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Facts
The Revenue and the assessee filed appeals against the CIT(A)/NFAC's order concerning bogus purchases. The appeals related to assessment years 2018-19 and 2021-22, with alleged disallowances of Rs. 23,14,75,540/- and Rs. 34,99,98,506/- respectively. The Assessing Officer rejected the purchase claims based on a Press Information Bureau report and lack of supplier returns, while the CIT(A) restricted the disallowance to a profit element.
Held
The Tribunal, considering the divergent views of various judicial precedents and in the interest of justice, decided that a further minimal disallowance would be appropriate. Legal expenses disallowed by the CIT(A) were also addressed, with no further disallowance deemed necessary once the assessee's net profit was estimated.
Key Issues
The primary issue was the disallowance of alleged bogus purchases made by the assessee in AY 2018-19 and AY 2021-22, and the subsequent disallowance of legal expenses.
Sections Cited
143(3) of the Income-tax Act, 1961
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Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI
Before: SHRI SATBEER SINGH GODARA
ORDER
PER SATBEER SINGH GODARA, JM
The instant batch of three cases pertains to the single assessee herein Sh. Mohinder Kumar. The Revenue and the assessee filed their respective appeals C.O. No. 22/Del/2025 for assessment year 2021-22 against the Commissioner of Income Tax (Appeals)/National Faceless Appeal & 1652/Del/2024 C.O. No. 22/Del/2025 Centre [in short, the “CIT(A)/NFAC”], Delhi’s order dated 28.12.2023 having DIN and order no. ITBA/NFAC/S/250/2023- 24/1059129244(1). The Revenue’s latter appeal is directed against the CIT(A)/NFAC’s order dated 28.12.2023 having DIN and order no. ITBA/NFAC/S/250/2023-24/1059155281(1) in proceedings u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’), respectively. Heard both the parties. Case files perused.
Delays of 989 days and 44 days in filing Revenue’s appeals and 1652/Del/2024, respectively, are condoned in larger interest of justice and in light of Collector, Land & Acquisition vs. Mst. Katiji & Others (1987) 167 ITR 471 (SC).
It emerges at the outset during the course of hearing that their arises the first and foremost identical issue in all the three instant cases regarding the assessee’s alleged bogus purchases disallowance(s) of Rs.23,14,75,540/- in AY 2018-19 and Rs.34,99,98,506/- in AY 2021-22, respectively. There is further no quarrel that the Revenue’s endeavour herein is to revive both these impugned disallowances in the twin assessment years herein made & 1652/Del/2024 C.O. No. 22/Del/2025 by the Assessing Officer in entirety involving 10 parties in assessment year 2018-19 and @ 25% in assessment year 2021-22; respectively.
Both the learned representatives invited our attention to the Assessing Officer’s twin assessments framed on 29th May, 2021 (pages 45 to 53) and 29th December, 2022 (pages 699 to 712) in AYs 2018-19 and 2021-22; respectively, involving identical discussion, inter alia, holding that although the assessee filed all the documentary evidences regarding its suppliers’ corresponding details; the Assessing Officer referred to the Press Information Bureau report and lack of their returns etc. to reject his purchases’ deduction claims herein. Coming to the learned CIT(A)’s identical detailed discussion, he has restricted the same to the extent of the assessee’s NP @ 0.65 % going by the corresponding figures in assessment years 2015-16 to 2017-18 and 2019-20; as the case may be, to partly uphold the Assessing Officer’s findings. It is in this factual backdrop that both the parties have filed their respective appeals and cross objection; as the case may be, before the tribunal.
& 1652/Del/2024 C.O. No. 22/Del/2025
We have given our thoughtful consideration to the Revenue’s and the assessee’s respective vehement submissions. We wish to make it clear that various recent judicial precedents i.e. (2025) 173 taxmann.com 592 (Guj.) Ravjibhai Becharbhai Dhamelia 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 taken divergent views for allowing purchases based on documentary evidences in entirety, disallowing the same in totality and also restricting such bogus purchases to a certain amount of the profit element embedded therein after considering N.K. Proteins Ltd. Vs. DCIT (2017) 84 taxmann.com 195 (SC); as the case may be.
That being the case and in the larger interest of justice, we are of the considered view that a further disallowance of Rs.10 each in the assessee’s hands than these entire purchases in both these assessment years would be just and proper with a rider that the same shall not be treated as a precedent. His relevant books entries & 1652/Del/2024 C.O. No. 22/Del/2025 are rejected to this extent in very terms. Necessary computation shall follow as per law.
Learned counsel further seeks to buttress the point that the CIT(A) has disallowed the assessee’s legal expenses of Rs.15 lakhs in assessment year 2021-22 as well. We quote Indwell Construction Vs. CIT (1998) 232 ITR 776 (AP) to conclude that once the assessee’s NP has been estimated herein, no further disallowance would be warranted. Deleted accordingly.
These Revenue’s twin appeals & 1652/Del/2024 and the assessee’s cross objection C.O. No. 22/Del/2025 are partly allowed in above terms. A copy of this common order be placed in the respective case files. Order pronounced in the open court on 22nd January, 2026 Sd/- Sd/- (AMITABH SHUKLA) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 22nd January, 2026. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi
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