RELIANCE ENTERPRISES AMBERNATH vs JT CIT RG 2 KALYAN

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES “SMC”, MUMBAI Before Shri Shamim Yahya, Accountant Member ITA No.950/Mum/2017 Assessment Year : 2011-12 Reliance Enterprises Survey No.58, Hiss No.1, Palegaon Near Shiv Mandir Road Ambernath 421501 PAN AAIFR7851A Vs.

JCIT Range 2, Kalyan (Appellant) Respondent) Appellant By : None Respondent By : Shri Satyanarayana Raju Date of Hearing :15.05.2017 Date of Pronouncement : 07.06.2017 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 hundred percent disallowance on account of bogus purchase has been sustained amounting to `.10,78,218/- 2.

I have heard the learned Departmental Representative and perused the records.

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 is 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 ends of justice in a number of cases at the Mumbai Tribunal.

Accordingly, I hold that the disallowance in this case should be restricted to 12.5% of the bogus purchase.

Learned counsel of the assessee has fairly agreed to this proposition.

3.

Learned Departmental Representative has placed reliance upon a Hon’ble Gujarat High Court decision, wherein hundred percent disallowance of bogus purchase has been upheld.

Special Leave Petition against this order has been dismissed by the apex court. pex court.

I find that dismissal of SLP by a non speaking order by the Hon’ble apex court doesn't merge the order of the Hon’ble High Court with that of the apex court.

Moreover, such disallowances depend upon the facts and circumstances of the case as expounded by Hon’ble Jurisdictional High Court in the case of Nikunj Eximp Enterprises.

Accordingly, I direct that the disallowance be restricted in this case to 12.5% of the bogus purchase.

4.

In the result this appeal filed by the assessee stands partly allowed.

Order pronounced in the open court on this day of 7th June 2017.

Sd/- (Shamim Yahya) ACCOUNTANT MEMBER Mumbai, Dated :7th June, 2017.

SA Copy of the Order forwarded to : 1.

The Appellant.

2.

The Respondent.

The CIT(A), Mumbai.

The CIT 5.

The DR, ‘SMC’ Bench, ITAT, Mumbai BY ORDER //True Copy// (Assistant Registrar) Income Tax Appellate Tribunal, Mumbai