SHAKEELUDDIN SIDDIQUI, MUMBAI V. INCOME TAX OFFICER-2(4), THANE

ITA 5118/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0381 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 02-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Bogus purchase; Tangible material; Accommodation entries; Reason to believe
• Section: 133(6); 147; 148; 10; 2; 11

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI , BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ./ I.T.A. NO S . 5118 TO 5120 /MUM/2017 ( / ASSESSMENT YEAR S : 2009 - 10 TO 2011 - 12 ) SHRI SHAKEELUDDIN SIDDIQUI 603, GULMOHAR CO - OP. HSG. SOCIETY, SARASWATI TOWER, NAYA NAGAR, GANGA COMPLEX, 60 FEET ROAD, MIRA ROAD (E), DIST. THANE - 400 107 / VS. ITO - 2(4), ROOM NO. 29, A - WING, 6 TH FLOOR, ASHAR I. T. PARK, ROAD NO. 16 - Z, WAGLE INDL. ESTATE, THANE - 400 604 ./ ./ PAN/GIR NO. AJWPS 5271 N ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI BHUPENDRA SHAH / RESPONDENT BY : MS. N. HEMALATHA / DATE OF HEARING : 16.11.2017 / DATE OF PRONOUNCEMENT : 05.02 .2018 / O R D E R PER S HAMIM YAHYA , A. M.: TH ESE ARE APPEALS BY THE ASSESSEE DIRECTED AGAINST THE COMMON ORDE R OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 02.05.2017 AND PERTAIN TO THE AFORESAID THREE ASSESSMENT YEARS. 2. THE ISSUE RAISED IS THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN SUSTAINING DISALLOWANCE OF 100% OF BOGUS PURCHASE. A N ADDITIONAL GROUND HAS BEEN RAISED CHALLENGING THE VALIDITY OF REOPENING. 2 ITA NO S . 5118 T O 5120/MUM/2017 SHRI SHAKEELUDDIN SIDDIQUI VS. ITO 3. SINCE THE FACTS ARE IDENTICAL REFERENCE IS BEING MADE TO THE FACTS AND FIGURES FROM ASSESSMENT YEAR 2009 - 10. 4. IN THIS CASE, T HE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUF ACTURING OF INDUSTRIAL VALVES, TUBES AND PIPE FITTINGS. INFORMATION HAD BEEN RECEIVED BY THE ASSESSING OFFICER FROM THE SALES TAX DEPARTMENT, MAHARASHTRA TO THE EFFECT THAT THE ASSESSEE WAS ONE OF THE BENEFICIARIES OF TRANSACTIONS WITH HAWALA DEALERS. THE ASSESSEE HAD SHOWN PURCHASES AMOUNTING TO RS.7,16,169/ - FROM THE FOLLOWING PARTIES: SR. NO. NAME OF THE ENTRY PROVIDER F.Y. AMOUNT 1 SIDHIVINAYAK STEELS 2008 - 09 2,79,508/ - 2 AKSHAT ENTERPRISES 2008 - 09 46,125/ - 3 GLOBAL TRADE IMPEX 2008 - 09 22,469/ - 4 C HANCHAL TUBE CORPORATION 2008 - 09 2,18,655/ - 5 M/S. KEY STONE TUBES PVT. LTD. 2008 - 09 69,790/ - 6 NIRMAL METAL INDUSTRIES 2008 - 09 79,622/ - TOTAL 7,16,169/ - THE NAMES OF THESE PARTIES WERE APPEARI NG IN THE LIST OF HAW ALA DEALERS AS SUPPLIED BY THE S A L ES - TAX DEPARTMENT OF MAHARASHTRA. THE HAWALA DEALERS HAD ADMITTED BEFORE THE SALES - TAX AUTHORITIES IN THEIR STATEMENT/AFFIDAVIT THAT THEY WERE PROVIDING ONLY ACCOMMODATION BILLS WITHOUT THERE BEING ANY ACTUAL PURCHASE/SALE OF GOODS. THOUGH THE PAYMENT W AS RECEIVED BY THE SAID PARTIES FROM THEIR CUSTOMERS THROUGH BANKING CHANNELS, HOWEVER, AFTER CLEARING OF THE CHEQUES CASH WAS WITHDRAWN AND HANDED OVER TO THE CUSTOMERS ALTER DEDUCTION OF NOMINAL COMMISSION CHARGES. THE ASSESSING OFFICER ISSUED NOTICE U/S . 