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2021 (4) TMI 324 - AT - Income TaxEstimation of income - bogus purchases - CIT(A) sustaining 25% disallowance - Information was received from the sales tax Department that assessee has made bogus purchases - HELD THAT:- Upon careful consideration we find that assessee has provided the documentary evidence for the purchase. Adverse inferences have been drawn due to the inability of the assessee to produce the suppliers and also the statement of the partner of the assessee firm. We find that in this case the sales or any other aspect of assessee's workings have not been doubted. It is settled law that when sales are not doubted, hundred percent disallowance for bogus purchase cannot be done. In the present case the facts of the case indicate that assessee has made purchase from the grey market. This is also the finding of learned CIT(A). Making purchases through the grey market gives the assessee savings on account of non-payment of tax and others at the expenses of the exchequer. In such situation in our considered opinion on the facts and circumstances of the case the 12.5% disallowance out of the bogus purchases meets the end of justice. In this regard we also note that Id counsel of the assessee has submitted that in assessee's own case for A.Y. 2007-08, ITAT in similar facts has restricted the disallowance to 12.5%. A.Y. 2007-08 is also a port of common order of learned CIT(A) and it is not the case of the Revenue the ITAT order has been reversed by Hon'ble High Court. Hence, in the background of the aforesaid discussion and precedent we modify the order of learned CIT(A) and direct that disallowance be restricted to 12.5% of the bogus purchases. Appeals filed by the assessee are partly allowed.
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