JUDGMENT : K.S. Jhaveri, J. 1. By filing these appeals, the assessee has challenged the order dated 30.12.2005 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench 'A' in ITA No. 1823/Ahd/2000 and order dated 16.1.2008 passed by Income Tax Appellate Tribunal, Rajkot Bench, Rajkot in ITA No. 359/RJT/2006 whereby both the appeals filed by the revenue were partly allowed. 2. At the time of admission of Tax Appeal No. 826 of 2006, following questions of law were framed for our consideration:-- "(1) Whether in the facts and circumstances of the case the Income Tax Appellate Tribunal was right in law in disallowing the purchase expenditure amounting to Rs. 26,72,656/- by treating the same as bogus when admittedly corresponding sales against these very purchases have been offered and accepted for tax? (ii) Whether, in the facts and circumstances of the case the Income Tax Appellate Tribunal was right in law in not granting deduction for purchase expenditure at all when material is purchased from one and bill is obtained from another?" 3. At the time of admission of Tax Appeal No. 936 of 2006, following questions of law were framed for our consideration:-- "(i) Whether on the facts and circumstances of the case the ITAT was right in upholding the addition on account of unexplained fictitious purchase/creditor of Rs. 10,82,450/-? (ii) Whether, in the facts and circumstances of the case the ITAT was right in law in disallowing the purchase expenditure amounting to Rs. 10,82,450/- by treating the same as bogus when admittedly corresponding sales against these very purchases have been offered and accepted for tax?" 4. Mr. Soparkar, learned advocate for the appellant submitted that the impugned orders are contrary to law. He submitted that the Tribunal has committed an error in disallowing the purchase expenditure by treating the same as bogus when admittedly corresponding sales against these very purchases have been offered and accepted for tax. In support of his submissions he has relied upon the decision of this Court in Vijay Proteins Ltd. v. Commissioner of Income Tax reported in [2015] 58 taxmann.com 44 (Gujarat), wherein it was observed as under:-- "16. It is a matter of fact that the goods were not received from the parties from whom it is shown to have been purchased but, such material was received from a different source which is exclusively within the knowledge of the assessee and none else. It is a matter of fact that the goods were not received from the parties from whom it is shown to have been purchased but, such material was received from a different source which is exclusively within the knowledge of the assessee and none else. Therefore, it is evident that the assessee had inflated the expenditure in question by showing higher amount of purchase price through the fictitious invoices in the names of 33 bogus suppliers. Considering the overall factual scenario, the Tribunal was justified in disallowing 25% of the purchase price." 5. He has relied upon the decision of this Court in Commissioner of Income Tax-II v. Gujarat Ambuja Export Ltd. reported in [2014] 43 taxmann.com 244 (Gujarat), wherein it was observed as under:-- "Having heard learned counsel for the parties and having perused the materials on record, we are of the opinion that the entire issue is based on materials on record. The Tribunal did not accept the Revenues stand that the purchases were bogus, in the sense that no material was received. Perusing the order of the Tribunal and the material discussed at length by the CIT [A] in his order, this issue gets further support. If we were to therefore not depart from the Tribunals view that the material was actually received for which payments were made, only question would be did the Tribunal err in adding 5% of the purchases and not 25% as was vehemently urged before us by the learned counsel for the Revenue. Here also, we do not find that the Tribunal has committed any error so as to give rise to any question of law. The Tribunal looking to the material noted above, retained portion of the above by giving cogent reasons. The decision of this Court in case of Sanjay Oilcake Industries {Supra] was rendered in a slightly different fact situation. In the said case, the assessee had made purchases but the parties were not traceable. They had opened the bank accounts and immediately upon credit of the cheques, withdrawn the amount by bearer cheques. On such basis, the Tribunal had held that such parties were creation of the assessee itself for the purpose of banking purchases into books of account because the purchases with bills were not feasible. The Tribunal therefore, observed that such parties became conduit pipes between the assessee-firm and the sellers of the raw materials. On such basis, the Tribunal had held that such parties were creation of the assessee itself for the purpose of banking purchases into books of account because the purchases with bills were not feasible. The Tribunal therefore, observed that such parties became conduit pipes between the assessee-firm and the sellers of the raw materials. It was on this basis that 25% of the purchase price was added by way of income of the assessee observing that possibility of inflating the price of the raw material cannot be ruled out. It was this decision that this Court upheld. In the present case, though it may appear that the purchases have been shown to have been made through M/s. Vishal Traders but supplied by some other agency, in absence of other additional facts noted by this Court in case of Sanjay Oilcake Industries [Supra] gross ad hoc addition of 25% may not be justified. In the present case, the assessee could produce before the authorities the precise rate at which the purchases were made from M/s. Vishal Traders and other suppliers to demonstrate