148 OF THE I.T. ACT DATED 07.05.2013 TO THE 3 ITA NO S . 5118 T O 5120/MUM/2017 SHRI SHAKEELUDDIN SIDDIQUI VS. ITO ASSESSEE FOR RE - OPENING OF THE ASSESSMENT PROCEEDINGS. DURING T HE COURSE OF RE - ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ISSUED NOTICE U/S. 133(6) OF THE I.T . ACT TO THE ABOVE LISTED PARTIES WHICH WERE RECE IVED BACK UNSERVED WITH THE REMARK OF THE POSTAL AUTHORITIES 'NOT KNOWN'. THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THESE PARTIES B EFORE HER, TO ESTABLISH THE IDENTITY OF THE PARTIES AND TO ESTABLISH THE GENUINENESS OF THE CLAIM OF PURCHASES. IN RESPONSE TO THIS QUERY, THE ASSESSEE FILED BEFORE, THE ASSESSING OFFICER C OPIES OF PURCHASE BIL L S FROM THE ABOVE LISTED PARTIES, THEIR LEDGER EXTRACT AND COPY OF HIS BANK A CCOUNT TO SHOW THAT THE PAYMENT TO THE PARTIES HAD BEEN MADE THROUGH ACCOUNT PAYEE C HEQUES. THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEES EXPLANATION AS HE FAILED TO PRODUCE, THESE PARTIES BEFORE HER AND TO FIL E SUPPORTING DOCUMENTARY EVIDENCE WITH REGARD T O THE PURCHASES. THE ASSESSING OFFICER THEREFORE 'HELD THAT THE ASSESSEE H AD FAILED TO ESTABLISH THE GENUINENESS OF THE PURCHASES SHOWN FROM THE ABOVE LISTED PARTIES AND MADE AN ADDITION OF RS.7,16,169/ - TO THE ASSESSEE 'S INCOME ON ACCOUNT OF UNPROVED PURCHASES. 5. AGAINST THE ABOVE ORDER, THE ASSESSEE APPEALED BEFORE THE LD. COMM ISSIONER OF INCOME TAX (APPEALS) CHALLENGING THE MERITS OF THE ADDITION. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION BY HOLDING AS UNDER: THE APPELLANT HAD S HOWN PURCHASES AMOUNTING TO RS. 7, 1 6,169/ - FROM THE ABOVE LISTED PARTIES WHICH WERE APPEARING IN THE LIST OF HAWALA DEALERS AS PER INFORMATION RECEIVED FROM THE SALES - TAX AUTHORIT IES OF MAHARASHTRA GOVERNMENT. THE HAWALA DEALERS HAD ADMITTED BEFORE THE SALES - TAX 4 ITA NO S . 5118 T O 5120/MUM/2017 SHRI SHAKEELUDDIN SIDDIQUI VS. ITO AUTHORITIES I N THEIR STATEMENT / AFFIDAVIT THAT THEY WERE PROVIDING ONLY ACCOMMODATION BILLS WITHOUT THERE BEING ANY ACTUAL PURCHASE/ SALE O F GOODS. THOUGH THE PAYMENT WAS RECEIVED BY THE SAID PARTIES FROM THEIR CUSTOMERS THROUGH BANKING CHANNELS, HOWEVER, AFTER CLEARI NG OF THE CHEQUES CASH WAS WITHDRAWN AND HANDED OVER TO THE CUSTOMERS AFTER DEDUCTION OF NOMINAL COMMISSION CHARGES. ON BEING ASKED TO ESTABLISH THE GENUINENESS