Bholanath Poly Fab Pvt.Ltd.,, Surat v. The Income tax Officer,Ward-1(1),, Surat

ITA 137/AHD/2009 | 2005-2006
Pronouncement Date: 26-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 13720514 RSA 2009
Assessee PAN AABCB9391H
Bench Ahmedabad
Appeal Number ITA 137/AHD/2009
Duration Of Justice 2 year(s) 6 month(s) 12 day(s)
Appellant Bholanath Poly Fab Pvt.Ltd.,, Surat
Respondent The Income tax Officer,Ward-1(1),, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 26-07-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 26-07-2011
Date Of Final Hearing 26-07-2011
Next Hearing Date 26-07-2011
Assessment Year 2005-2006
Appeal Filed On 13-01-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD D BENCH (BEFORE S/SHRI G.D. AGARWAL VICE-PRESIDENT AND T.K. SHARMA JUDICIAL MEMBER) ITA NO.137/AHD/2009 [ASSTT. YEAR : 2005-2006] BHOLANATH POLY FAB P. LTD. C/O. A.K.OSTWAL & CO. C-408 INTERNATIONAL TRADE CENTRE MAJURA GATE SURAT 395 002. PAN: AABCB 9391 H VS. ITO WARD-1(1) SURAT. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PRAKASH D. SHAH REVENUE BY : SHRI B.L. YADAV O R D E R PER G.D. AGARWAL VICE-PRESIDENT : THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME -TAX (APPEALS)-I SURAT DATED 7.08.2008 ARISING OUT OF THE ORDER OF T HE AO UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961. 2. IN THIS APPEAL OF THE ASSESSEE THE FOLLOWING GR OUNDS WERE RAISED: 1. THE LD.CIT(A) ERRED IN CONFIRMING ADDITION OF R S.40 69 546/- MADE BY THE LD.AO BY DISALLOWING PURCHASE OF FINISH ED FABRICS AMOUNTING TO RS.40 69 456/- TREATING THE SAME AS UN ACCOUNTED PURCHASE. 2. THE LD.CIT(A) ERRED IN UPHOLDING THE REJECTION O F THE BOOKS OF ACCOUNTS UNDER SECTION 145(3) BY THE AO. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE DERI VES INCOME FROM THE BUSINESS OF SALE OF GREY AND FINISHED FABRICS. DUR ING THE ASSESSMENT PROCEEDINGS THE AO VERIFIED THE PURCHASE OF FINISH ED FABRICS AND HE FOUND THAT ALL 31 PARTIES FROM WHOM THE ASSESSEE CL AIMED TO HAVE PURCHASED THE FINISHED GOODS WERE NOT AVAILABLE AT THE ADDRESS GIVEN. ITA NO.137/AHD/2009 -2- THE PURCHASE BILLS WERE NOT HAVING TELEPHONE NUMBER OF THE SELLER. THE AO DEPUTED THE INSPECTOR OF THE INCOME-TAX DEPARTME NT TO VERIFY THE PURCHASES. HOWEVER NONE OF THE PARTIES WAS FOUND AT THE ADDRESS GIVEN BY THE ASSESSEE. THE ASSESSEE HAS ALSO NOT PRODUCE D EITHER CONFIRMATIONS FROM THE PARTIES OR ANY OF THE PARTIES BEFORE THE A O. THE RELEVANT FINDINGS RECORDED BY THE AO IN PARA 7 OF THE ASSESS MENT READS AS UNDER: ON VERIFICATION OF PURCHASE BILL OF FINISHED FABRI CS CLAIMED BY THE ASSESSEE COMPANY IT WAS NOTICED THAT ALMOST THE AL L BILLS ARE NOT HAVING MENTIONED