Loading judgment…
Facts
The assessee's appeal for assessment year 2019-20 arose against the order upholding the disallowance of purchases totaling Rs. 40,12,083/- as bogus. The lower authorities disallowed these purchases despite the corresponding sales figures remaining undisturbed.
Held
The Tribunal held that the entire purchase disallowance could not be upheld in principle, especially when sales figures were not disturbed. A lump sum disallowance of 10% representing the gross profit component was deemed just and proper.
Key Issues
Whether the disallowance of purchases is justified when corresponding sales are not disturbed? If not, what is the appropriate relief?
Sections Cited
147, 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
O R D E R
PER SATBEER SINGH GODARA, JM:
This assessee’s appeal 2019-20 arises against CIT(A)/ NFAC, Delhi’s order dated 13.06.2025 (DIN & Order No. ITBA/NFAC/S/250/2025-26/10770014104(1), in proceedings u/s 147 r.w.s. 143(3) of the Income-tax Act, 1961, hereinafter referred to as the ‘Act’.
Heard both the parties. Case file perused. 2. The tribunal hereby notices from a perusal of the case record that both the learned lower authorities have disallowed the assessee’s purchases in garments and other allied business; totaling to Rs. 40,12,083/- as bogus ones, in assessment order dated 12.01.2024 and upheld in the lower appellate proceedings.
Harsh Gupta v. ITO 3. It is in this factual background that the assessee’s learned counsel vehemently argues that both the lower authorities could not have disallowed the impugned purchases; more particularly, when they have not disturbed the corresponding sales figures declared in the duly audited book results. This clinching fact has indeed gone unrebutted from the Revenue’s side. The fact, however, remains that both the lower authorities have referred to corresponding detailed evidence(s) against the assessee whilst disallowing these purchases. It is, thus deemed appropriate to observe in these peculiar facts that the impugned entire purchase disallowance could not be upheld in principle. Faced with this situation, it is deemed appropriate that a lump sum disallowance of the impugned bogus purchases @ 10% representing the gross profit component therein 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.
This assessee’s appeal is partly allowed. Order pronounced in open court on 22.09.2025.