that the purchases made on the same day carried the same price. This would substantially eliminate the angle of the purchase price being artificially inflated. Additionally, the Tribunal also noted other parameters such as higher net and gross profit rates of the present year compared to the earlier years of the recent past. Under the circumstances, no question of law arises. Tax Appeal is, therefore, dismissed. These questions are therefore not considered. Questions {C} & {D} pertain to purchases made by the assessee through one M/s. Amber Trading Company, Dahod. Assessing Officer disallowed the purchases on the ground that M/s. Amber Trading Company had made purchases from an unregistered dealer. He, in fact, doubted the purchases by M/s. Amer Trading Company itself. Learned counsel for the assessee would however correctly point out that CIT [A] as well as the Tribunal both noted that in the case of the assessment of M/s. Amber Trading Company itself, such purchases were accepted and found genuine. That being the situation, the Tribunal in our opinion correctly did not accept the Revenues appeal, making following observations:-- 3.9 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. That being the situation, the Tribunal in our opinion correctly did not accept the Revenues appeal, making following observations:-- 3.9 We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. We find that the disallowance in respect of purchases from Amber Trading Company was made by the Assessing Officer on this basis that out of total purchases claimed by the assessee from Amber Trading Company of Rs. 4123.10 lacs, total unregistered dealers [URD] purchases made by Amber Trading Company in assessment year 2008-09 is Rs. 2119.45 lacs. The A.O was of the view that the URD purchases of Amber Trading Company is bogus and as a consequence, the purchases of the assessee company from Amber Trading Company is also to be held as bogus to the extent of URD purchases of Amber Trading Company. Hence, it is seen that the disallowance in the present case was made on this basis that to the extent of URD purchases of Amber Trading Company held to be bogus, the purchases of the assessee company from Amber Trading Company is also to be held as bogus. Now, we find that it is noted by learned CIT [A] in the above para that the A.O of the firm M/s. Amber Trading Company treated the URD purchases of M/s. Amber Trading Company as genuine. Once, the URD purchases of M/s. Amber Trading Company is accepted as genuine by the A.O of that party, the disallowance made by the A.O in this regard cannot be sustained because it has no legs to stand. Accordingly, we decide this aspect of the matter in favour of the assessee. Thus, Ground No. 3 of the revenues appeal is also rejected. These questions are, therefore, not required to be considered." 6. He has relied upon the decision of this Court in Tax Appeal No. 679 of 2010 decided on 16.8.2011, wherein it was observed as under:-- "7.0 In the present case also, the Commissioner of Income-tax (Appeals) had observed that, it can be logically presumed that the assessee was motivated to produce goods from unidentified parties who were not ready to account for the sales to save various levies and taxes, including income tax to share the advantages. It was further observed that in absence of good and reliable evidence the plea, if raised, that the goods had to be purchased in this manner because they were not otherwise available could not have been discarded as out of total purchases of about Rs. 5.15 crores, purchases of Rs. 1.75 crores which is about 1/4th of the total purchases were procured in dubious manner. It is view of the CIT (Appeals) which to the above extent came to be confirmed by the Tribunal. The Tribunal, of course, modified the order of the CIT (Appeals) and reinstated additions to the extent of 25% relying on the decision in the case of Sanjay Oilcake Industries (supra). 8.0 In the present case also there was evidence on record to suggest that though purchases may not have been made from M/s. Shreenathji Industries as initially suggested by the assessee in the books of account, nevertheless the factum of actual purchases was placed for verification by the assessee before the authorities. In fact, assessee's assertion appears to have been that purchases had to be made from other parties who were not reflecting such sales in their account for saving taxes such as income-tax, sales tax etc. 9.0 Be that as it may, we see no material distinction in facts involved in the present case and in case of Sanjay Oilcake Industries (supra). It is true that the Delhi High Court treated the issue somewhat differently. However, when the decision of our Court lays down certain ratio, in the absence of any special reason to differ, we would have to follow the same." 7. In view of above observations, he prayed to allow these appeals by setting aside the impugned orders. 8. On the other hand, learned counsel for the revenue submitted that the impugned order is just and proper and the same is not required to be interfered with in the present appeals. He has relied upon the decision of the Delhi High Court in the case of Commissioner of Income-Tax v. La Medica reported in, 250 ITR 575, wherein it is observed as under:-- "3. We have heard learned counsel for Revenue. There is no appearance on behalf of assessed in spite of notice. He has relied upon the decision of the Delhi High Court in the case of Commissioner of Income-Tax v. La Medica reported in, 250 ITR 575, wherein it is observed as under:-- "3. We have heard learned counsel for Revenue. There is no appearance on behalf of assessed in spite of notice. Though essentially the conclusions of the Tribunal have the colour of factual findings, still we find that the Tribunal has not taken into