TELEPHONE NUMBER PRINTED BILL NUM BER CHALAN NUMBER AND DE AILS OF TRANSPORTATION AND BROKERS. T HE PRINTED FORMAT IN MOST OF THE BILLS ARE ALSO SIMILAR. HAVIN G SUCH DOUBTS THIS OFFICE HAS ISSUED NOTICES U/S 133(6) OF THE IT ACT TO THE EACH PARTIES FOR CALLING CONTRA COPY OF ACCOUNT COPY OF ACKNOWLEDGEMENT OF RETURN FILED BANK STATEMENT ETC . HOWEVER ALL NOTICES ISSUED BY THIS OFFICE HAVE BEEN RETURNED BY THE POSTAL AUTHORITIES EITHER MENTIONING NO SUCH PARTY OR INCO MPLETE ADDRESS. ACCORDINGLY THIS OFFICE HAS DEPUTED THE INSPECTOR OF THIS WARD TO ASCERTAIN THE CORRECT ADDRESS OF THE PARTIES SO THA T GENUINENESS OF CLAIM OF THE ASSESSEE COMPANY COULD BE MADE. THE IN SPECTOR OF THIS WARD SUBMITTED HIS REPORT DATED 17.09.2007 WHEREIN HE HAS MADE COMMENT ON EACH PARTY. THE OUT COME OF THE INQUIRY WAS NO SUCH PARTIES WERE FOUND AT THE GIVEN ADDRESSES/PRINTED A DDRESSES ON MSS AND IN THE SURROUNDING AREA. NO DOUBT THE REPORT S UBMITTED BY THE INSPECTOR PROVED THAT THE ASSESSEE COMPANY HAS NOT MADE ACTUAL PURCHASE FROM ABOVE PARTIES SIMPLY BILLS HAVE BEEN EITHER OBTAINED OR KEPT ON RECORD IN SUPPORT OF UNACCOUNTE D PURCHASES. THE ASSESSEE COMPANY WAS GOT AWARE OF THE INQUIRIES CARRIED OUT U/S 133(6) OF THE IT ACT AND INQUIRIES CARRIED OUT THROUGH THE INSPECTOR OF THIS WARD BUT THE REPLY WAS MADE THAT PURCHASES WERE ACTUALLY MADE AND PAYMENT WAS ALSO MADE THROUGH CHE QUES. SIMULTANEOUSLY THIS OFFICE HAS MADE INQUIRIES U/S 133(6) OF THE IT ACT THROUGH HDFC BANK AND KOTAK MAHINDRA OF THE ASS ESSEE COMPANY IN SOME CASES. BOTH THE BANKS HAVE BEEN PRO VIDED CHEQUE NUMBER AMOUNT AND DATE OF CLEARANCE OF THE CHEUQES CLAIMED TO BE ISSUED FOR THE PURPOSE OF PURCHASES DISCUSSED AB OVE. BOTH THE BANKS PROVIDED DETAILS REGARDING CLEARANCE OF THOSE CHEQUES AND NOTICED THAT MOST OF CLEARING WERE SHOWN PAYMENT TO 'NINA' AND ITA NO.137/AHD/2009 -3- 'H' TRADERS IN THE CASE OF KOTAK MAHINDRA BANK. IN THE SAME FASHION THE CLEARING WERE SHOWN IN THE NAME OF 'ARU N CHEM' IN THE CASE OF HDFC BANK. THE INQUIRIES REVEALED THAT THE ASSESSEE COMPANY HAS NOT ISSUED ACCOUNT PAYEE CHEQUE ACCORD INGLY THE CHEQUES HAVE BEEN CLEARED IN OTHER ACCOUNTS. IN VIEW OF THE ABOVE THE AO TREATED THE PURCHASE A MOUNTING TO RS.40 69 546/- FROM THE ABOVE PARTIES TO BE BOGUS A ND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 4. ON APPEAL THE CIT(A) SUSTAINED THE ADDITION HE NCE THIS APPEAL BY THE ASSESSEE. 