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The issue raised in Revenue’s appeal is that the learned CIT(A) erred in restricting the disallowance on account of bogus purchases to 12.5% of the bogus purchases. We find that assessee has provided the documentary evidence for the purchase including the transportation details. Held that—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 the 12.5 % disallowance out of the bogus purchases meets the end of justice. As the assessee has prayed that when only the profits earned by the assessee on these bogus purchase transaction is to be taxed the gross profit already shown by the assessee and offered to tax should be reduced from the standard 12.5% being directed to be disallowed on account of bogus purchase. Upon careful consideration we find considerable cogency in the submission of the assessee as otherwise it will be double jeopardy to the assessee. Accordingly we modify the order of learned CIT-A and direct that the disallowance in this case be restricted to 12.5 % of the bogus purchases as reduced by the gross profit rate already declared by the assessee on these transactions. Ld counsel of the assessee fairly accepted this proposition.

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Section 37 of Income Tax act, 1961 —The issue raised in Revenue’s appeal is that the learned CIT(A) erred in restricting the disallowance on account of bogus purchases to 12.5% of the bogus purchases.

We find that assessee has provided the documentary evidence for the purchase including the transportation details.

Held that—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 the 12.5 % disallowance out of the bogus purchases meets the end of justice. As the assessee has prayed that when only the profits earned by the assessee on these bogus purchase transaction is to be taxed the gross profit already shown by the assessee and offered to tax should be reduced from the standard 12.5% being directed to be disallowed on account of bogus purchase.

Upon careful consideration we find considerable cogency in the submission of the assessee as otherwise it will be double jeopardy to the assessee. Accordingly we modify the order of learned CIT-A and direct that the disallowance in this case be restricted to 12.5 % of the bogus purchases as reduced by the gross profit rate already declared by the assessee on these transactions. Ld counsel of the assessee fairly accepted this proposition.[THE DY. COMMISSIONER OF INCOME TAX 11 (1) (1) AND THE ACIT - 11 (1) (1) , MUMBAI VERSUS M/S. RAKSHIT INFRASTRUCTURE PVT. LTD.] [2018] [7] [ITCD Online] [41] [ITAT MUMBAI]