M/S. GUPTA ENTERPRISE,HOWRAH vs. I.T.O., WARD - 47(1), KOLKATA

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ITA 917/KOL/2026Status: DisposedITAT Kolkata13 July 2026AY 2012-20139 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the purchases were indeed bogus and not substantiated by the assessee. Following the decision of the Bombay High Court, which was upheld by the Supreme Court, the Tribunal ruled that the entire amount of bogus purchases is liable to be treated as income.

What were the facts?

The assessee appealed against an addition of Rs. 1,25,32,106/- on account of alleged bogus purchases. The CIT(A) had restricted the addition to Rs. 73,12,876/-. The assessee argued that only the gross profit on such purchases should be added, not the entire amount.

What were the issues?

Whether the entire amount of bogus purchases should be added to the income, or only the profit element. Whether the assessee could substantiate the purchases made from parties identified as operating for creating bogus bills.

Which sections of the Income-tax Act were involved?

Section 69C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, KOLKATA

Before: SHRI GEORGE MATHAN & SHRI RAKESH MISHRA

For Appellant: Shri Arya Das, Anibarya Das, Siddhartha Das
For Respondent: Smt. Madhumita Das, Sr. DR
Hearing: 13.07.2026Pronounced: 13.07.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI RAKESH MISHRA, ACCOUNTANT MEMBER ITA No.917/Kol/2026 Assessment Year: 2012-13

M/s Gupta Enterprise ITO, Ward-47(1), Kolkata Vs 88/1 C Road, Belgachia, Howrah – 711101. (PAN: AAGFG1219D) (Appellant) (Respondent)

Assessee by : Shri Arya Das, Anibarya Das, Siddhartha Das, Advocates Revenue by : Smt. Madhumita Das, Sr. DR Date of Hearing : 13.07.2026 Date of Pronouncement : 13.07.2026

ORDER Per George Mathan, JM: This is an appeal filed by the assessee against the order of the CIT(A)- NFAC, Delhi [hereinafter referred to as the ‘CIT(A)’] in appeal no.CIT(A), Kolkata-14/10256/2019-20 dated 29.12.2023 for the assessment year 2012-13.

2.

Shri Arya Das, Anirbarya Das, Siddhartha Das, Advocates, represented on behalf of the assessee and Smt. Madhumita Das, Sr. DR represented on behalf of the revenue.

ITA No.917/Kol/2026 3. The appeal filed by the assessee is with a delay of 12 days. The assessee has filed a petition for condonation of the delay. The reasons mentioned in the petition are plausible and reasonable. Consequently, the delay in filing the appeal is hereby condoned and we proceed to dispose off the appeal on merits.

4.

It was submitted by the ld. AR that the only issue in the assessee’s appeal is in respect of addition on alleged bogus purchases made by the Assessing Officer to an extent of Rs.1,25,32,106/-. It was the submission that on appeal before the ld. CIT(A), the assessee had been able to substantiate its case that the purchases were not to the extent as claimed by the Assessing Officer but only to an extent of Rs.73,12,876/-. It was the submission that consequently, the ld. CIT(A) restricted the addition of Rs.73,12,876/-. It was the submission that the addition of the entire alleged bogus purchases is not permissible and it was only the gross profit in respect of such purchases which should have been added if at all. It was the further submission that the Assessing Officer has relied the third party statement for the purpose of making the addition.

5.

In reply, the ld. Sr DR vehemently supported of the Assessing Officer and the ld. CIT(A). It was the submission that the purchases were bogus. It was the submission that the order of the ld. CIT(A) is liable to be upheld.

6.

In reply, it was submitted by the ld. AR that the Assessing Officer has accepted the sales in its entirety and consequently, the said alleged bogus purchases could not have been added. At this point, it was asked

ITA No.917/Kol/2026 to the ld. AR to show the details of the closing stock which is shown at page 64 of the paper-book which reads as follows:

7.

It was then asked to the ld. AR that how the valuation has been done of closing stock for which it was shown at page 62 of the paper-book where it is mentioned that the inventories are valued and certified by the partners of the firm which reads as follows:

ITA No.917/Kol/2026

8.

It was then asked to the ld. AR as to the P&L A/c which is shown at page 59 of the paper-book, which reads as follows:

ITA No.917/Kol/2026

9.

The ld. AR also relied upon the decision of the Hon’ble Jurisdictional High Court in the case of PCIT vs. M/s Subarna Rice Mills in ITA 196 of 2015 dated 20.06.2018 wherein the Hon’ble Jurisdictional High Court has held as follows:

“However, the other aspect of the matter was dealt with by the Appellate Tribunal on a point of principle and such matter does not call for any interference. According to the Appellate Tribunal the value of the entire quantity of additional stocks that were discovered in course of the survey operation could not be regarded as the additional income of the assessee and amenable to tax. There was a specific ground taken before the Appellate Tribunal, which was a legal question, as to whether the undisclosed purchase could be taken as the additional income without reference to the possible sale of the paddy when converted. The assessee refers to a judgment of the Gujarat High Court reported at 388 ITR 377. The principle enunciated in such judgment is that when undisclosed purchases of such nature are discovered, it is only the profit embedded in the transaction which can be added to the total income. The Gujarat High Court relied on some of its previous judgments to hold that "not the entire purchase price but only the profit element embedded in such purchases can be added to the income of the assessee."

