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Facts
The assessee's appeal for assessment year 2018-19 challenges the lower authorities' action treating purchases of Rs.26,87,500/- from M/s. Swastik Enterprises as bogus and unexplained under section 69C of the Income-tax Act, 1961. The assessee is in the business of mild steel scrap and sources purchases from unregistered dealers, while sales have not been questioned.
Held
The Tribunal acknowledged that the assessee is engaged in the business of mild steel scrap and sourcing from unregistered dealers cannot be ruled out. Considering the facts and various judicial precedents, a lumpsum disallowance of 6% of the alleged bogus purchases was deemed appropriate in the interest of justice.
Key Issues
Whether the purchases treated as bogus and unexplained by the lower authorities warrant a disallowance, and if so, to what extent.
Sections Cited
147, 144, 69C
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Income Tax Appellate Tribunal, DELHI BENCH: “SMC” NEW DELHI
Before: SHRI SATBEER SINGH GODARA
Date of hearing 21.01.2026 Date of pronouncement 21.01.2026 ORDER This assessee’s appeal for assessment year 2018-19, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2025-26/1081919714(1), dated 22.10.2025 involving proceedings under section 147 r.w.s. 144 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case file perused.
It emerges during the course of hearing that the assessee presses for his sole substantive ground on merits challenging both the learned lower authorities’ action treating his purchases of Rs.26,87,500/- in AY 2018-19, sourced from the entity M/s. Swastik Enterprises as bogus/unexplained ones under section 69C of the Act, in assessment order dated 18.03.2024, and 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 the business of mild steel scrap all along wherein possibility of assessee sourcing its purchases from unregistered dealers per se could not be altogether ruled out as well. And that his corresponding sales have nowhere been questioned in both the lower proceedings. Various recent judicial precedents (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
2 | P a g e 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 lumpsum disallowance @ 6% of the assessee’s alleged bogus purchases amounting to Rs.26,87,500/-, would be just and proper with a rider that the same shall not be treated as a precedent. The assessee’s book entries are hereby rejected to the very extent. Necessary computation shall follow as per law. No other ground or argument has been pressed.