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Facts
The assessee's appeals pertain to assessment year 2012-13, involving disallowance of entire purchases of Rs. 34,54,339/- as bogus and a penalty of Rs. 10,17,970/-. The lower authorities disallowed the purchases as bogus and levied penalty.
Held
The Tribunal partly allowed the appeal concerning the disallowance of purchases, restricting the disallowance to a lump sum of Rs. 3.5 lakhs, stating it should not be a precedent. The penalty appeal was allowed, holding that the issue of bogus purchases does not necessarily amount to concealment of income or furnishing inaccurate particulars.
Key Issues
Whether the entire purchases can be disallowed as bogus, and whether penalty is leviable in such cases.
Sections Cited
143(3), 147, 271(1)(c)
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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’ NEW DELHI
Before: SHRI SATBEER SINGH GODARA
O R D E R PER SATBEER SINGH GODARA, JM: These assessee’s twin appeals & 2726/Del/2025 for A.Y.
2012-13, arise against the CIT(A)/NFAC, Delhi’s as many DINs & Order Nos.
ITBA/NFAC/S/250/2024-25/1067146872(1) & ITBA/NFAC/S/250/2024- 25/1067145147(1), both dated 30.07.2024, in proceedings u/s 143(3) r.w.s. 147 & 271(1)(c) of the Income-tax Act, 1961, hereinafter referred to as the ‘Act’, respectively.
Heard both the parties. Case file perused. transpires during the course of hearing that both the learned lower authorities have disallowed his entire purchases of Rs. 34,54,339/- as bogus, in assessment framed on 29.11.2019, as upheld in the lower appellate proceedings. The Revenue could hardly dispute that the assessee’s sales figure in his books of account in regular business activity have been duly reflected and accepted in both the lower proceedings. The fact also remains that the assessee also could not plead and prove the impugned purchases as genuine all along in the lower proceedings. It is thus deemed appropriate in the larger interest of justice that a lump sum disallowance of bogus purchases of Rs. 3.5 lakhs only 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. The assessee’s instant former appeal ITA 2725/Del/2025 is partly allowed.
Next comes the asessee’s penalty appeal in AY 2012-13. There is no dispute between the parties that the impugned penalty of Rs. 10,17,970/- involves quantum issue of bogus purchases which requires supportive appreciation of the entire supporting evidence in quantum proceedings. That being the case, I hereby quote CIT v. Reliance Petroproducts P. Ltd. (2010) 322 ITR 158 (SC) that such an issue would hardly result in an instance of concealment of income or furnishing of inaccurate particulars thereof to delete the impugned penalty levied by both the learned lower authorities. The assessee’s instant latter succeeds therefore. allowed and his latter appeal is allowed, in above terms. A copy of this common order be placed in the respective case files.
Order pronounced in open court on 06.10.2025.