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2017 (6) TMI 299 - ITAT MUMBAIBogus purchases - Held that:- It is settled law that when the sales are not disputed, the entire purchases to make the sales cannot be disallowed. It is true that assessee has not at all been able to prove that the purchases from the parties booked on the accounts are genuine. No book and records have been shown. However, in the absence of any finding that sales are also bogus, the purchases to make the corresponding sales cannot be held to be completely bogus. This points out to the practice that assessee had made purchases from grey market. Operating in the grey market leads to various savings on account of non-payment of various taxes by use of unaccounted money to the assessee. On a similar situation, Hon’ble Gujarat High Court in the case of Simit P.Sheth (2013 (10) TMI 1028 - GUJARAT HIGH COURT) has upheld the disallowance of 12.5% of the bogus purchases. Since the proposition that when sales are not disputed, entire purchases cannot be held to be bogus is supported by Hon’ble jurisdictional High Court decision in Nikunj Exim Enterprises [2013 (1) TMI 88 - BOMBAY HIGH COURT], in considered opinion, the interest of justice will be served if the addition in this case is restricted to 12.5% of the bogus purchases. Appeal filed by the assessee stands partly allowed.
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