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Facts
The assessee challenged the lower authorities' decision to treat purchases of Rs. 12,73,328/- from M/s. Ninja Electrical Traders as bogus under section 69C of the Act for AY 2018-19. The assessee is in the business of electrical goods, and their sales were not questioned.
Held
The Tribunal, considering divergent judicial precedents and the larger interest of justice, decided to allow a lumpsum disallowance of 8% of the alleged bogus purchases, amounting to Rs. 101,866/- (8% of Rs. 12,73,328/-), with a rider that this would not be treated as a precedent. The assessee's book entries were rejected to this extent.
Key Issues
Validity of treating purchases as bogus and determining the extent of disallowance in the absence of specific proof of bogus nature but considering other business factors.
Sections Cited
147, 69C, 143(3)
AI-generated summary — verify with the full judgment below
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/250/2025-26/1080977531(1), dated 22.09.2025 involving proceedings under section 147 of the Income- tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case file perused.
Delay of 18 days in filing the asseessee’s instant appeal is condoned in larger interest of justice and in light of Collector, Land & Acquisition vs. Mst. Katiji & Others (1987) 167 ITR 471 (SC).
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.12,73,328/- in AY 2018-19, sourced from the entity M/s. Ninja Electrical Traders as bogus ones under section 69C of the Act, in the assessment order dated 09.03.2023, 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 electrical goods 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
2 | P a g e 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 lumpsum disallowance @ 8% of the assessee’s alleged bogus purchases amounting to Rs.12,73,328/-, 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.