OF THE PURCHASES SHOWN FROM THE ABOVE LISTED PARTIES, THE APPELLANT FILED BEFORE THE AO COPIES OF PURCHASE BILLS FROM THE ABOVE LISTED PARTIES, THEIR LEDGER EXTRACT AND COPY OF HIS BANK; ACCOUNT TO SHOW THAT THE PAYMENT TO THE PARTIES HAD BEEN MADE THROUGH ACCOUNT PAYEE CHEQUES. THE NOTICES U/S. 133(6) OF THE I.T. ACT SENT BY THE AO TO THESE PARTIES HAD BEEN RECEIVED BACK WITH THE REMARK OF THE POSTAL AUTHORITIES 'NOT KNOWN' . ON BEING ASKED TO PRODUCE THESE PARTIES BEFORE THE AO, THE APPELLANT FAILED TO DO SO. DURING THE CO URSE OF PRESENT PROCEEDINGS THE APPELLANT HAS FILED A COPY OF THE SUBMISSIONS AND DOCUMENTARY EVIDENCE FILED BEFORE THE AO COMPRISING OF COPIES OF PURCHASE BILLS, COPIES OF LEDGER EXTRACTS OF THE PARTIES AND COPY OF HIS BANK ACCOUNT TO SHOW PAYMENT TO THE PAR TIES THROUGH BANKING CHANNELS. HOWEVER, THE APPELLANT HAS NOT FILED ANY DO CUMENTARY EVIDENCE TO ESTABLISH THE MOVEMENT OF THE GOODS FROM THE PREMISES OF THE ABOVE LISTED PARTIES TO THE APPELLANT'S PREMISES. THOUGH IN HIS SUBMISSIONS THE APPELLANT HAS STATED THAT HE HAD FILED COPIES OF LORRY RECEIPTS, DELIVERY CHALLANS IN RESPECT OF THESE PURCHASES, HOWEVER, ON PERUSAL OF THE DOCUMENTARY EVIDENCE FILED BEFORE THE AO, IT IS SEEN THAT NO SUCH DOCUMENTARY EVIDENCE WAS FILED BEFORE THE AO. FURTHER, NO SUCH DOCUMENTARY EVIDENCE HAS BEEN FILED BEFORE ME DURING THE COURSE OF PRESENT PROC EEDINGS ALSO. NO STOCK REGISTER HAS BEEN PRODUCED BEFORE ME TO SHOW THE RECEIPT OF THE MATERIAL PURCHASED FROM THE ABOVE LISTED PARTIES AS RECORDED IN THE APPELLANT'S BOOKS. FURTHER, NO CONSUMPTION RECORDS ARE MAINTAINED BY THE APPELLANT NOR HAVE ANY SUCH RECORD BEEN PRODUCED BEFORE ME TO ESTABLISH THE CONSUMPTION OF THE MATERIAL SHOWN AS PURCHASED FROM THE ABOVE LISTED PARTIES IN THE MANUFACTURE OF FINISHED GOODS. THEREFORE THE FACTS OF THE APPELLANT'S CASE ARE DIFFERENT FROM THE FACTS OF VARIOUS DECISIONS RELIED UPON BY THE APPELLANT AS LISTED ABOVE IN THE APPELLANT'S SUBMISSIONS. FOR ALL THE DETAILED REASONS .DISCUSSED ABOVE, THE APPELLANT'S BOOKS OF ACCOUNTS A RE REJECTED U/S. 145(3) OF THE I T. ACT FOR BEING INCOMPLETE A ND UNRELIABLE . 5 ITA NO S . 5118 T O 5120/MUM/2017 SHRI SHAKEELUDDIN SIDDIQUI VS. ITO 6. AGAINST THE ABOV E ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 7. