Harsha Devani, J.

1. Heard Mr. J.P. Shah, learned counsel for the appellant.

2. ADMIT. The following substantial question of law arises for consideration:--

"Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that purchases of Rs. 73,29,278/-, out of the total purchases of Rs. 1,01,83,331/- of grey cloth was bogus and, therefore, 25% thereof was required to be disallowed and added as income of the appellant?"

3. Having regard to the controversy in issue which lies in a very narrow compass and with the consent of the learned counsel for the respective parties, the appeal was taken up for final hearing.

4. The appellant assessee is the proprietor of M/s. Ladly Prints which is engaged in the business of purchase and sale of grey cloth. The appellant filed return of income for assessment year 2003-04 on 21.10.2003 declaring total income of Rs. 1,09,218/-. The original assessment came to be completed under section 143(3) of the Act on 10.3.2006 whereby the Assessing Officer disallowed 25% of the purchases of Rs. 73,29,278/-, that is, Rs. 18,32,319/-, claimed to have been made by the assessee as bogus purchases an