“unexplained expenditure”

Cash Credits & Unexplained ItemsSection 69CSection 69C3,276 judgments

The decision most relied on for unexplained expenditure is CIT v. Bholanath Poly Fab. Pvt. Ltd. (355 ITR 290), cited in 712 judgments on BharatTax.

Leading authorities on unexplained expenditure

CIT v. Bholanath Poly Fab. Pvt. Ltd.

355 ITR 290 · 2013 · High Court

712

citing judgments

If an assessee makes purchases from bogus parties, but the underlying goods are genuinely acquired and sold, only the profit margin embedded in such purchases, and not the entire value of the bogus purchases, should be added to the assessee's income.

Vijay Proteins Ltd. v. Asst. CIT

58 ITD 428 · 1996 · ITAT

430

citing judgments

Where purchases are found to be non-genuine or fictitious, a reasonable disallowance of 25% of such purchases or the peak credit, whichever is higher, can be made. This is applied to address unexplained expenditure under Section 69C when actual goods are likely procured from the grey market.

Nikunj Eximp Enterprises v. CIT

216 Taxmann 171 · 2013 · High Court

325

citing judgments

Purchases may be treated as genuine even if the purchase parties are untraceable or not available for verification, as long as there is no specific evidence from the parties themselves denying the transactions or proving them to be bogus.

CIT v. M.K. Brothers

163 ITR 249 · 1987 · High Court

262

citing judgments

Mere non-production of a party or their denial of a transaction is insufficient to treat a payment as non-genuine if it is duly recorded in books and made through banking channels. Once the assessee furnishes relevant documentation, the burden shifts to the Assessing Officer to prove the transaction is not genuine.

N.K. Proteins Ltd. v. DCIT

84 Taxmann.com 195 · 2017 · Supreme Court

204

citing judgments

When purchases are found to be entirely bogus and based on fictitious invoices from non-existent or unconfirmed suppliers, the entire amount of such purchases is liable to be added back as unexplained expenditure, not merely a percentage thereof.

CIT v. La Medica

250 ITR 575 · 2001 · High Court

150

citing judgments

When purchases are shown to be non-genuine, the entire amount is to be disallowed as unexplained expenditure under section 69C, irrespective of whether the goods were procured from alternative sources.

Vijay Proteins Ltd. v. CIT

58 Taxmann.com 44 · 2015 · High Court

140

citing judgments

When an assessee makes alleged bogus or hawala purchases but subsequently makes genuine sales from those purchases, the addition to income should be restricted only to the estimated profit embedded in such transactions, not the entire purchase value.

N.K. Industries Ltd. v. DCIT

72 Taxmann.com 289 · 2016 · High Court

127

citing judgments

When there is a categorical finding that purchases are bogus and from fictitious suppliers, the Assessing Officer is justified in making a 100% addition of the bogus purchase amount under Section 69C, rather than restricting the disallowance to merely the profit margin. This position has been upheld by the Supreme Court through the dismissal of the assessee's SLP.

Judgments citing unexplained expenditure

Neha Metals, New Delhi vs. ITO Ward - 63(3), New Delhi

In the result, the appeal of the assessee is allowed

ITA 910/DEL/2020[2007-08]Status: DisposedITAT Delhi05 Jan 2023AY 2007-08

Bench: Shri Kul Bharatassessment Year: 2007-08

Section 142(3)Section 147Section 148Section 69C

confirming the addition of Rs.1,49,056/- made by the AO on account of purchases made by the assessee treating the same as unexplained expenditure invoking the 3 provision of section 69C of the Act. (ii) That the addition has been confirmed at an arbitrary rate of 10% of purchases

Deputy Commissioner of Income Tax, Centre-Circle-6(4), Mumbai vs. Shri Rajiv Ratan, New Delhi

In the result, the appeal of the revenue is dismissed and cross objection filed by the assessee is also dismissed

ITA 1434/MUM/2022[2011-12]Status: DisposedITAT Mumbai30 Dec 2022AY 2011-12

Bench: Shri Aby T Varkey & Shri Amarjit Singhthe Dcit, Cc -6(4), Vs. Shri Rajiv Rattan Room No. 1925, 19 Th Floor, 60, 2 Nd Floor, Vasant Marg, Air India Building, Vasant Vihar, Nariman Point, New Delhi - 110057 Mumbai – 400021 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aespr3957D Appellant .. Respondent C.O. No. 126/Mum/2022 (A.Y.2011-12) Shri Rajiv Rattan Vs. The Dcit, Cc -6(4), 60, 2 Nd Floor, Vasant Marg, Room No. 1925, 19 Th Floor, Vasant Vihar, Air India Building, New Delhi - 110057 Nariman Point, Mumbai – 400021 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aespr3957D Appellant .. Respondent Appellant By : Smt. Riddhi Mishra Respondent By : Meet Shah

