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Facts
The assessee's case was scrutinized for alleged bogus purchases of Rs. 60.45 Crores, which the AO disallowed entirely under Section 69C. The CIT(A) restricted the disallowance to 25% of the purchases, noting that sales and stock were accepted, implying some purchases must have occurred, despite deficiencies in supplier documentation.
Held
The tribunal upheld the CIT(A)'s decision to restrict the disallowance to 25% of the alleged bogus purchases. It reasoned that since sales and stock were accepted, and the assessee maintained quantitative records and made payments through banking channels, a complete disallowance was not justified, even if the genuineness of all purchases could not be fully substantiated.
Key Issues
The key legal issue was the extent to which alleged bogus purchases should be disallowed when sales and stock are accepted by the AO, but the genuineness of all purchases cannot be fully proven.
Sections Cited
Section 143(3), Section 133(6), Section 69C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “DB” BENCH, AMRITSAR
Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM & SHRI UDAYAN DASGUPTA, JM
(िनधा�रणवष� / Assessment Year: 2018-19) Income Tax Officer Shri Nitin Dutta बनाम/ Model Town Road 269, Kalia Colony CR Building Jalandhar (Punjab) - 144008 Vs. Jalandhar (Punjab) - 144001 �थायीलेखासं./जीआइआरसं./PAN/GIR No. ALDPD-6626-K (अपीलाथ�/Appellant) (��थ� / Respondent) : अपीलाथ�कीओरसे/ Appellant by : None ��थ�कीओरसे/Respondent by : Sh. Farhat Khan (CIT) – Ld. DR सुनवाईकीतारीख/Date of Hearing : 05-02-2026 घोषणाकीतारीख /Date of Pronouncement 11.02.2026 : आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by revenue for Assessment Year (AY) 2018-19 arises out of an order of learned Commissioner of Income Tax (Appeals), NFAC dated 18-06-2024 in the matter of an assessment framed by Ld. AO u/s 143(3) on 21-04-2021. At the time of hearing, none appeared for assessee. The perusal of order sheet entries would establish that none is appearing for assessee since past many occasions. Left with no option, we proceed to dispose-off the appeal after hearing revenue. The Ld. CIT-DR pleaded for full disallowance of alleged bogus purchase as against estimation of 25% as made by Ld. CIT(A) in the impugned order.
From case records, it emerges that the assessee’s case was subjected to scrutiny to verify the purchases. Notices u/s 133(6) were issued by Ld. AO to five suppliers which remained non-compliant. The documents as furnished by the assessee were alleged to be fabricated. The assessee could not furnish complete details also. Consequently, Ld. AO disallowed purchased of Rs.60.45 Crores and added the same to the income of the assessee u/s 69C.
During first appeal, the assessee stated that it furnished all the required documents to Ld. AO which includes PAN / GST details of suppliers, ledger extracts, assessee’s GST return, audited financial statements etc. The payments to the suppliers were through banking channels. The assessee also furnished month-wise purchase and sales details - both quantity wise and value wise. The quantitative details of opening and closing stock were also furnished. The copies of freight account along with sample vouchers and purchase bills were duly furnished to Ld. AO. The Ld. AO failed to appreciate that the assessee was maintaining complete quantitative records of purchase and sales. The stock as well as sales stood accepted by Ld. AO. The assessee made sales of Rs.79.67 Crores and purchases of Rs.80.45 Crores. All the suppliers filed their respective GST returns. The confirmation of accounts of the 5 suppliers was also furnished. The financial results for AYs 2016-17 & 2017-18 were accepted in scrutiny assessment proceedings.
The Ld. CIT(A), after considering assessee’s submissions as well as remand report, concurred that sale, closing stock and opening stock was not doubted by Ld. AO. Therefore, entire purchase could not be considered as bogus since for effecting sales, there has to be purchase of goods. The assessee furnished confirmed copy of statement of accounts of the suppliers. However, there were many deficiencies in the supporting documents as pointed out by Ld. AO in the remand report. None of the suppliers produced transportation documents. It was clear that AO was not justified in disallowing entire purchases and at the same time, the assessee was not able to substantiate the complete genuineness of the purchases so made. Therefore, the impugned addition was restricted to the extent of 25% against which the revenue is in further appeal before us. It would apparently appear from the record that the assessee has not filed any further appeal. No further appeal is shown to have been filed by the assessee.
From the facts, it clearly emerges that the assessee is engaged in trading activities and made sales and purchases for Rs.79.67 Crores & Rs.80.45 Crores respectively. The books of accounts are duly audited as required under law. The assessee has furnished details of opening stock, closing stock and sales. The sales have been accepted by Ld. AO. The assessee as well as the suppliers has filed respective GST returns. The quantity details of sales and purchases were duly furnished by the assessee before lower authorities. It is quit logical that without purchases, there could not be any sales. The financial results in earlier years stood accepted in scrutiny assessment proceedings. The assessee has duly furnished confirmed copy of accounts before lower authorities. On these facts, the adjudication of Ld. CIT(A) in restricting the impugned addition to the extent of 25% could not be faulted with. We see no reason to interfere in the same.
The appeal stands dismissed.
Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963.