ITO 19 (2)(3), MUMBAI vs. PREETI MANISH SHAH (LEGAL HEIR OF LATE MANISH Y.SHAH), MUMBAI

O R D E R This is an appeal by the revenue wherein the revenue is aggrieved that the learned CIT-A has deleted part of the addition for bogus purchase by sustaining only 12.5% disallowance on account of bogus purchases, vide order dated 28.9.2018 pertaining to A.Y. 2009-10.

2 Preeti Manish Shah (legal heir of Late Manish Y. Shah) 4. Against above order revenue is in appeal before the ITAT. I have heard both the counsel and perused the records. 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 honourable jurisdictional High Court decision in the case of Nikunj Eximp Enterprises (in writ petition no 2860, order dt. 18.6.2014). In this case the Hon High Court has 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 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 my considered opinion on the facts and circumstances of the case the 12.5% disallowance out of the bogus purchases done by the learned CIT-A meets the end of justice. Accordingly I uphold the order of learned CIT-A.