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. AS REGARDS THE REOPENING OF THE ASSESSEE, ON A CAREFUL CONSIDERATION, I NOTE THAT IN THIS CASE INFOR MATION WAS RECEIVED BY THE ASSESSING OFFICER FROM DGIT INVESTIGATION (MUMBAI) THERE ARE SOME PARTIES WHO ARE ENGAGED IN THE HAWALA TRANSACTIONS AND ARE ALSO INVOLVED IN ISSUING BOGUS PURCHASE BILLS FOR SALE OF MATERIAL WITHOUT DELIVERY OF GOODS, WHICH INFO RMATION WAS BASED ON INFORMATION RECEIVED BY REVENUE FROM MAHARASHTRA SALES TAX AUTHORITY. INFORMATION WAS RECEIVED THAT THE ASSESSEE WAS BENEFICIARY OF HAWALA ACCOMMODATION ENTRIES FROM ENTRY PROVIDERS BY WAY OF BOGUS PURCHASE. THE ACCOMMODATION ENTRY PRO VIDER HAS DEPOSED AND ADMITTED BEFORE THE MAHARASHTRA SALES TAX AUTHORITY VIDE STATEMENT/ AFFIDAVIT THAT THEY WERE ENGAGED IN PROVIDING BOGUS ACCOMMODATION ENTRIES WHEREIN BOGUS SALE BILLS WERE ISSUED WITHOUT DELIVERY OF GOODS, IN CONSIDERATION FOR COMMISS ION. THESE, ACCOMMODATION ENTRY PROVIDERS, ON RECEIPT OF CHEQUES FROM PARTIES AGAINST BOGUS BILLS FOR SALE OF MATERIAL, LATER ON WITHDREW CASH FROM THEIR BANK ACCOUNTS, WHICH WAS RETURNED TO BENEFICIARIES OF BOGUS BILLS AFTER DEDUCTION OF THEIR AGREED COMM ISSION. THE ASSESSEE WAS STATED TO BE ONE OF THE BENEFICIARIES OF THESE BOGUS ENTRIES OF SALE OF MATERIAL FROM HAWALA ENTRY OPERATORS IN FAVOUR OF THE ASSESSEE WHEREIN THE ASSESSEE MADE ALLEGED BOGUS PURCHASES THROUGH THESE BOGUS BILLS ISSUED BY HAWALA ENT RY PROVIDERS IN FAVOUR OF THE ASSESSEE. THESE 6 ITA NO S . 5118 T O 5120/MUM/2017 SHRI SHAKEELUDDIN SIDDIQUI VS. ITO DEALERS WERE SURVEYED BY THE SALES TAX INVESTIGATION DEPARTMENT WHEREBY THE DIRECTORS OF THESE DEALERS HAVE ADMITTED IN A DEPOSITION VIDE STATEMENTS/AFFIDAVIT MADE BEFORE THE SALES TAX DEPARTMENT THAT THEY WERE INVOLVED IN. ISSUING BOGUS PURCHASE BILLS WITHOUT DELIVERY OF ANY MATERIAL. THERE IS A LIST OF SUCH PARTIES WHEREIN THE ASSESSEE IS STATED TO BE BENEFICIARY OF BOGUS PURCHASE BILLS. 8. FROM THE ABOVE, I FIND THAT TANGIBLE AND COGENT INCRIMINATING MATE RIAL WERE RECEIVED BY THE AO WHICH CLEARLY SHOWED THAT THE ASSESSEE WAS BENEFICIARY OF BOGUS PURCHASE ENTRIES FROM BOGUS ENTRY PROVIDERS WHICH FORMED THE REASON TO BELIEVE BY THE AO THAT INCOME HAS ESCAPED ASSESSMENT. THE INFORMATION SO RECEIVED BY THE AO HAS LIVE LINK WITH REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. ON THESE INCRIMINATING TANGIBLE MATERIAL INFORMATION, ASSESSMENT WAS REOPENED. AT THIS STAGE THERE HAS TO BE PRIMA FACIE BELIEF BASED ON SOME TANGIBLE AND MATERIAL INFORMATION ABOUT E SCAPEMENT OF INCOME AND THE SAME IS NOT REQUIRED TO BE PROVED TO THE GUILT. IN THIS REGARD, I REFER TO THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CIT(A) VS. RAJESH JHAVERI STOCK BROKERS P. LTD, 291 ITR 500: - 'SECTION 147 AUTHORISES AND PERMITS T HE ASSESSING OFFICER TO ASSESS OR REASSESS INCOME CHARGEABLE TO LAX IF HE HAS REASON TO BELIEVE THAT INCOME FOR ANY ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. THE WORD 'REASON' IN THE PHRASE 'REASON TO BELIEVE' WOULD MEAN CAUSE OR JUSTIFICATION. IF THE AO HAS CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE (HAT INCOME HAD ESCAPED ASSESSMENT, IT CAN BE SAID TO HAVE REASON TO BELIEVE THAT AN INCOME HAD ESCAPED ASSESSMENT. THE EXPRESSION CANNOT BE READ TO MEAN THAT THE AO SHOULD HAVE FINALLY ASCERTAINED THE FACT BY LEG AL STATUTE WITH SOLICITUDE FOR THE PUBLIC EXCHEQUER WITH AN INBUILT IDEA OF FAIRNESS TO TAXPAYERS. AS OBSERVED BY THE SUPREME COURT IN CENTRAL 7 ITA NO S . 5118 T O 5120/MUM/2017 SHRI SHAKEELUDDIN SIDDIQUI VS. ITO PROVINCES MANAGNESE ORE CO, LTD. V. ITO(1991) 191 ITR 662, FOR INITIATION OF ACTION UNDER SECTION 147(A) (AS THE PROVISION STOOD AT THE RELEVANT TIME) FULFILLMENT OF THE TWO REQUISITE CONDITIONS IN THAT REGARD IS ESSENTIAL. AT THAT STAGE, THE FINAL OUTCOME OF THE PROCEEDING IS NOT RELEVANT. IN OTHER WORDS, AT THE INITIATION STAGE, WHAT IS REQUIRED IS 'REASON TO BELIE VE', BUT NOT THE ESTABLISHED FACT OF ESCAPEMENT OF INCOME. AT THE STAGE OF ISSUE OF NOTICE, THE ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED A REQUISITE BELIEF WHETHER THE MATERIALS WOULD CONCLUSIVELY PROVE THE ESCAPEMENT IS NOT THE CONCERN AT THAT STAGE. THIS IS SO BECAUSE THE FORMATION OF BELIEF BY THE AO IS WITHIN THE REALM OF SUBJECTIVE SATISFACTION ITO V. SELECTED DALURBAND COAL CO, (P.) LTD. (1996) 217 ITR 597 (SUPREME COURT): RAYMOND WOOLLEN MILL S LTD. V. ITO (1999) 236 ITR 34 (SUPREME COURT). 9. THE ABOVE DISCUSSION AND PRECEDENT FROM APEX COURT FULLY JUSTIFY THE VALIDITY OF REOPENING IN THIS CASE. FURTHER I FIND THAT THE LD. CIT(A) HAS CAREFULLY EXAMINED THE ISSUE AND HAS PROPERLY APPRECIATED THE ISSUE. HENCE, I DO NOT FIND ANY INFIRMITY IN THE SAME. ACCORDINGLY, I UPHOLD THE ORDER OF THE LD. CIT(A) ON THE ISSUE OF REOPENING. SINCE, THE ISSUE HAS BEEN DECIDED ON THE BASIS OF THE HONBLE APEX COURT DECISION, THE OTHER CASE LAWS REFERRED BY ASSE SSEE ARE NOT SUPPORTING THE ASSESSEES CASE. 10. AS REGARDS THE MERITS, I FIND THAT CREDIBLE AND COGENT INFORMATION WAS RECEIVED IN THIS CASE BY THE ASSESSING OFFICER THAT CERTAIN ACCOMMODATION ENTRY PROVIDER/BOGUS SUPPLIERS WERE BEING USED BY CERTAIN PA RTIES TO OBTAINED BOGUS BILLS. THE ASSESSEE WAS FOUND TO HAVE TAKEN ACCOMMODATION ENTRY/BOGUS PURCHASE BILLS DURING THE CONCERNED ASSESSMENT YEAR FROM DIFFERENT PARTIES. BASED UPON THIS INFORMATION ASSESSMENT WAS REOPENED. THE CREDIBILITY OF INFORMATION RE LATING TO REOPENING REMAINS UN - ASSAILED. IN 8 ITA NO S . 