TMI Blog2017 (11) TMI 253X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon’ble High Court has upheld 100% 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 such situation, in our considered opinion, on the facts and circumstances of the case, 12.5% disallowance out of the bogus purchases meets the end of justice. Accordingly we direct disallowance of 12.% of the bogus purchases. - Decided partly in favour of assessee. - I.T.A. No. 2660/Mum/2017 - - - Dated:- 1-11-2017 - SHRI SHAMIM YAHYA, AM AND SHRI SANDEEP GOSAIN, JM For The Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s who are only providing accommodation entries without doing any actual business. On going through the aforesaid list, it was found that the following party/parties are appearing in the list of bogus parties from whom the assessee is shown to have made purchases. S.No. Name Amount (Rs.) 1. M/s. Mihir Diamonds (Prop. Gautam B Jain) 2,34,44,142 2. M/s. Krishna Diamonds Pvt. Ltd. 2,65,11,199 4.2 It is seen that the assessee has claimed total purchases of ₹ 4,99,55,341/- from the above-said parties. It is pertinent to mention here that the Sales Tax Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement. 4.5 Subsequently, notices u/s. 133(6) were issued to the above-said parties calling for all the details of all the transactions that these parties had with the assessee for the relevant assessment year, a copy of the ledger of the account of the assessee as appearing in parties' books of account, mode of receipt of payment, copy of Bank Statement reflecting the transactions made with the assessee, highlighting the same, Income tax return and full set of financial statements of parties etc. However, these notices returned unserved, thus confirming the fact that the afore-mentioned parties are bogus. 4.6 The submissions of the assessee as also the documents furnished have been carefully perused. However the same are not fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g bogus bills only after carrying out a detailed enquiry investigation. 5. On the above reasoning, the Assessing Officer made 10% addition for bogus purchase amounting to ₹ 4,99,55,341/-. 6. Against the above order, the assessee appealed before the ld. CIT(A) challenging both the reopening as well as merits of addition. The ld. CIT(A) dismissed both the issue raised. 7. We have heard both the counsel and perused the records. We find that credible and cogent information was received in this case by the Assessing Officer that certain accommodation entry provider/bogus suppliers were being used by certain parties to obtained bogus bills. The assessee was found to have taken accommodation entry/bogus purchase bills during the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d it further strange that assessee wants the revenue to produce assessee s own vendors, whom the assessee could not produce. The Purchase bills from these non-existent the/bogus parties cannot be taken as cogent evidence of purchases. In light of the overwhelming evidence, the revenue authorities cannot put upon blinkers and accept these purchases as genuine. This proposition is duly supported by Hon ble Apex Court decision in the case of Sumati Dayal 214 ITR 801 and Durga Prasad More 82 ITR 540. In the present case, the assessee wants that the unassailable fact that the suppliers are nonexistent and thus bogus should be ignored and only the documents being produced should be considered. This proposition is totally unsustainable in ligh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 009) 316 ITR 274 (Guj) and N.K. Industries Ltd. Vs. Dy. C.I.T., Tax Appeal No.240/2003 decided on 20.06.2016, the parties are bound by the principle of law pronounced in the aforesaid three judgments. 11. However, we find 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. The rationale being no sales is possible without actual purchases. This proposition is supported from Hon'ble jurisdictional High Court decision in the case of Nikunj Eximp Enterprises (supra). In this case, the Hon ble High Court has upheld 100% allowance for the purchases said to be bogus when sales are not doubted. However the facts of the present case indi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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