5. AT THE TIME OF HEARING BEFORE US IT IS STATED B Y THE LEARNED COUNSEL THAT THE ASSESSEE MADE PURCHASES FROM THE ABOVE MEN TIONED PARTIES AND MADE PAYMENT BY CHEQUE. THAT IF AT THE TIME OF VE RIFICATION BY THE AO THE PARTIES WERE NOT AVAILABLE AT THE ADDRESS GIVEN IT CANNOT BE PRESUMED THAT THE PURCHASE IS NOT GENUINE. HE FURTHER SUBMI TTED THAT EVEN IF IT IS HELD THAT THE ASSESSEE DID NOT MAKE THE PURCHASE FR OM THOSE PARTIES IT IS EVIDENT THAT THE GOODS WERE ACTUALLY PURCHASED BY T HE ASSESSEE. IN SUPPORT OF THIS HE REFERRED TO QUANTITATIVE DETAIL S GIVEN IN THE AUDIT REPORT AND POINTED OUT THAT ENTIRE QUANTITY OF PURCHASES M ADE BY THE ASSESSEE WAS SOLD. THE ASSESSEE HAS NOT CLAIMED SHORTAGE OF SINGLE METER OF THE CLOTH. THUS WHEN THE ENTIRE PURCHASE OF 1 02 514 METERS OF THE CLOTH WAS SOLD IF THE PURCHASE IS HELD TO BE BOGUS THERE CAN NOT BE RESULTANT SALE. SINCE THE DEPARTMENT HAS ACCEPTED THE SALE AS GENUI NE OBVIOUSLY THE CORRESPONDING PURCHASE WOULD ALSO BE GENUINE. HE S UBMITTED THAT SIMILAR FACTS IS CONSIDERED IN DETAIL BY THE ITAT IN THE CA SE OF VIJAY PROTEINS 58 ITD 428 (AHD). THAT THE ITAT IN THE SUBSEQUENT CAS ES ALSO MADE SOME LUMPSUM DISALLOWANCE OUT OF THE PURCHASES WHICH WAS MUCH LOWER THAN ITA NO.137/AHD/2009 -4- 25%. THAT IN THE CASE OF PROCESSING OF CLOTH AT T HE RELEVANT TIME THERE WAS NEITHER ANY CUSTOM DUTY NOR EXCISE DUTY THEREFO RE EVEN IN THE PURCHASES MADE IN THE GREY MARKET THERE WOULD BE O NLY MARGINAL DIFFERENCE IN THE RATE. HE THEREFORE STATED THAT L UMPSUM DISALLOWANCE OUT OF PURCHASES MAY BE MADE. 6. THE LEARNED DR ON THE OTHER HAND RELIED UPON T HE ORDER OF THE AUTHORITIES BELOW. HE POINTED OUT THAT THE AO AFTE R DETAILED INVESTIGATION HAS PROVED THAT THE PURCHASES SHOWN IN THE BOOKS OF ACCOUNTS WERE NOT GENUINE. ONCE THE PURCHASE IS PROVED TO BE NON-GEN UINE HE WAS FULLY JUSTIFIED IN DISALLOWING THE NON-GENUINE PURCHASES THE SAME SHOULD BE SUSTAINED. 7. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. SO FAR AS T HE GENUINENESS OF THE PURCHASE IS CONCERNED WE FIND THAT THE ASSESSEE HA S CLAIMED TO HAVE PURCHASED THE FINISHED GOODS FROM 31 PARTIES. HOWE VER IN RESPECT OF ALL THE PARTIES ON THE SALE BILLS THERE WAS NO TELEPH ONE NUMBER OR NO PRINTED BILL NUMBER. THE AO ISSUED NOTICES TO ALL THE PART IES WHICH WERE RETURNED BY THE POSTAL AUTHORITIES WITH THE REMARK THAT THE ADDRESS IS INCOMPLETE. WHEN THE INSPECTOR OF THE IT DEPARTMENT WAS DEPUTED HE ALSO FOUND THAT NONE OF THE PARTIES IS AVAILABLE AT THE ADDRESS GIV EN IN THE BILLS. THE ASSESSEE WAS UNABLE TO PRODUCE THE CONFIRMATION FRO M ANY OF THE PARTIES. THE ASSESSEE CLAIMED TO HAVE MADE THE PAYMENT BY AC COUNT PAYEE CHEQUE BUT FROM THE VERIFICATION FROM THE BANK IT WAS FOUND THAT THE CHEQUES WERE ENCASHED BY SOME OTHER PARTIES AND NOT BY THE SOCALLED SELLERS. THESE FACTS CLEARLY ESTABLISH THAT THE AS SESSEE DID NOT MAKE THE PURCHASE FROM THE ABOVE