5118 T O 5120/MUM/2017 SHRI SHAKEELUDDIN SIDDIQUI VS. ITO SUCH FACTUAL SCENARIO, THE ASSESSING OFFICER HAS MADE THE NECESSARY ENQUIRY. THE ISSUE OF NOTICE TO ALL THE PARTIES HAVE RETURNED UNSERVED. ASSESSEE HAS NOT BEEN ABLE TO PROVIDE ANY CONFIRMATION FROM ANY OF THE P ARTY. ASSESSEE HAS ALSO NOT BEEN ABLE TO PRODUCE ANY OF THE PARTIES. NECESSARY EVIDENCE RELATING TO TRANSPORTATION OF THE GOODS WAS ALSO NOT ON RECORD. IN THIS FACTUAL SCENARIO, IT IS AMPLY CLEAR THAT THE ASSESSEE HAS OBTAINED BOGUS PURCHASE BILLS. MERE PR EPARATION OF DOCUMENTS FOR PURCHASES CANNOT CONTROVERT OVERWHELMING EVIDENCE THAT THE PROVIDER OF THESE BILLS IS BOGUS AND NON - EXISTENT. 11. THE SALES TAX DEPARTMENT IN ITS ENQUIRY HAS FOUND THE PARTIES TO BE PROVIDING BOGUS ACCOMMODATION ENTRIES. THE AS SESSING OFFICER ALSO ISSUED NOTICES TO THESE PARTIES AT THE ADDRESSES PROVIDED BY THE ASSESSEE. ALL THESE NOTICES HAVE RETURNED UNSERVED. ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY OF THE PARTIES. NEITHER THE ASSESSEE HAS BEEN ABLE TO PRODUCE ANY CONFIRMATI ON FROM THESE PARTIES. IN SUCH CIRCUMSTANCES, THERE IS NO DOUBT THAT THESE PARTIES ARE NON - EXISTENT. WE FIND IT FURTHER STRANGE THAT ASSESSEE WANTS THE REVENUE TO PRODUCE ASSESSEES OWN VENDORS, WHOM THE ASSESSEE COULD NOT PRODUCE. THE PURCHASE BILLS FROM THESE NON - EXISTENT/BOGUS PARTIES CANNOT BE TAKEN AS COGENT EVIDENCE OF PURCHASES. IN LIGHT OF THE OVERWHELMING EVIDENCE, THE REVENUE AUTHORITIES CANNOT PUT UPON BLINKERS AND ACCEPT THESE PURCHASES AS GENUINE. THIS PROPOSITION IS DULY SUPPORTED BY HONBLE APEX COURT DECISION IN THE CASE OF SUMATI DAYAL VS. CIT [1995] 214 ITR 801 (SC) AND CIT VS. DURGA PRASAD 9 ITA NO S . 5118 T O 5120/MUM/2017 SHRI SHAKEELUDDIN SIDDIQUI VS. ITO MORE [1971] 82 ITR 540 (SC). IN THE PRESENT CASE, THE ASSESSEE WANTS THAT THE UNASSAILABLE FACT THAT THE SUPPLIERS ARE NON - EXISTENT AND, THUS, BOGUS SH OULD BE IGNORED AND ONLY THE DOCUMENTS BEING PRODUCED SHOULD BE CONSIDERED. THIS PROPOSITION IS TOTALLY UNSUSTAINABLE IN LIGHT OF HONBLE APEX COURT DECISIONS. 12. I FURTHER FIND THAT HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF NIKUNJ EXIMP ENTERPRIS ES (IN WRIT PETITION NO 2860, ORDER DT. 18.6.2014) HAS UPHELD 100% ALLOWANCE FOR THE PURCHASES SAID TO BE BOGUS WHEN THE SALES HAVE NOT BEEN DOUBTED. HOWEVER, THE FACTS OF THAT CASE WERE DIFFERENT. FURTHERMORE, THE SALES IN THAT CASE WERE BASICALLY TO GOV ERNMENT DEPARTMENTS. HENCE, THE RATIO FROM THIS DECISION IS NOT FULLY APPLICABLE ON THE FACTS OF THE CASE. 13. IN THESE CIRCUMSTANCES, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS REFERRED TO HONBLE GUJARAT HIGH COURT DECISION IN THE CASE OF TAX APPEAL NO. 240 OF 2003 IN THE CASE OF N K INDUSTRIES VS. DY. CIT VIDE ORDER DATED 20.06.2016, WHEREIN 100% OF THE BOGUS PURCHASES WAS HELD TO BE ADDED IN THE HANDS OF THE ASSESSEE AND TRIBUNALS RESTRICTION OF THE ADDITION TO 25% OF THE BOGUS PURCHASES WAS SET ASIDE. IT W AS EXPOUNDED THAT WHEN PURCHASE BILLS HAVE BEEN FOUND TO BE BOGUS, 100% DISALLOWANCE WAS REQUIRED. THE SPECIAL LEAVE PETITION AGAINST THIS ORDER ALONG WITH OTHERS HAS BEEN DISMISSED BY THE HONBLE APEX COURT VIDE ORDER DATED 16.1.2017. 