallowance out of the bogus purchases meets the end of justice. Accordingly, direct that disallowance be restricted @ 2% of the bogus purchase - Appeal filed by the assessee stands partly allowed.
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