For Appellant: Smt. Riddhi MishraFor Respondent: Meet Shah

Section 153CSection 245D(4)

rival contentions. We have also perused the orders of the lower authorities. Ground no.1 to 3 relates to the addition of ₹95,000/- as unexplained expenditure. We find that identical issue arose in the case of the assessee for A.Y. 2011-12, the learned CIT (A) has deleted the identical ... same because of the difference in narration in the bank account. We find that there is identical expenditure which is held to be unexplained expenditure for seven years which has been deleted by the learned CIT (A). Further, it was also the claim of the assessee that the transactions have

Dy Commissioner of Income Tax, Central Circle-6(2), Mumbai vs. Samira Construction India Ltd, Mumbai

In the result, both the appeals of the learned Assessing

ITA 860/MUM/2022[2011-12]Status: DisposedITAT Mumbai29 Dec 2022AY 2011-12

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm

For Appellant: Ms. Vinita Shah, ARFor Respondent: Shri H.N. Singh, CIT DR

Section 132(1)Section 143(3)Section 153A

Constructions India Ltd; A.Y. 10-11 06. On appeal before the learned CIT (A), the addition related to interest paid on cash loan and unexplained expenditure of ₹1,12,57,000/- was deleted because of the reason that the learned CIT (A) vide order dated 30thDecember, 2021 upheld the same

Dy Commissioner of Income Tax, Cemra;L-Circle -6(2), Mumbai vs. Samira Construction India Ltd, Mumbai

In the result, both the appeals of the learned Assessing

ITA 859/MUM/2022[2010-11]Status: DisposedITAT Mumbai29 Dec 2022AY 2010-11

Bench: Shri Prashant Maharishi, Am & Shri Pavan Kumar Gadale, Jm

For Appellant: Ms. Vinita Shah, ARFor Respondent: Shri H.N. Singh, CIT DR

Section 132(1)Section 143(3)Section 153A

Mehul Krishnkant Mehta, Mumbai vs. ACIT 29(2), Mumbai

In the result, the appeal filed by the assessee is allowed for statistical purposes

ITA 1654/MUM/2022[2015-16]Status: DisposedITAT Mumbai29 Dec 2022AY 2015-16

Bench: Shri Prashant Maharishi & Shri Pavan Kumar Gadalemehul Krishnakant Vs. Acit, Circle – 29(2) Mehta Room No. 202, C-10, Shop No. 24, Sharmila 2Nd Floor Bkc, Apartments, Model Bandra (E), Town, Mulund (W), Mumbai – 400051. Mumbai – 400080. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aacpm6130D Appellant .. Respondent Appellant By : Shri. Ravi Swarna.Ar Respondent By : Shri. Suresh Periasamy.Dr Date Of Hearing 13.10.2022 Date Of Pronouncement 30.12.2022 आदेश / O R D E R Per Pavan Kumar Gadale Jm: The Assessee Has Filed The Appeal Against The Order Passed By The National Faceless Appeal Centre (Nfac), Delhi / Cit(A) Passed U/S 250 Of The Act. The Assessee Has Raised The Fallowing Grounds Of Appeal:

For Appellant: Shri. Ravi Swarna.ARFor Respondent: Shri. Suresh Periasamy.DR

Section 10(38)Section 250Section 68

case as well as law, the NFAC erred in confirming the action of the Ld. AO in making addition on account of unexplained expenditure of Rs. 2,49,323/- under section 69C of the Act for alleged commission payment for procuring the alleged unexplained income. The Appellant therefore prays that

Avinash Narayan Sutar, Navi Mumbai vs. ITO 28(1)(2), Mumbai

In the result, the appeal filed by the revenue is dismissed and the three appeals filed by the asssessee are allowed

ITA 1029/MUM/2020[2011-12]Status: DisposedITAT Mumbai27 Dec 2022AY 2011-12

Bench: Shri Baskaran Br & Shri Pavan Kumar Gadaleita Nos. 1029, 1030 & 1031/Mum/2020 (A.Ys: 2011-12, 2012-13 & 2010-11) Avinash Narayan Sutar Vs. Ito – 28(1)(2) Plot No. 582, Laxmi Tower No.6, Vashi Niwas, Sector -1, Station, Navi Mumbai- Shiravana, Nerul, Navi 400703. Mumbai – 400706. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Arsps9036R Appellant .. Respondent Ito – 28(1)(2) Vs. Avinash Narayan Sutar Tower No.6, Vashi Plot No. 582, Laxmi Station, Navi Mumbai- Niwas, Sector -1, 400703. Shiravana, Nerul, Navi Mumbai – 400706. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Arsps9036R Appellant .. Respondent

