HIRALAL C. SHARMA,AMBERNATH vs. ITO WD 2(1), KALYAN

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ITA 7655/MUM/2016Status: DisposedITAT Mumbai01 June 2017AY 2010-113 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that when sales are not doubted, the entire purchase cannot be disallowed as bogus. A disallowance of 12.5% of the bogus purchases was deemed to meet the ends of justice, as agreed by the assessee's counsel.

What were the facts?

The assessee's purchases were disallowed entirely on the grounds of bogus purchase bills. However, the assessee's sales were not doubted by the revenue.

What were the issues?

Whether the entire disallowance of purchases is justified when sales are not doubted? What is the appropriate disallowance for bogus purchases in such circumstances?

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI

Before: SHRI SHAMIM YAHYA

For Appellant: Shri. Govind Jhaveri
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 the appeals by the assessee, wherein assessee is aggrieved by following additions on account of bogus purchases:-

Assessment Year Amount (Rs.) 2011-12 3,14,519.00 2010-11 5,29,145.00 2009-10 80,550.00 -7657/Mum/2016 Hiralal C. Sharma 2. I have heard both the counsel and perused the records.

3.

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 has not been doubted. It is settled law that when the sales have not been doubted the corresponding purchase cannot be held to be in 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.

4.

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.

5.

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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