PACKAGING REMEDIES,MUMBAI vs. DCIT 24(3), MUMBAI

I have heard both the counsel and perused the records.

Up on careful consideration of the facts of the case, I find that overwhelming evidence have been referred by the authorities below that the impugned purchases are bogus. There is no evidence of the actual movement of the goods under dispute. In these circumstances learned departmental representative has referred to Hon’ble Gujarat High Court decision in the case of tax 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 will held to be added in the hands of the assessee and . M/s.Packaging Remedies. tribunals restriction of the addition to 25% of the bogus purchases was set aside. The special leave petition against this order along with others has been dismissed by the Hon’ble Apex Courtvide order dated 16.1.2017 as under: "Delay Condoned. The special leave petitions are dismissed. Pending application(s) if any stands disposed of accordingly".

I find that dismissal of special leave petition by the Hon’ble Apex Court by a simple non-speaking order does not merge order of the Hon’ble High Court with that of the Hon’ble Supreme Court. Furthermore, the addition/disallowance for bogus purchases depends upon the facts of each case.

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. This proposition finds support from the Hon,ble Gujarat High Court in the same combined order as mentioned above in case of therein. This proposition is further supported from Hon’ble jurisdictional High Court decision in the case of Nikunj Eximp Enterprises. However the facts of the present case indicate that assessee has made purchase from the grey market. Making purchase through the grey market gives the asseessee savings on account of non-payment of tax and others at the expense of the exchequer. In similar situation on the facts and circumstances of the case a disallowance of 12.5% of the bogus purchase has been considered to meet the end of justice in a number of cases at the Mumbai tribunal following Hon’ble Gujarat High Court decision in the case of Simit P Seth. Accordingly I hold that the disallowance in this case should be . M/s.Packaging Remedies. restricted to 12.5% of the bogus purchase. Learned counsel of the assessee fairly agreed to the above and did not press any further.

In the result, this appeal by the assessee stands partly allowed. Order pronounced on this 05th day of July, 2017. Sd/- (Shamim Yahya) ACCOUNTANT MEMBER मुंबई Mumbai; �दनांक Dated : 05th July, 2017. Devdas* आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. आयकर आयु�त(अपील) / The CIT, Mumbai. 4. आयकर आयु�त / CIT(A), Mumbai 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, True copy