For Appellant: Shri Hariom Tulsiyan.ARFor Respondent: Shri Manoj Sinha.DR

Section 143(2)Section 147Section 148Section 250

being the purchase value of 9 plots entered into MOU entered during the F.Y 2010-11 as unexplained expenditure and made addition u/s 69C of the Act. 16. Further, on the second issue, the AO has observed that there is a violation of provisions ... erred in making addition of Rs.2,88,14,400/- being the cost of purchase of plots purchased/entered into MOU as unexplained expenditure w's 69C of the Act and also us 40A(3) of the Act. During the year under review, appellant has entered into MOU for purchase of following

Dy.Commissioner of Income Tax Central Circle 6(1), Mumbai vs. Rashi Commercial Company, Mumsai

In the result, both these appeal of the revenue are dismissed

ITA 1960/MUM/2022[2016-17]Status: DisposedITAT Mumbai23 Dec 2022AY 2016-17

Bench: Shri Amarjit Singh & Ms. Kavitha Rajagopal

For Appellant: Riddhi MishraFor Respondent: Neelkanth Khandelwal

Section 132Section 143(2)Section 143(3)Section 153ASection 153A(1)(a)Section 37(1)Section 69C

circumstances of the case and in law, the Ld.CIT(A) erred in deleting addition of Rs.3,10,221/ u/s69C of the Act as unexplained expenditure @2% on estimated basis on the non-genuine loss disallowance of Rs. 1,55,11,052/-. 7. The appellant craves to leave ... amount of Rs.1,55,11,052/- and addition of Rs.3,10,221/- was made u/s 69 of the Act as unexplained expenditure. It is undisputed fact that in the case of the assessee assessment for the year under consideration was already completed

Dy.Commissioner of Income Tax Central Circle 6(1), Mumbai vs. Rashi Fincorp Limited, Mumbai

In the result, both these appeal of the revenue are dismissed

ITA 1959/MUM/2022[2014-15]Status: DisposedITAT Mumbai23 Dec 2022AY 2014-15

Bench: Shri Amarjit Singh & Ms. Kavitha Rajagopal

For Appellant: Riddhi MishraFor Respondent: Neelkanth Khandelwal

Section 132Section 143(2)Section 143(3)Section 153ASection 153A(1)(a)Section 37(1)Section 69C

I.B.Commercial Private Limited, Mumbai vs. Dcita Central Circle-3(3), Mumbai

In the result, both the appeals of the assessee are treated as partly allowed for statistical purposes

ITA 2029/MUM/2018[2014-15]Status: DisposedITAT Mumbai16 Dec 2022AY 2014-15

Section 143(2)Section 68

this ground of the assessee. 4. The next issue contested by the assessee relates to the addition of Rs.29.34 lakhs on account of alleged unexplained expenditure on the basis of seized material. We notice that the assessee did not properly co-operate before the AO during the course of assessment

Ghanshyam A . Dubhey, Mumbai vs. DCIT Cen Cir 2, Thane

In the result, both the appeals filed by assessee are dismissed

ITA 7609/MUM/2016[2009-10]Status: DisposedITAT Mumbai16 Dec 2022AY 2009-10

Bench: Shri Kuldip Singh & Shri Gagan Goyal

For Appellant: NoneFor Respondent: Sh. Rakesh Gargh, CIT-DR

Section 132Section 153Section 153ASection 69BSection 69C

account of deemed rental, Rs 10,79,591/- on account of unexplained investment in flat at Thane u/s 69B, addition on account of unexplained expenditure based on seized papers amounting to Rs 52,00000/-(Rs 42,00,000+Rs1,00,0000) u/s 69C and addition on account of undisclosed income ... such documents have been furnished. As the payments have been made in cash and are unaccounted payments, the same need to be added as unexplained expenditure u/s 69C of the Act. As the impugned paper was seized from the appellant's residence, it can reasonably be assumed that the said

