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“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

Rajnibhai Bhogilal Desai, Kheda vs. The ITO, Ward-5, Nadiad

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

ITA 533/AHD/2025[2002-03]Status: DisposedITAT Ahmedabad23 Sept 2025AY 2002-03

Bench: DR. BRR Kumar (Vice President), Shri Siddhartha Nautiyal (Judicial Member)

Section 143(3)Section 147Section 148

upheld the AO’s addition of Rs.59,32,051/- as undisclosed capital, Rs.19,18,893/- as unexplained cash receipt, and Rs.32,97,287/- as unexplained expenditure. The CIT(A) held that the assessee failed to explain the entries in the seized cash book and did not offer any evidence

DCIT, Circle-4(1)(1), Ahmedabad, Vejalpur vs. Savvy Infrastructure Private Limited, S. G Highway Ahmedabad

In the result, the appeal of the Revenue is dismissed

ITA 2021/AHD/2024[2017-18]Status: DisposedITAT Ahmedabad23 Sept 2025AY 2017-18

Bench: Dr. B.R.R. Kumar, Vice-Ms. Suchitra R. Kambledeputy Commissioner Of Savvy Infrastructure Pvt Ltd., Vs. Income-Tax, B-900, Shapath-4, Opp. Circle 4(1)(1), Karnavati Club, Sg Highway, Ahmedabad Ahmedabad-380051 [Pan : Aaccs 1428 B] (Appellant) .. (Respondent) Appellant By : Shri B.P. Srivastava, Sr Dr Respondent By: Ms. Shrunjal Shah, Ar Date Of Hearing 22.09.2025 Date Of Pronouncement 23.09.2025 O R D E R Per Dr. B.R.R. Kumar, Vice-:-

For Appellant: Shri B.P. Srivastava, Sr DRFor Respondent: Ms. Shrunjal Shah, AR
Section 143(3)Section 250Section 69C

Thereafter, the Assessing Officer passed an assessment order u/s 143(3) of the Act dated 23.12.2019, disallowing the said loss and treating it as unexplained expenditure under Section 69C of the Act. 4. Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before

Dr. Pratap Pandhiranath Patil, Pune vs. PCIT - 2, Pune

In the result, the appeal filed by the assessee is allowed as per terms indicated above

ITA 1026/PUN/2025[2020-21]Status: DisposedITAT Pune23 Sept 2025AY 2020-21

Bench: Dr.Manish Borad & Shri Vinay Bhamore

For Appellant: Shri A.V.Iyer and Shri Siddhant G. BiswasFor Respondent: Shri Amit Bobde
Section 143(3)Section 263Section 263(1)

have made the addition of Rs.42,83,244/- by invoking section 68 and 69C of the Act for the unexplained Agricultural Receipts and unexplained Expenditure. We fail to find any justification in this observation by ld. PCIT and the basis for assumption of jurisdiction because the issue has already been

Shri Vishwakarama Jewellers, Akola vs. DCIT Akola Circle, Akola

In the result, assessee’s appeal is allowed

ITA 99/NAG/2025[2017-18]Status: DisposedITAT Nagpur22 Sept 2025AY 2017-18

Bench: Shri Narender Kumar Choudhry & Shri K.M. Roy, Accountant, Member

For Appellant: Shri S.G. GandhiFor Respondent: Shri Surjit Kumar Saha
Section 115BSection 133ASection 143(3)Section 69B

satisfactorily explained, then the value of such investments and money or the value of articles not recorded in the books of account or the unexplained expenditure may be deemed to be the income of such Assessee." In the absence of the explanation/evidence regarding the sources of the additional income being

Nilesh Shirish Mehta, Mumbai vs. Income Tax Officer - Ward 42(1)(3), Mumbai

In the result, appeal of the assessee is allowed

ITA 4807/MUM/2025[2015-16]Status: DisposedITAT Mumbai22 Sept 2025AY 2015-16

Bench: Shri Saktijit Dey, Hon’Ble & Shri Narendra Kumar Billaiya, Hon’Ble

For Appellant: Shri Suchek Anchaliya, A/RFor Respondent: Shri Leyaqat Ali Aafaqui, Sr. D/R
Section 143(2)Section 147Section 148Section 148ASection 234ASection 250Section 68Section 69C

facts in confirming the addition of Rs. 10,91,979/- under section 69C of the Act as Rs. 371164/- alleged unexplained expenditure on account of commission. 6. The learned CIT(A) erred in upholding the assessment without addressing the fundamental violation of principles of natural justice, as no opportunity

