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TMI Blog2018 (5) TMI 351X X X X Extracts X X X X X X X X Extracts X X X X ..... relates to validity of reopening u/s. 147 of the Act. At the outset, the ld. Counsel of the assessee submitted that he shall not be pressing for this ground, hence, ground relating to the validity of reopening is dismissed as not pressed. 3. The second common issue raised relates to sustenance of addition out of the alleged bogus purchases by the ld. Commissioner of Income Tax (Appeals). 4. In Revenue's appeal, the issue raised is that the ld. Commissioner of Income Tax (Appeals) erred in reducing the addition made by the Assessing Officer. 5. Brief facts of the case are as under: In this case, the Assessing Officer had received information from the Sales Tax Department that the assessee had affected purchases from certain parties, who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om above referred hawala parties were not supported by credible documentary evidence such as transportation bills, delivery challans, goods receipt note, other receipts, etc. In compliance, the appellant could not furnish credible documentary evidences to substantiate the above purchases as well as the quantitative details of raw material vis-avis the finished goods to establish the genuineness of the above purchases. The assessee however, contended that he was engaged in the business of manufacturing and sale of electric resistance, and the raw material purchased from these parties was used in the manufacturing of goods. In order to verily the genuineness of purchases, the Assessing Officer issued letters u/s 133(6) of the Act to all the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he counsel and perused the records. As regards merits of addition, 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, assessee was found to have taken accommodation entry/bogus purchase bills during the concerned assessment year from different parties. Based upon this information assessment was reopened. The credibility of information relating to reopening remains unassailed. Furthermore it is noted that in such factual scenario Assessing Officer has made the necessary enquiry. The issue of notice to all the parties have returned unserved. Assessee has not been able to provide any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suppliers are non-existent and thus bogus should be ignored and only the documents being produced should be considered. This proposition is totally unsustainable in light of above apex court decisions. 12. In these circumstances learned departmental representative has referred to Hon'ble Gujarat High Court decision in the case of Apex Appeal No. 240 of 2003 in the case of N K Industries vs Dy CIT, order dated 20.06.2016, wherein hundred percent of the bogus purchases was held to be added in the hands of the assessee and tribunals restriction of the addition to 25% of the bogus purchases was set aside. It was expounded that when purchase bills have been found to be bogus 100% disallowance was required. The special leave petition against thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were to the Government department. However the facts and circumstances of the present case indicate that assessee has engaged into dealings in the grey market. Dealings in the grey market give the assessee various savings at the expense of the Exchequer. Hence, on the overall consideration of facts and circumstances and following the decision of Hon'ble Gujarat High Court in the case of CIT vs Simit P. Sheth [2013] 356 ITR 451 (Guj.) we hold that a disallowance of 12.5% of the bogus purchase would meet the end of justice. Accordingly, we modify the order's of authorities below and direct that the disallowance in this case should be restricted to 12.5% of the bogus purchase. The ld. Counsel of the assessee fairly agreed to the above pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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