REAL VALUE FOODS PRIVATE LIMITED,DELHI vs. ITO WARD-21(1), NEW DELHI

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ITA 9059/DEL/2025Status: DisposedITAT Delhi22 January 2026AY 2019-201 pages
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What did the Tribunal hold?

The Tribunal acknowledged that the assessee is engaged in the construction business, where some cash turnover cannot be ruled out, and importantly, their corresponding sales have not been questioned. The Tribunal noted the existence of divergent judicial views on the issue of bogus purchases, citing several recent precedents from various High Courts and the ITAT. Faced with these facts and the divergent legal opinions, the Tribunal deemed it appropriate in the larger interest of justice to allow a lump sum disallowance at 8% of the total alleged bogus purchases, which amounted to Rs. 63,84,000/-. This decision is to be without prejudice to it being treated as a precedent. Necessary computations are to be made as per law. No other grounds were pressed.

What were the facts?

The assessee, Real Value Foods Pvt. Ltd., is in appeal before the Income Tax Appellate Tribunal (ITAT), Delhi Bench 'SMC', against the order of the CIT(A)/NFAC, Delhi, dated 24.10.2025. This order was passed in proceedings under Section 147 read with Section 144 of the Income Tax Act, 1961, for the Assessment Year 2019-20. The core of the dispute concerns the lower authorities' action of treating purchases amounting to Rs. 49,02,300/- from M/s. Swastik Traders and Rs. 14,81,700/- from M/s Kalki Trading Company as bogus under Section 69C of the Act. The assessment order was dated 28.03.2024, and this disallowance was upheld in the subsequent appellate proceedings.

What were the issues?

1. Whether the purchases amounting to Rs. 49,02,300/- from M/s. Swastik Traders and Rs. 14,81,700/- from M/s Kalki Trading Company can be treated as bogus under Section 69C of the Income Tax Act, 1961, thereby warranting disallowance. Assessee's Contention: The assessee's sole substantive ground challenges the action of both lower authorities in treating these purchases as bogus. The assessee is engaged in the construction business, and while some cash turnover is possible, their corresponding sales have not been questioned. Revenue's Contention: The revenue supports the impugned disallowance of bogus purchases. The judgment notes that both parties vehemently reiterate their respective stands.

Which sections of the Income-tax Act were involved?

Section 69C,Section 147,Section 144

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Cases cited in this judgment(3)Show list

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Income Tax Appellate Tribunal, DELHI BENCH SMC, NEW DELHI

Before: Sh. Satbeer Singh Godara

For Appellant: Ms. Monalisa Maity, Adv
Hearing: 22.01.2026Pronounced: 22.01.2026

ORDER This assessee’s appeal for Assessment Year 2019-20 arises against the CIT(A)/NFAC, Delhi’s DIN & order No. ITBA/NFAC/S/250/2025-26/1081984659(1) dated 24.10.2025, in proceedings u/s 147 r.w.s. 144 of the Income Tax Act, 1961 (in short “the Act”).

2.

Hear 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.49,02,300/- sourced from M/s. Swastik Traders and Rs. 14,81,700/- from M/s Kalki Trading Company, as bogus under section 69C of the Act, in assessment order dated 28.03.2024 as upheld in the lower appellate discussion.

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 @ 8% of the assessee’s alleged bogus purchases amounting to Rs.63,84,000/- 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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