Dy. Commissioner of Income Tax, Central Circle-3(3), Mumbai vs. Pradeep Phulchand Agarwal, Mumbai

ITA 4181/MUM/2025[2017-18]Status: DisposedITAT Mumbai22 Sept 2025AY 2017-18
Section 132(4)Section 139(1)Section 143(3)Section 254(1)Section 69C

Ground no 4 to 6 of the appeal pertains to the addition of Rs.2,19,08,711/- done by the AO on account of unexplained expenditure attributing the same to cash interest paid for the loans taken by the appellant. This issue is a repetitive issue ... discussed the facts of case elaborately and had deleted the entire addition of Rs.2,19,08,711/- made on account of unexplained expenditure u/s 69C and rightly so, as the addition was made only on the basis of principle of preponderance of human probabilities on presumptive basis dehors any corroborative

Dy. Commissioner of Income Tax, Mumbai vs. Pradeep Phulchand Agarwal, Mumbai

ITA 4136/MUM/2025[2019-20]Status: DisposedITAT Mumbai22 Sept 2025AY 2019-20
Section 132(4)Section 139(1)Section 143(3)Section 254(1)Section 69C

Ground no 4 to 6 of the appeal pertains to the addition of Rs.2,19,08,711/- done by the AO on account of unexplained expenditure attributing the same to cash interest paid for the loans taken by the appellant. This issue is a repetitive issue ... discussed the facts of case elaborately and had deleted the entire addition of Rs.2,19,08,711/- made on account of unexplained expenditure u/s 69C and rightly so, as the addition was made only on the basis of principle of preponderance of human probabilities on presumptive basis dehors any corroborative

Dy. Commissioner of Income Tax, Central Circle -3(3), Mumbai vs. Pradeep Phulchand Agarwal, Mumbai

ITA 3852/MUM/2025[2015-16]Status: DisposedITAT Mumbai22 Sept 2025AY 2015-16

Bench: SHRI PAWAN SINGH (Judicial Member), SHRI ARUN KHODPIA (Accountant Member)

Section 132(4)Section 139(1)Section 143(3)Section 254(1)Section 69C

Ground no 4 to 6 of the appeal pertains to the addition of Rs.2,19,08,711/- done by the AO on account of unexplained expenditure attributing the same to cash interest paid for the loans taken by the appellant. This issue is a repetitive issue ... discussed the facts of case elaborately and had deleted the entire addition of Rs. 2,19,08,711/- made on account of unexplained expenditure u/s 69C and rightly so, as the addition was made only on the basis of principle of preponderance of human probabilities on presumptive basis dehors

Rasiklal Lavchand Vora, Thane vs. ACIT - Central Circle 1, Thane

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

ITA 5983/MUM/2024[2013-14]Status: DisposedITAT Mumbai22 Sept 2025AY 2013-14

Bench: Shri Sandeep Gosain

Section 144Section 147Section 250Section 44ASection 69C

identical for A.Y. 2010- 11, the appellant is not liable to addition of Rs. 8,02,948/- made from bogus parties is treated as unexplained expenditure u/s 69C of the I.T. Act. The AO is directed to delete the addition of Rs. 8,02,948/- made u/s 69C. Therefore

Rasiklal Vora, Thane vs. ACIT - Central Circle -1, Thane

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

ITA 5982/MUM/2024[2016-17]Status: DisposedITAT Mumbai22 Sept 2025AY 2016-17

Bench: Shri Sandeep Gosain

Section 144Section 147Section 250Section 44ASection 69C

identical for A.Y. 2010- 11, the appellant is not liable to addition of Rs. 8,02,948/- made from bogus parties is treated as unexplained expenditure u/s 69C of the I.T. Act. The AO is directed to delete the addition of Rs. 8,02,948/- made u/s 69C. Therefore