PARTIES AND CLAIM OF SUCH P URCHASES WAS NOT ITA NO.137/AHD/2009 -5- GENUINE. HOWEVER WE FIND FORCE IN THE ALTERNATIV E CONTENTION OF THE LEARNED COUNSEL. QUANTITY-WISE DETAILS IS GIVEN IN PARA-28B OF THE AUDIT REPORT WHICH READS AS UNDER: B. FINISHED PRODUCTS. BY-PRODUCTS. (I) OPENING STOCK : 57356 (II) PURCHASES DURING THE PREVIOUS YEAR : 102514.20 (III) QUANTITY MANUFACTURED DURING THE PREVIOUS YEAR : 390684.50 (IV) SALES DURING THE PREVIOUS YEAR : 550554.70 (IV) CLOSING STOCK : NIL (VI) SHORTAGE/EXCESS IF ANY. : - FROM THE ABOVE IT IS EVIDENT THAT THE ENTIRE QUANT ITY OF OPENING STOCK PURCHASE AND QUANTITY MANUFACTURED DURING THE YEAR UNDER CONSIDERATION WAS SOLD BY THE ASSESSEE. THERE WAS NO CLOSING STO CK AND NO SHORTAGE WAS CLAIMED BY THE ASSESSEE. THUS THE PURCHASES O F ENTIRE 102514.20 METERS OF CLOTH WAS SOLD DURING THE YEAR UNDER CONS IDERATION. THIS SUPPORTS THE ASSESSEES CONTENTION THAT THE FINISHE D GOODS ARE PURCHASED BY THE ASSESSEE MAY BE FROM SOME OTHER PARTIES THAN THE PARTIES IN WHOSE NAME THE PURCHASE WAS SHOWN. ON THIS FACT THE DEC ISION OF THE ITAT IN THE CASE OF M/S. SANKET STEEL TRADERS VS. ITO VIDE ORDER IN ITA NO.2801/AHD/2008 DATED 20-5-2011 WOULD BE SQUARELY APPLICABLE WHEREIN THE TRIBUNAL HELD AS UNDER: 8. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US. FIRST WE SHALL CONSIDER THE ADDITION OF RS.26 76 559/- MADE BY THE ASSESSING OFFICER AS UNE XPLAINED PAYMENT. WE FIND THAT THE ASSESSING OFFICER IN THI S CASE HAS MADE A THOROUGH INVESTIGATION. HE HAD TAKEN PAIN TO TRA P THE PAYMENT ITA NO.137/AHD/2009 -6- FOR PURCHASES MADE BY THE ASSESSEE FROM THE BANK AC COUNT AND AT PAGE NO.5 OF THE ASSESSMENT ORDER HAS RECORDED THE FINDING WITH REGARD TO EACH PAYMENT. PERUSAL OF WHICH CLEARLY S HOWS THAT THE ENTIRE PAYMENT MADE BY THE ASSESSEE WAS BY CHEQUE A ND WAS DEBITED IN THE ASSESSEES BANK ACCOUNT. THEREFORE ONCE THE ASSESSEE HAS MADE THE PAYMENT BY CHEQUE WHICH IS D ULY DEBITED IN THE ASSESSEES BANK ACCOUNT THE SAME CANNOT BE SAI D TO BE UNEXPLAINED PAYMENT SOURCE OF SUCH PAYMENT IN THE HANDS OF THE ASSESSEE IS DULY EXPLAINED. THEREFORE IN OUR OPIN ION THERE WAS NO JUSTIFICATION FOR MAKING THE PAYMENT OF RS.26 76 55 9/- AS UNEXPLAINED CREDIT. SO FAR AS THE BOGUS PURCHASE I S CONCERNED WE FIND THAT THE ASSESSING OFFICER RECORDED THE DETAIL ED FINDING SO AS TO ESTABLISH THAT THE PURCHASES CLAIMED TO HAVE BEE N MADE FROM GIRNAR SALES CORPORATION AND SHIV METAL CORPORATION WAS BOGUS. THE LEARNED COUNSEL FOR THE ASSESSEE WAS UNABLE TO CONTROVERT THE FACTUAL FINDING RECORDED BY THE AO IN THIS REGARD. HOWEVER THERE IS NO DISPUTE THAT THE ASSESSEE IS ONLY A TRADER IN THE IRON AND STEEL