ITO, 19(2)(14), MUMBAI vs. MR. NARPATKUMAR DUDHMALJI CHANDAN, MUMBAI

This is an appeal by the revenue wherein the revenue is aggrieved that the Ld. CIT(A) has reduced the addition for bogus purchase of Rs. 6,83,280/- done @ 100% by A.O by sustaining only 12.5% order dated 28.02.2019 for A.Y 2011-12.

Against above order revenue is in appeal before the ITAT.

I have heard the rival submissions and perused the record. I find that in this case the sales have not been doubted it is settled law that when sales are not doubted, hundred percent 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 Exip Enterprises (in writ petition No. 2860, order dated 18.06.2014). In this case the Hon’ble High Court has . Mr. Narpatkumar Dudhmalji, Mumbai. - 3 - upheld hundred percent 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 purchases from the grey market. Making purchase 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 the 12.5% disallowance out of the bogus purchase done by the Ld. CIT(A) meets the end of justice. Accordingly I uphold the order of Ld. CIT(A). The Ld. Counsel of the assessee fairly agreed to the above.

The decision of NV proteins relied by the revenue was dismissal of SLP by the Hon’ble Supreme Court and has already been explained and distinguished by Hon’ble Bombay High Court in the case of Pr. CIT Vs. Md. Haji Adam & Co. in of 2016, dated 11.12.2019.

In the result this appeal filed by the revenue stands dismissed.

Before parting I may add that if the assessee has filed a cross objection and the same has remained unheard,