14. THE LD. DEPART MENTAL REPRESENTATIVE FURTHER REFERRED TO THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT JAIPUR VS SHRUTI GEMS IN ITA NO. 658 OF 2009. THE 10 ITA NO S . 5118 T O 5120/MUM/2017 SHRI SHAKEELUDDIN SIDDIQUI VS. ITO HONBLE HIGH COURT HAS REFERRED TO THE DECISION OF CIT JAIPUR VS. ADITYA GEMS, D. B. IN ITA NO. 234 OF 2008 DAT ED 02.11.2016, WHEREIN THE HONBLE COURT HAD INTER ALIA HELD AS UNDER: 'CONSIDERING THE LAW DECLARED BY THE SUPREME COURT IN THE CASE OF VIJAY PROTEINS LTD. VS. COMMISSIONER OF INCOME TAX, SPECIAL LEAVE TO APPEAL (C) NO.8956/2015 DECIDED ON 06.04.2015 WHE REBY THE SUPREME COURT HAS DISMISSED THE SLP CONFIRMED THE ORDER DATED 09.12.2014 PASSED BY THE GUJARAT HIGH COURT AND OTHER DECISIONS OF THE HIGH COURT OF GUJARAT IN THE CASE OF SANJAY OILCAKE INDUSTRIES VS. COMMISSIONER OF INCOME TAX (2009) 316 ITR 274 ( GUJ) AND N.K. INDUSTRIES LTD. VS. DY. C.I.T., TAX APPEAL NO.240/2003 DECIDED ON 20.06.2016, THE PARTIES ARE BOUND BY THE PRINCIPLE OF LAW PRONOUNCED IN THE AFORESAID THREE JUDGMENTS. 15. UPON CAREFUL CONSIDERATION I FIND THAT SALES IN THESE CASES ARE NO T DOUBTED. WHEN SALES ARE NOT DOUBTED , 100% DISALLOWANCE FOR BOGUS PURCHASE IS NOT SUSTAINABLE AS PER THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT REFERRED HERE - IN - ABOVE. HOWEVER THE FACTS AND CIRCUMSTANCES OF THE CASE INDICATE THAT ASSESSEE HAS E NGAGED INTO DEALINGS IN THE GREY MARKET. DEALINGS IN THE GREY MARKET GIVE THE ASSESSEE VARIOUS SAVINGS AT THE EXPENSE OF THE E XCHEQUER. HENCE , ON THE O VERALL CONSIDERATION OF FACTS AND CIRCUMSTANCES AND FOLLOWING THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS SIMIT P. SHETH [2013] 356 ITR 451 (GUJ.) I HOLD THAT A DISALLOWANCE OF 12.5% OF THE BOGUS PURCHASE WOULD MEET THE END OF JUSTICE. ACCORDINGLY , I MODIFY THE ORDER'S OF AUTHORITIES BELOW AND DIRECT THAT THE DISALLOWANCE IN THIS CASE SHOULD BE RESTRICTED TO 12.5% OF THE BOGUS PURCHASE . SINCE THE ISSUE HAS BEEN DECIDED KEEPING IN 11 ITA NO S . 5118 T O 5120/MUM/2017 SHRI SHAKEELUDDIN SIDDIQUI VS. ITO MIND THE HONBLE SUPREME COURT AND HONBLE HIGH COURT DECISION, THE DECISIONS OF TRIBUNAL REFERRED BY THE LD. COUNSEL OF THE ASSESSEE ARE NOT RELEVANT. 16. I N THE RESULT , THESE APPEALS FILED BY THE ASSESSEE STAND PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 05.02.2018 SD/ - (S HAMIM YAHYA ) / A CCOUNTANT MEMBER MUMBAI ; DATED : 05. 02.2018 . . ./ ROSHANI , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI