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Facts
The assessee, engaged in civil construction, appealed against the disallowance of purchases from M/s. Sanjay Jain & Mehta group, treated as bogus under Section 69C of the Income Tax Act. The lower authorities upheld this disallowance for assessment years 2018-19 to 2021-22.
Held
The Tribunal acknowledged that while sourcing from unregistered dealers is possible in the assessee's business, the purchases in question were treated as bogus. Considering various judicial precedents with divergent views, the Tribunal decided to allow a lumpsum disallowance at 6% of the disputed purchase amounts.
Key Issues
Whether purchases from specific suppliers, treated as bogus by lower authorities, warrant a disallowance, and if so, to what extent.
Sections Cited
153C, 143(3), 69C
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Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI
Before: SHRI SATBEER SINGH GODARA
ORDER PER SATBEER SINGH GODARA, JM These assessee’s four appeals to 1080/Del/2025 for assessment years 2018-19 to 2021-22 arises against the Commissioner of Income Tax (Appeals)-30 [in short, the “CIT(A)”], Delhi’s orders, all dated 09.01.2025, having DINs and orders No. ITBA/APL/M/250/2024-25/1072033246(1), ITBA/APL/M/250/2024-25/1072033006(1), ITBA/APL/M/250/ 2024-25/1072032810(1), ITBA/APL/M/250/2024- 25/1072032633(1), involving proceedings under section 153C r.w.s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’), respectively. Heard both the parties. Case files 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 amounting to Rs.6,64,062/- in AY 2018-19, Rs.2,42,04,145/- in AY 2019-20, Rs.85,20,719/- in AY 2020-21 and Rs.8,32,341/- in AY 2021-22 sourced from M/s. Sanjay Jain & Mehta group, as bogus one under section 69C of the Act, in the respective assessment orders, 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. We wish to make it clear that there is no dispute in principle that the assessee is engaged in civil construction business 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.
2 | P a g e 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 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.6,64,062/- in AY 2018-19, Rs.2,42,04,145/- in AY 2019-20, Rs.85,20,719/- in AY 2020-21 and Rs.8,32,341/- in AY 2021-22; respectively, 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.