AND IT HAS MAINTAINED QUANTITATIVE DETAILS. THE ST ATEMENT MADE BY THE LEARNED COUNSEL THAT THE PURCHASES CLAIMED TO H AVE BEE MADE BY THE ASSESSEE FROM GIRNAR SALES CORPORATION AND S HIV METAL CORPORATION IS DULY RECORDED IN THE BOOKS OF THE AS SESSEE AND HAS BEEN REFLECTED EITHER IN THE SALES OR IN THE CLOSIN G STOCK IS NOT CONTROVERTED. ON THESE FACTS THE DECISION IN THE CASE OF KULUBI STEEL (SUPRA) WOULD BE SQUARELY WHEREIN THE ITAT HE LD AS UNDER: 8. FROM THE ABOVE IT IS EVIDENT THAT THE ASSESSEE DID NOT MAKE ANY EFFORT TO CONTROVERT THE FINDING RECORDED BY THE DD IT (INVESTIGATION) AND IT MADE NO EFFORTS TO PRODUCE THE SELLER PARTIES ON THE OTHER HAND IT CLAIMED THAT IT IS NOT HIS RESPONSIBILITY TO PRODUC E THE SELLER. IT IS A SETTLED LAW THAT ONUS IS ON THE ASSESSEE TO ESTABLI SH THE GENUINENESS OF THE PURCHASE. THE ASSESSEE HAS PRODUCED VARIOUS EV IDENCE WITH REGARD TO THE RECEIPT OF THE GOODS BY IT I.E. STOCK REGIS TER RECEIPT OF WEIGH- BRIDGE FOR WEIGHMENT OF GOODS PURCHASED BY THE ASSE SSEE OCTROI RECEIPT FOR THE PAYMENT OF OCTROI DUTY ETC. AFTER CONSIDER ING THE ENTIRE MATERIAL WE ARE OF THE OPINION THAT THE ASSESSEE DID NOT PUR CHASE THE GOODS FROM THE PARTIES MENTIONED IN THE SALES BILL. AT THE SA ME TIME IT DID PURCHASE THE GOODS FROM SOME OTHER SUPPLIERS MAY BE WITHOUT BILL. THEREFORE PURCHASE RATE AS MENTIONED IN THE ALLEGED SALES BIL L CANNOT BE ACCEPTED. ANY PERSON INDULGING IN THE PRACTICE OF PURCHASING GOODS FROM THE GREY MARKET AND OBTAINING BOGUS BILLS OF SOME OTHER PART IES WOULD DO SO FOR GETTING SOME BENEFIT. BUT WHAT WOULD BE THE MAGNIT UDE OF THE BENEFIT WOULD DEPEND UPON FACTS OF EACH CASE. IN THE CASE OF VIJAY PROTEINS ITAT HELD THAT SUCH BENEFIT TO BE 25% AND THEREFORE SUSTAINED THE ITA NO.137/AHD/2009 -7- DISALLOWANCE FOR BOGUS PURCHASE AT 25%. IN THE CAS E OF SUNSTEEL (SUPRA) THE ITAT DEEMED IT FIT TO SUSTAIN THE DISA LLOWANCE FOR A LUMPSUM AMOUNT OF RS.50 000/-. HOWEVER WE FIND TH AT IN THE CASE OF SHRI ANUBHAI SHIVLAL (SUPRA) THE ITAT HAS CONSIDERE D BOTH THE DECISIONS IN THE CASE OF VIJAY PROTEINS AND SUNSTEEL (SUPRA) AND THEREAFTER SUSTAINED THE DISALLOWANCE AT 12.5%. RELEVANT FIND INGS OF THE ITAT IN THE CASE OF ANUBHAI SHIVALAL READS ARE UNDER: 3. AT THE TIME OF HEARING BEFORE US IT IS SUBMITTE D BY THE LEARNED COUNSEL THAT THE ADDITION SUSTAINED IS EXCE SSIVE. IN SUPPORT OF THIS CONTENTION HE REFERRED TO THE DECIS ION OF THE TRIBUNAL IN THE CASE OF ITO VS. SUN STEEL 92 TTJ (A HD) 1126 WHEREIN THE TRIBUNAL HAS SUSTAINED THE ADDITION OF RS.50 000/- ON ACCOUNT OF BOGUS PURCHASES. HOWEVER WE FIND THAT THE FACTS IN THE ABOVE CASE WERE DIFFERENT. IN THE ABOVE CASE THE