TMI Blog2017 (11) TMI 1058X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is dismissed. Confirmation of disallowance @ 12.5% of the bogus purchases - Held that:- Facts and circumstances of the case clearly prove that assessee has booked bogus purchases. The assessee has made purchase from grey market. Making purchases from the grey market gives the assessee selling on account of non-payment of tax and others at the expense of the exchequer. In such circumstances, following the precedent from Hon’ble Gujarat High Court decision in the case of Simit P. Sheth (2013 (10) TMI 1028 - GUJARAT HIGH COURT) we are of the considered opinion that 12.5% disallowance in this case would serve the interest of justice. - Decided against assessee. - I.T.A. No. 3355/Mum/2017 And I.T.A. No. 3339/Mum/2017 - - - Date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n basis @ 12.50%, erred in ignoring the understated vital facts, being; a) The entire addition has been made only on the basis of information received from the Sales tax department without bringing credible evidence on record; b) The appellant made entire payments for disputed purchases through banking channel by A/c payee cheques; c) The Gross profit ratio disclosed in impugned year @ 21.80% is in excess to earlier 2 years disclosed @ 19.05% and 14.67%; d) The statement of 31-d parties recorded at back of the appellant and without allowing an opportunity of cross examination used against the appellant is erroneous; e) The Ld. AO has not rejected appellant's books of accounts u/s 145(3), thus estimation mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve appeals. However at present, we are dealing with the appeal filed by the assessee. Ground No. 1. 4. This grounds raised by the assessee relates to challenging the validity of reopening. 5. We have heard the counsels for both the parties and we have also perused the material placed on record as well as the orders passed by revenue authorities. AO issued notice u/s 148 of the I.T. Act after receiving information from the Sales Tax Department that some of the parties from whom the assessee had made purchases were bogus and they are engaged in the business of providing bills without actual delivery of goods and thus there was escapement of income from assessment. This information received from the Investigation wing construed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and earlier 2 years. 5.2 Further, appellant states that addition of entire purchases would be unjustified as it would lead to a case of taxing the entire sales without allowing the deduction of corresponding purchase. According to the appellant, there cannot be a case of only sales without corresponding purchase. Appellant further states that during the year under consideration, gross profit was shown as 21.80% whereas for A.Y.2009-10, it was only 19.05% and for A.Y.2008-09 it was 14.67%. It was further stated that all payments were made by cheque through banking channels which can be verified by the AO. Further, appellant prays that the concept of real income be adopted to estimate the suppressed income of ₹ 7,72,286/- @ 5% o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enuineness of recorded purchase and payments thereon. Further, appellant states that disallowance of entire purchases would be unjustified and it would lead to taxing the entire sales without allowing deduction of corresponding purchases. Appellant further states that there cannot be a case of only sales without corresponding purchase. In short, if there is a sales, then it is required to be presumed that there is a corresponding purchase against such sale. 5.4 I have considered the appellant's submission and order passed by the AO. An identical situation has arisen in the case of CIT Vs. Simit P. Sheth (Guj.) of Hon'ble Gujarat High Court where it is held that when total sales is accepted by the AO, he could not have question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. CIT (A) are judicious and are well reasoned. Resultantly, these ground raised by the assessee stands dismissed . I.T.A. No. 3339/Mum/2017 (AY 2010-11) 8. Now we take up revenue s appeal in I.T.A. No. 3339/Mum/2017 (AY 2010-11). The grounds of appeal are mentioned herein below:- 1. On the facts and in the circumstances of the case and in law, whether the Ld. CIT(A) has erred in sustaining addition of ₹ 19,30,174/- only on estimate basis although the entire purchase of ₹ 1,54,45,712/- made by the assessee is bogus in nature to the extent of without actual delivery of goods. 2. On the facts and circumstances of the case and in law, whether the Ld.CIT(A) has erred in not appreciating the ratio laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X
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