consideration relevant materials and has also acted on irrelevant materials. The fact that the alleged sellers have been found to be persons with no means to effect purchases or to carry on business is a factor which does not appear to have been considered by the Tribunal in its proper perspective. Materials on record clearly establish that Chedi Lal was a petty employee of a concern of which Satya Pal Jain was a partner. In fact Satya Pal Jain was partner of M/s. Medipac, one of the sister concerns of the assessed firm. On enquiries conducted by the authorities after due notice to the assessed it was found that there was no such concern called M/s. Kalpana Enterprises at either 71, Canning Street, Calcutta or 479, Bartan Market, Sadar Bazar, Delhi. Additionally Chedi Lal opened the bank account with the introduction of Satya Pal Jain and the amounts were withdrawn. If the purchases were really effected from M/s. Kalpana Enterprises it is not understood as to how some other person namely Inder Sain Jain (HUF) accepted that the materials were supplied by it. The question before the Tribunal was not whether purchases were made from another concern. What was under consideration was whether the purchases were made from M/s. Kalpana Enterprises as was claimed by the assessed. Ample material has been brought on record by the Revenue to show that the purchases were in fact not made from M/s. Kalpana Enterprises. These are some of the relevant materials which have not been considered by the Tribunal. Tribunal's conclusion that even if it is accepted that Chedi Lal was only an instrument used by Satya Pal Jain, assessed was not involved in it, is a conclusion arrived at without any foundation. On the contrary it has been established by materials on record that assessed knew that the whole thing was a fictitious arrangement. Tribunal's conclusion that even if it is accepted that Chedi Lal was only an instrument used by Satya Pal Jain, assessed was not involved in it, is a conclusion arrived at without any foundation. On the contrary it has been established by materials on record that assessed knew that the whole thing was a fictitious arrangement. Once it is accepted that the supplies were not made by Kalpana Enterprises to whom payments were alleged to have been made, the question whether the purchases were made from some other source ought not to have weighed with the Tribunal as a factor in favor of the assessed. The conclusions of the Tribunal are, therefore, clearly erroneous, contrary to materials on record and have been arrived at without taking into consideration relevant material and placing reliance on irrelevant materials. It is to be noted that assessed's stand was not that it had effected purchases from anybody else. Its stand throughout was that it had effected purchases from M/s. Kalpana Enterprises. It was not open to the Tribunal to make out a third case, which was not even the case of the assessed, to hold that the transactions were real and not fictitious as claimed by the Revenue. As observed in Omar Salay Mohamed Sait v. Commissioner of Income-tax,, a question of law arises if a finding of fact is arrived at by the Tribunal after improperly rejecting evidence. A question of fact becomes a question of law if the finding is not founded on any evidence or material, or if it is contrary to evidence. Similar is the position if it is perverse or there is no direct nexus or link between conclusion of fact and the primary fact upon which that conclusion is based. Where Tribunal acts on partly relevant and partly irrelevant materials, and it is not possible to say as to what extent latter has influenced its mind, the finding is vitiated because of use of irrelevant material. That gives rise to a question of law. This position has been succinctly stated by the Apex Court in Dhirajlal Girdharilal v. Commissioner of Income-tax,, Commissioner of Income-tax v. Daulat Ram Rawatmull, (1973) 87 ITR 349 (SC). Where the Tribunal misdirects itself in law in basing its conclusions on some evidence ignoring other essential materials on record, a question of law arises. (See: Commissioner of Income-tax v. Radha Kishan Nandlal,). Where the Tribunal misdirects itself in law in basing its conclusions on some evidence ignoring other essential materials on record, a question of law arises. (See: Commissioner of Income-tax v. Radha Kishan Nandlal,). The answer to the question therefore, is in the negative, in favor of Revenue and against the assessee. The reference application stands disposed of." 9. In view of above observations, he prayed to dismiss these appeals. 10. Having heard learned counsel for the parties and having perused the materials on record, we are of the opinion that the entire issue is based on materials on record. This is not a case where purchases have accounted for and suppliers were not traceable or not available at the address given by the assessee. This is a case where the amount has been received back to the assessee from the suppliers of which expenditure on account of purchases accounted for in the books of account. In view of the consistent decisions of this Court, referred to herein above, in our opinion, ends of justice would be met if we grant deduction at 25% for purchase expenditure, as admittedly corresponding sales against these very purchases have been offered and accepted for tax. Accordingly, we modify both the impugned orders and hold that the Tribunal has committed an error in disallowing the purchase expenditure and direct that deduction at 25% of the purchase expenditure may be allowed in both these cases. We answer the questions posed for our consideration accordingly. Both the questions are answered in favour of the assessee and against the revenue. Accordingly, both these appeals are allowed to the aforesaid extent.