ASSESSEE HAS SHOWN PURCHASES OF RS.27 39 410/- SALE OF RS.2 8 17 207/- AND GP AT RS.94 740/-. THE ASSESSING OFFICER MADE THE ADDITION OF RS.27 39 407/- FOR BOGUS PURCHASES. IF THE ABOV E SUM IS ADDED TO THE GP THE GP WORKS OUT RS.28 34 1247/- WHICH W AS MORE THAN THE SALE ITSELF. THE TRIBUNAL HELD THAT IT IS IMPOSSIBLE THAT THE GP IS MORE THAN THE SALE ITSELF. THE TRIBUNAL ALSO FOUND THAT THE ASSESSEE HAS MAINTAINED THE QUANTITATIVE DETAIL S IN RESPECT OF MATERIALS PURCHASED AND SOLD. CONSIDERING PECULIAR FACTS OF THAT CASE THE TRIBUNAL ARRIVED AT THE CONCLUSION THAT I T WOULD BE FAIR AND REASONABLE TO ESTIMATE THE ADDITION AT RS.50 00 0/- AS AGAINST THE ADDITION OF RS.27 39 407/- MADE BY THE ASSESSIN G OFFICER. HOWEVER THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) CONSIDERING THE FACTS OF THE ASSESSEES CASE HAS S USTAINED THE ADDITION AT 12.5%. WHILE DOING SO HE HAS ALSO REL IED UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S.VIJAY P ROTEINS LTD. 55 TTJ (AHD) 76. IN THE CASE OF M/S. VIJAY PROTEINS L TD. THE TRIBUNAL HAS SUSTAINED THE ADDITION OF 25% OF THE B OGUS PURCHASES. HOWEVER CONSIDERING THE FACTS OF THE A SSESSEES CASE THE CIT(A) RESTRICTED THE DISALLOWANCE TO 12.5% AS AGAINST 25% MADE IN THE CASE OF M/S.VIJAY PROTEINS LTD. FROM T HESE FACTS IT IS EVIDENT THAT THE CIT(A) HAS SUSTAINED THE ADDITION AT 12.5% OF THE NON-GENUINE PURCHASES CONSIDERING THE FACTS OF THE ASSESSEES CASE. WE THEREFORE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE CIT(A) IN THIS REGARD. THE SAME I S SUSTAINED. AFTER CONSIDERING THE FACTS AND THE ARGUMENTS OF BO TH THE SIDES WE ARE OF THE OPINION THAT IT WOULD MEET ENDS OF JU STICE IF THE DISALLOWANCE IS SUSTAINED AT 12.5% OF THE PURCHASE FROM THESE ITA NO.137/AHD/2009 -8- TWO PARTIES. THE ASSESSING OFFICER IS DIRECTED TO WORK OUT THE DISALLOWANCE ACCORDINGLY. SINCE THE FACTS OF THE ASSESSEES CASE ARE IDENTICA L WE RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE ITAT DIRECT TH E ASSESSING OFFICER TO DISALLOW 12.5% OF THE PURCHASES MADE DUR ING THE YEAR UNDER CONSIDERATION. SINCE THE FACTS IN THE PRESENT CASE IS IDENTICAL TO THE FACTS CITED IN THE CASE MENTIONED ABOVE WE RESPECTFULLY FOLLOWING THE ABOV E DECISION OF THE ITAT IN THE CASE OF M/S.SANKET STEEL TRADERS (SUPRA ) RESTRICT THE DISALLOWANCE TO 12.5% OF THE PURCHASE. WE DIRECT T HE AO TO WORK OUT DISALLOWANCE ACCORDINGLY. 8. IN THE RESULT THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED IN OPEN COURT ON 26 TH JULY 2011 SD/- SD/- (T.K. SHARMA) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 26-07-2011 C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER DR/AR ITAT AHMEDABAD