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Facts
The assessee challenged the action of the lower authorities in treating purchases of Rs.49,02,300/- and Rs. 14,81,700/- as bogus under section 69C of the Income Tax Act, 1961. These purchases were from M/s. Swastik Traders and M/s Kalki Trading Company respectively.
Held
The Tribunal noted that the assessee was in the construction business where cash turnover is possible and sales were not questioned. Considering divergent judicial precedents on similar issues, it was deemed appropriate to allow a lump sum disallowance of 8% of the alleged bogus purchases in the interest of justice, without setting a precedent.
Key Issues
Validity of treating purchases as bogus under section 69C and the quantum of disallowance.
Sections Cited
69C, 147, 144
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Income Tax Appellate Tribunal, DELHI BENCH SMC, NEW DELHI
Before: Sh. Satbeer Singh Godara
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”).
Hear both the parties at length. Case file perused.
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.
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.
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.