2021 (4) TMI 333

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..... 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. As regards the quantification of the profit element embedded in making of such bogus/unsubstantiated purchases by the assessee, learned counsel pleaded that as held in M/S MOHOMMAD HAJI ADAM CO. [ 2019 (2) TMI 1632 - BOMBAY HIGH COURT] the addition in respect of bogus purchases is to be limited to the extent of bringing the gross profit rate on such purchases at the same rate as of other genuine purchases. We set aside the matter to the file of the assessing officer with the direction to restrict the .....

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..... one the delay. 5. Brief facts of the case are that the assessee is an individual claimed to be engaged in the business of dealers in laptop and its accessories. The return of income for the year under appeal was filed on 29-09-2009 declaring total income of ₹ 9,61,810/- and the return was processed u/s 143(1). Thereafter on the basis of information received in respect of hawala transactions, proceedings were initiated u/s 147 of the Act. The assessment u/s. 143(3) rws 147 was completed by the Assessing Officer on 13.03.2009 determining income at ₹ 13,36,270/-. The Assessing Officer observed that the appellant had debited purchases of ₹ 29,95,668/- from two parties considered to be hawala dealers. On the basis of informa .....

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..... les are not doubted, hundred percent disallowance for bogus purchase cannot be done. The rationale being no sales is possible without actual purchases. This proposition is supported from honourable jurisdictional High Court decision in the case of Nikunj eximp enterprises (in writ petition no 2860, order dated 18.6.2014). In this case the honourable High Court has upheld hundred percent allowance for the purchases said to be bogus when sales are not doubted. However in that case all the supplies were to 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 th .....

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