M/S Harmony Media Pvt Ltd., Mumbai vs. ITO 5 (1)(4), Mumbai

In the result, the appeal filed by the assessee in ITA No

ITA 7116/MUM/2019[2015-16]Status: DisposedITAT Mumbai15 Dec 2022AY 2015-16

Bench: Shri Om Prakash Kant, Am & Ms. Kavitha Rajagopal, Jm

For Respondent: Smt. Usha Gaikwad

Section 143(3)Section 250

assessee’s submission that the import transaction has been disclosed in the books of accounts of the assessee and was, therefore, treated as ‘unexplained expenditure’. The assessee has failed to substantiate its claim, neither before the first appellate authority nor before us, there was no evidence produced by the assessee

M/S Harmony Media Pvt Ltd., Mumbai vs. ITO 5 (1)(4), Mumbai

In the result, the appeal filed by the assessee in ITA No

ITA 7115/MUM/2019[2014-15]Status: DisposedITAT Mumbai15 Dec 2022AY 2014-15

Bench: Shri Om Prakash Kant, Am & Ms. Kavitha Rajagopal, Jm

For Respondent: Smt. Usha Gaikwad

Section 143(3)Section 250

Sankrt Shailendra Mody, Mumbai vs. Income Tax Officer 19(3) (2), Mumbai

In the result, the appeal of the assessee is allowed

ITA 1780/MUM/2022[2014-15]Status: DisposedITAT Mumbai13 Dec 2022AY 2014-15

Bench: Shri Aby T Varkey & Shri M.Balaganeshsanket Shailendra Vs. Income Tax Officer 19(3) (2) Mody Mumbai. 8/A, Navjeevan Patel, Compound, 20 Nepean Mumbai, Maharashtra 400007 Sea Road, Mumbai, Maharashtra 400006

Section 10(38)Section 143(1)Section 147Section 69C

therein is whether the ld. CIT(A) NFAC was justified in confirming the addition @ 2% of transaction amount of long term capital gain as unexplained expenditure u/s 69C of the Act in the facts and circumstances of the case. 3. We have heard the rival submissions and perused the materials ... sale proceeds was treated as bogus, the ld. AO also proceeded to add estimated commission @ 2% for arranging the said bogus transaction as unexplained expenditure u/s 69C of the Act. 5. We find that each and every averment of the ld. AO were duly met by the assessee before

ITO - 33(1)(1), Mumbai vs. Smt Ranjana Subhash Shinde, Mumbai

In the result , the appeal of the revenue is dismissed

ITA 102/MUM/2021[2014-15]Status: DisposedITAT Mumbai13 Dec 2022AY 2014-15

Section 68Section 69C

issue involved therein is whether the ld. CIT(A) was justified in deleting the addition @ 3% of amount of short term capital loss as unexplained expenditure u/s 69C of the Act in the facts and circumstances of the case. 3. I have heard the rival submissions and perused the materials ... sale proceeds was treated as bogus, the ld. AO also proceeded to add estimated commission @ 3% for arranging the said bogus transaction as unexplained expenditure u/s 69C of the Act. 7. I find that each and every averment of the ld. AO were duly met by the assessee before

Ms.Miracle Cars India Prt Ltd, Coimbatore vs. DCIT, Coimbatore

In the result, appeal filed by the assessee is dismissed

ITA 138/CHNY/2022[2012-13]Status: DisposedITAT Chennai07 Dec 2022AY 2012-13

Bench: Shri V. Durga Rao & Shri G. Manjunathaआयकर अपील सं./Ita No.: 138/Chny/2022 िनधा"रण वष" / Assessment Year: 2012-13 M/S. Miracle Cars India Pvt Deputy Commissioner Of Ltd., V. Income Tax, No.1, Krishna Nagar, Near Corporate Circle -1, Sowripalayam Esi, Coimbatore. Coimbatore – 641 028. [Pan: Aaica-4848-F] (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ" क" ओर से/Appellant By : Shri. R. Anish Kumar, Advocate : Shri. D. Hema Bhupal, Jcit ""यथ" क" ओर से/Respondent By सुनवाई क" तारीख/Date Of Hearing : 29.11.2022 घोषणा क" तारीख/Date Of Pronouncement : 07.12.2022

For Appellant: Shri. R. Anish Kumar, Advocate

Section 115JSection 143(3)

determined total income of Rs. 5,37,13,270/- by making various additions including additions towards disallowance of unexplained expenditure being rent paid to M/s. DRS Industries Ltd., and disallowance of advertisement expenses paid to M/s. DRS Industries Ltd. The assessee carried the matter in appeal before the first appellant

Lanxess India P.Ltd, Thane vs. DCIT Cir 1, Thane

In the result, the present appeal is partly allowed

ITA 971/MUM/2015[2010-11]Status: DisposedITAT Mumbai06 Dec 2022AY 2010-11

For Appellant: Shri Dhanesh Bafna, Ms. ChandniFor Respondent: Ms. Samruddhi Dhananjay Hande