ITA No.917/Kol/2026 In the circumstances and particularly since the factual findings rendered by the Commissioner (Appeals) as to the quantum of additional stocks have now been restored, the order impugned on the methodology for the ascertainment of the income which escaped assessment would pass muster. The Appellate Tribunal merely directed the gross profit that the additional purchase was capable of generating to be regarded as the additional income for tax to be assessed on such basis. Such view of the Appellate Tribunal does not call for any interference.” 10. It was then put to the ld. AR that the decision of Hon’ble Jurisdictional High Court in the case of PCIT vs. M/s Subarna Rice Mills referred to supra would not apply in so far as the issue therein is in regard to undisclosed stock found in the course of survey and not bogus purchases. The ld. AR then relied upon the decision of the Hon’ble Gujarat High Court in the case of CIT vs. Simit P reported in 356 ITR 451 (Gujarat) wherein Hon’ble Gujarat High Court has held that instead of entire addition, only the taxable profit in respect of bogus purchases is liable to be considered. It was then put to the ld. AR that the Hon’ble Bombay High Court in the case of PCIT v. Kanak Impex (India) Ltd. reported in 474 ITR 175 has held that the entire bogus purchases is liable to be treated as income of the assessee u/s 69C of the Act. It is also to be mentioned that the Hon’ble Supreme Court has also dismissed SLP filed against the said decision of the Hon’ble Bombay High Court on 21.11.2025. It was submitted by the ld. AR on behalf of the assessee that only the gross profit is liable to be added.

11.

We have considered the rival submissions. A perusal of the facts in the present case clearly shows that a statement has been recorded from one Shri Sanjiw Kumar Singh. He has been identified as operating companies for creating bogus bills. Shri Sanjiw Kumar Singh has also

ITA No.917/Kol/2026 identified that the assessee is one of the recipients of the bogus bills. The ld. CIT(A) in page 4 of his order has also categorically mentioned that the assessee has never challenged the statement of Shri Sanjiw Kumar Singh and expressed his desire to cross-examine Shri Sanjiw Kumar Singh. The assessee has not been able to substantiate the purchases which have been made by the assessee from the concerns which are being operated by Shri Sanjiw Kumar Singh. The assessee has also not been able to produce any evidence to substantiate the purchases which were alleged to have been made. Neither the assessee has produced the seller Shri Sanjiw Kumar Singh to show that the purchases were genuine. Consequently, the order of the Assessing Officer and that of ld. CIT(A) treating the said purchases to the extent of Rs.73,12,876/- is found to be on the right footing.

11.1 The next question that comes up for adjudication is whether the gross profit is to be added in respect of the said bogus purchases or the entire bogus purchases are liable to be added. Here there are views of two decisions, one being the Hon’ble Gujarat High Court in the case of CIT vs. Simit P referred to supra and the second being Hon’ble Bombay High Court in the case of PCIT v. Kanak Impex (India) Ltd. referred to supra. A perusal of the decision of Hon’ble Bombay High Court in the case of PCIT v. Kanak Impex (India) Ltd. referred to supra clearly shows that the decision of Hon’ble Gujarat High Court in the case of CIT vs. Simit P referred to supra has been considered in the said decision and after considering the said decision has reversed the order of the Tribunal therein and has directed that the entire disputed purchase is liable to be 7

ITA No.917/Kol/2026 treated as undisclosed income of the assessee. This decision of the Hon’ble Bombay High Court in the case of PCIT v. Kanak Impex (India) Ltd. referred to supra has also been approved in so far as the SLP from the said decision has also been dismissed by the Hon’ble Supreme Court. The decision relied upon by the ld. AR being the decision of the Hon’ble Jurisdictional High Court in the case of PCIT vs. M/s Subarna Rice Mills referred to supra would not apply to the facts of the present case in so far as that was the case where in the course of survey undisclosed stock has been found. The impugned appeal relates to bogus purchases which admittedly have not been proved. The statement of the ld. AR of the assessee that the sales have been accepted in its entirety, therefore, the purchases cannot be disallowed also would not hold water in so far as for the purpose of reducing the profits, bogus bills would have been raised. This being so, respectfully following the decision of the Hon’ble Bombay High Court in the case of PCIT v. Kanak Impex (India) Ltd. referred to supra in respect of which SLP has been dismissed by the Hon’ble Supreme Court, the addition as confirmed by the ld. CIT(A) to the extent of Rs.73,12,876/- stands upheld.

12.

In the result, the appeal of the assessee is dismissed.

Order pronounced in the open court on 13/07/2026.

Sd/- Sd/- [Rakesh Mishra] [George Mathan] लेखा सदस्य/Accountant Member न्याययक सदस्य/Judicial Member Dated: 13/07/2026 RS 8

ITA No.917/Kol/2026

Copy of the order forwarded to: 1. Appellant - 2. Respondent – 3. CIT(A)- 4. CIT- , 5. CIT(DR),

//True copy// By order Assistant Registrar, Kolkata Benches

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