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Income Tax Appellate Tribunal, MUMBAI BENCHES “SMC”, MUMBAI
Before: Shri Shamim Yahya
आदेश / O R D E R This is an appeal by the assessee wherein the assessee is aggrieved by the order of the learned CIT(A), wherein 100% disallowance on account of bogus purchases amounting to Rs.31,39,736 has been done.
The brief facts of the case are that the assessee-company filed its return of income for assessment year 2009-2010 on 23.09.2009 declaring total income of Rs.3,27,970. The case was processed u/s 143(1) of the Act accepting the returned income of the assessee. Thereafter, on the basis of information received from Sales-tax (VAT) Department, State of Maharashtra, the case was reopened u/s 147 of the Income-tax Act and an order u/s 143(3) r.w.s. 147 of the Income-tax Act, 1961 was passed on . M/s.Filtertechniks Private Limited. 31.03.2015 assessing the total income of the assessee at Rs.34,67,710 whereby the purchases for an amount of Rs.31,39,736 were disallowed by the A.O. by treating them as bogus purchases.
Upon assessee’s appeal, the learned CIT(A) confirmed the addition.
Against this order, assessee has filed appeal before the ITAT.
I have heard both the Counsel and perused the records.
Upon 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.CI, order dated 20.06.2016, wherein hundred percent of the bogus purchases will 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. The special leave petition against this order along with others has been dismissed by the Hon’ble Apex Court vide order dated 16.01.2017as under :
"Delay Condoned. The special leave petitions are dismissed. Pending application(s) if any stands disposed of accordingly'".
6.1 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
. M/s.Filtertechniks Private Limited. Court with that of the Hon’ble Supreme Court. Furthermore the addition/disallowance for bogus purchases depends upon the facts of each case.
6.2 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 Honble 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 assessee 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 restricted to 12.5% of the bogus purchase. Hence I modify the order of authorities below and hold that the disallowance should be restricted to 12.5% of the bogus purchases.
6.3 The learned Counsel of the assessee fairly agreed to this.
. M/s.Filtertechniks Private Limited.