Section 143(3)Section 144C(13)Section 144C(5)Section 69CSection 92C

addition of INR 1,05,43,246, and disallowance of INR 9,77,21,726/- consisting of INR 4,86,49,361/- pertaining to unexplained expenditure and INR 3,85,29,119/- undisclosed income. 6. Being aggrieved the Appellant is now in appeal before us against the Final Assessment Order ... pertain to addition of INR 4,86,49,361/- and INR 3,85,29,119/- held by the Assessing Officer to be unexplained expenditure and undisclosed income, respectively. 20. At the outset the Ld. Authorised Representative sought for remand of the issues raised in Ground

Ramaniklal Sivji Savla, Mumbai vs. CIT (Appeals) NFAC, Mumbai

ITA 1527/MUM/2021[2010-11]Status: DisposedITAT Mumbai30 Nov 2022AY 2010-11

Bench: Shri Kuldip Singhassessment Year: 2010-11

For Appellant: NoneFor Respondent: Shri Rajendra Chandekar, D.R

Section 143(3)Section 145Section 147Section 271Section 271(1)(c)

short ‘the Act’) determining the income of the assessee at Rs.32,80,200/- by making addition of Rs.29,23,726/- on account of unexplained expenditure i.e. bogus purchases @ 12.5% of the total bogus purchases made during the year under consideration to the tune of Rs.23389804/-, the Assessing Officer

Shri Sanjay Shantilal Jain, Mumbai vs. JCIT, Central Range-8, Mumbai

In the result, the appeals of the assessee for assessment year

ITA 6140/MUM/2018[2011-12]Status: DisposedITAT Mumbai30 Nov 2022AY 2011-12

Bench: Shri Om Prakash Kant () & Shri Sandeep Singh Karhail () Assessment Year: 2011-12 & Assessment Year: 2011-12 & Assessment Year: 2012-13 & Assessment Year: 2013-14 & Assessment Year: 2014-15

For Respondent: Assessee by Mr. Rushabh Mehta

Section 269SSection 271DSection 273B

erred in facts and law in upholding the addition of unaccounted interest payment of Rs. 13.10.367/- unaccounted interest payment of Rs. 13.10.367/ as unexplained expenditure u/s. 69C of the Act on the alleged cash loan taken of Rs. expenditure u/s. 69C of the Act on the alleged cash loan taken ... three of the appeal of the assessee relates to addition of interest payment of t payment of ₹ 13, 10, 367/ 13, 10, 367/-as unexplained expenditure under section 69C on alleged cash loan taken of expenditure under section 6 9C on alleged cash loan taken

Dy.C.I.T. Cent. Cir-6(2), Mumbai vs. Shri Dilip B.Jiwrajka, Mumbai

In the result, the Cross Objections for AYs 2012-13 & 2013-14

ITA 2349/MUM/2021[2012-13]Status: DisposedITAT Mumbai29 Nov 2022AY 2012-13

Section 132Section 143(2)Section 153ASection 68Section 69C

which the transactions in such shares took place, across all these AYs 2012-13 to 2015-16. Consequently, the AO also estimated and added unexplained expenditure by way of commission paid for such trades to the assessee’s income u/s 69C of the Act in all the four ... into the business of providing accommodation entries. v) On the facts and circumstance of the case, the Ld. CIT(A) erred in deleting the unexplained expenditure without appreciating the fact that the Shri Amit Saraogi (one of the stock brokers) in its statement has clearly stated that he had provided

Mukesh Gupta, Mumbai vs. Asstt CIT-Central Circle-1, Thane

Appeals are partly allowed for statistical purpose

ITA 886/MUM/2022[2008-09]Status: DisposedITAT Mumbai28 Nov 2022AY 2008-09

Bench: Shri Kuldip Singh, Hon'Ble & Shri S. Rifaur Rahman, Hon'Ble

Section 132Section 142Section 153ASection 250

basis (Para 18) 2343782 Addition on account of deposits of treated as unexplained cash credits u/s 68 (Para 19) 500000 Addition on account of unexplained expenditure (Para 20) 190000 Payment to Mr.Sham Bali treated as income from undisclosed sources (Para 21) 245000 Addition on account of income from unexplained sources ... Officer has disallowed part of the salary income declared by the assessee, additions on account of unexplained cash credit u/s. 68 of the Act, unexplained expenditure, payment to undisclosed sources etc., as discussed in Para Nos. 22 to 25, the additions can only be made in the hands