Case Law Details
ITO Vs M/s. Dinal Diamonds (ITAT Mumbai)
We find that in this case the sales have not been doubted. It is settled law that when sales are not doubted, 100% disallowance for bogus purchase cannot be done. The rationale being no sales is possible without actual purchases. This proposition is supported from the Hon’ble jurisdictional High Court decision in the case of Nikunj Eximp Enterprises (in writ petition no 2860, order dt. 18.6.2014). In this case, the Hon’ble High Court has upheld 100% allowance for the purchases said to be bogus when sales are not doubted. However, in that case all the supplies were to the government agency. In the present case, the facts of the case indicate that assessee has made purchase from the grey market. Making purchases through the grey market gives the assessee savings on account of non-payment of tax and others at the expense of the exchequer. In such situation, in our considered opinion, on the facts and circumstances of the case, 3% disallowance out of the bogus purchases meets the end of justice, as reasoned by the ld. CIT(A) above.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal by the Revenue is directed against the order of the learned Commissioner of Income Tax (Appeals)-30, Mumbai (‘ld.CIT(A) for short) dated 03.07.2017 and pertains to the assessment year (A.Y.) 2007.08.
2. The grounds of appeal read as under:
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