UNIQUE DIECASTING PRODUCTS P.LTD,MUMBAI vs. ITO WD 13(1)(2), MUMBAI

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ITA 7640/MUM/2016Status: DisposedITAT Mumbai01 June 2017AY 2011-123 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that when sales are not doubted, purchases cannot be entirely bogus. A disallowance of 12.5% of the bogus purchases was deemed to meet the ends of justice, following precedent.

What were the facts?

The assessee claimed purchases for which suppliers allegedly provided bogus bills. The Assessing Officer made a 100% disallowance of these purchases. The assessee's sales were not doubted.

What were the issues?

Whether 100% disallowance of purchases is justified when sales are not doubted, and what is the appropriate disallowance percentage for bogus purchases.

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI

Before: SHRI SHAMIM YAHYA

For Appellant: Shri. Hari S Raheja
For Respondent: Shri. Sumit Kumar

Date of Hearing –30.05.2017 Date of Order - 01.06.2017

O R D E R PER: SHAMIM YAHYA These are appeals by the assessee, wherein assessee is aggrieved by following additions on account of bogus purchases.

Assessment Year Amount (Rs.) 2010-11 707113.00 2011-12 705567.00 & 7640/Mum/2016 Unique Diecasting Products Pvt. Ltd.,

2.

I have heard both the counsel and perused the records. I find that hundred percent disallowance of bogus purchase has been made in this case on account of information that the suppliers were providing bogus purchase bills. I note that the sales have not been doubted. It is settled law that when the sales have not been doubted the corresponding purchase cannot be held to be entirely bogus. Such practices indicate purchasing through the grey market which entails savings to the assessee on account of saving in taxes and others at the expense of the exchequer. In similar circumstances honourable Gujarat High Court in the case of Sumit P Sheth has upheld disallowance of 12.5% of the bogus purchases. Learned counsel of the assessee fairly agreed for a disallowance of 12.5% of the bogus purchases.

3.

Accordingly in the background of aforesaid discussion I modify the order of learned CIT-A. I hold that 12.5% disallowance from the bogus purchases would meet the end of justice.

4.

In the result these appeals by the assessee stand partly allowed.

Order pronounced in the Open Court on 01.06.2017

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