NEM CHAND JAIN,DELHI vs. DCIT, CIRCLE- 58(1), DELHI

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ITA 312/DEL/2026Status: DisposedITAT Delhi11 February 2026AY 2019-20Bench: Sh. Satbeer Singh Godara (Judicial Member)1 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal acknowledged the divergent views on similar issues in various judicial precedents. Considering the peculiar facts and in the interest of justice, a lump sum disallowance of 5% of the alleged bogus purchases was deemed appropriate.

What were the facts?

The assessee's appeal for AY 2019-20 pertains to a disallowance of purchases amounting to Rs. 11,60,008/- from Sh. Sanjay Jain, treated as bogus under Section 69C of the Income Tax Act, 1961. The assessee is engaged in the construction business, and while cash turnover might be possible, their sales have not been questioned.

What were the issues?

Whether the entire amount of purchases from Sh. Sanjay Jain should be treated as bogus and disallowed, or if a partial disallowance is justified given the facts and precedents.

Which sections of the Income-tax Act were involved?

Section 69C,Section 147

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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI

Before: Sh. Satbeer Singh Godara

Hearing: 11.02.2026Pronounced: 11.02.2026

ORDER This assessee’s appeal for Assessment Year 2019-20 arises against the CIT(A)/NFAC, Delhi’s DIN & order No. ITBA/NFAC/S/250/2025-26/1082890494(1) dated 27.11.2025, in proceedings u/s 147 of the Income Tax Act, 1961 (in short “the Act”).

2.

Heard both the parties at length. Case file perused.

3.

It emerges during the course of hearing that the assessee raises his sole substantive ground challenging both the learned lower authorities’ action treating it’s purchases amounting to Rs.11,60,008/- sourced from Sh. Sanjay Jain, as bogus under section 69C of the Act, in assessment order dated 27.02.2025 as upheld in the lower appellate discussion.

1.

Nem Chand Jain 4. That being the case, both the parties vehemently reiterate their respective stands against and in support of the impugned bogus purchases disallowance. I wish to make it clear that there is no dispute in principle that the assessee is engaged in construction business all along wherein possibility of some cash turnover could not be altogether ruled out. And that his corresponding sales have nowhere been questioned in both the lower proceedings. Various recent judicial precedents (2025) 173 taxmann.com 592 (Guj.) RavjibhaiBecharbhaiDhamelia vs. ACIT; (2024) 160 taxmann.com 110 (Bom) PCIT Vs. Hitesh Mody (HUF), (2024) 160 taxmann.com 93 (Del) PCIT Vs. Forum Sales (P) Ltd.; (2025) 172 taxmann.com 283 (Bom) PCIT Vs. Kanak Impex (India) Ltd; (2025) 178 taxmann.com 424 (Del. – Trib.) DCIT Vs. Kohinoor Foods Ltd.; and (2025) 177 taxmann.com 836 (Delhi-trib.) DCIT Vs. Tirupati Matsup (P.) Ltd. have recently decided the instant issue of bogus purchases with divergent views as well.

5.

Faced with these peculiar facts, it is thus deemed appropriate in the larger interest of justice that a lump sum disallowance @ 5% of the assessee’s alleged bogus purchases amounting to Rs.11,60,008/- would be just and proper with a rider that the same shall not be treated as a precedent. Necessary computation shall follow as per law.

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