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Income Tax Appellate Tribunal, “SMC” Bench, Mumbai
Before: Shri Shamim Yahya (AM)
This appeal by the assessee is directed against the order of learned CIT(A) dated 15.3.2018 and pertains to A.Y. 2011-12.
Issue raised is that learned CIT(A) erred in confirming 12.5% disallowance on account of suspicious purchase.
Brief facts of the case are that disallowance in this case was made on account of bogus purchase which was made @ 15%. Learned CIT(A) on assessee’s appeal reduced the same to 12.5%. Against this order, assessee is in appeal before ITAT.
I have heard both the counsel and perused the record. Learned Counsel of the assessee contended that the assessee has already shown gross profit margin of 8.37% which is duly reflected in the tax audit report submitted in page No. 34 of the paper book. Hence, learned counsel submitted that disallowance on account of purchase which has been made in this case @ 12.5% should be reduced to give effect of the profit already disclosed by the assessee on the impugned purchase.
Upon careful consideration, I find considerable cogency in the submission of learned counsel. Addition for bogus purchase has been done on account of non-production of suppliers. Necessary purchase vouchers are already available. Sales have not been doubted. In these circumstances, in several case laws it has been held that 12.5% disallowance out of bogus purchases should be done. However, since assessee has already shown 8.37% of the gross profit purchase, further addition of 12.5% without deduction of gross profit already disclosed would amount to double prejudice, which is not sustainable in law. Accordingly, I direct that gross profit has already shown as above is required to be deducted from @ 12.5% and resultant amount is to be deleted.
In the result, assessee’s appeal is partly allowed. Order has been pronounced in the Court on 10.6.2019.