Rasiklal Vora, Thane vs. ACIT, Central 1, Thane

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

ITA 5981/MUM/2024[2015-16]Status: DisposedITAT Mumbai22 Sept 2025AY 2015-16

Bench: Shri Sandeep Gosain

Section 144Section 147Section 250Section 44ASection 69C

identical for A.Y. 2010- 11, the appellant is not liable to addition of Rs. 8,02,948/- made from bogus parties is treated as unexplained expenditure u/s 69C of the I.T. Act. The AO is directed to delete the addition of Rs. 8,02,948/- made u/s 69C. Therefore

DCIT, Circle-7(1), Delhi vs. Fmi Automotive Components Private Limited, Haryana

In the result, the appeal filed by the Revenue is dismissed

ITA 3489/DEL/2024[2017-18]Status: DisposedITAT Delhi22 Sept 2025AY 2017-18

Bench: Shri Satbeer Singh Godara & Shris.Rifaur Rahmandcit, Circle 7 (1), Vs. Fmi Automotive Components Private Limited, Delhi. Plot No.1, Subplot 4, 5, 8 & 9 Msil, Supplier Park, Phase 3A, Imt Manesar, Gurgaon – 1222 050 (Haryana). (Pan :Aabcf1682P) (Appellant) (Respondent) Assessee By :Shri S.K. Agarwal, Ca Revenue By :Shri Rajesh Kumar Dhanesta, Sr. Dr Date Of Hearing : 24.06.2025 Date Of Order : 22.09.2025 O R D E R Per S. Rifaur Rahman: 1. The Revenue Has Filed Appeal Against The Order Of The Learned Commissioner Of Income Tax (Appeals)/National Faceless Appeal Centre (Nfac), Delhi [“Ld. Cit(A)”, For Short] Dated 30.05.2024 For The Assessment Year 2017-18 Raising Following Grounds Of Appeal :- “1. Whether On The Facts & Circumstances Of The Case & In Law, The Ld Nfac Has Erred In Allowing The Appeal Of The Assessee By Deleting The Addition Made By The Ao Amounting To Rs.5,90,59,019/- On Account Of Disallowance Of Foreign Exchange Loss On Account Of Plant & Machinery.

For Appellant: Shri S.K. Agarwal, CAFor Respondent: Shri Rajesh Kumar Dhanesta, Sr. DR
Section 143(1)Section 143(2)Section 41

appeal of the assessee by deleting the addition made by the AO amounting to Rs.40,26,506/- being disallowance of 10% of the total unexplained expenditure incurred in relation to service fee and job work? 5. Whether on the facts and circumstances of the case ... assessee by deleting the addition made by the AO amounting to Rs.2.94,40,000/- being disallowance of 10% of the total disproportionately increased unexplained expenditure as compared to the previous year? 6. Whether on the facts and circumstances of the case and in law, the Ld. NFAC has erred

Deputy Commissioner of Income Tax, Central Circle-4(3), Kolkata vs. Tamanna Commosales Private Limited, Kolkata

In the result, the appeal of the revenue is dismissed

ITA 1492/KOL/2025[2020-21]Status: DisposedITAT Kolkata19 Sept 2025AY 2020-21

Bench: Shri Rajesh Kumar & Shri Pradip Kumar Choubeyassessment Year: 2020-21 Dcit, Central Circle-4(3), Kolkata.…………………………….…….……Appellant Vs. Tamanna Commosales Pvt. Ltd………………….………...……...…..…..Respondent B-2/2, Gillander House, Kol- 1. [Pan: Aaect0756H] Appearances By: Shri Sanat Kr. Raha, Cit-Dr, Appeared On Behalf Of The Appellant. Shri Sujay Sen, Ar, Appeared On Behalf Of The Respondent. Date Of Concluding The Hearing : September 15, 2025 Date Of Pronouncing The Order : September 19, 2025 Order Per Pradip Kumar Choubey: The Present Appeal Has Been Preferred By The Assessee Against The Order Dated 07.03.2025 Of The National Faceless Appeal Centre [Hereinafter Referred To As The “Ld. Cit(A)”] Passed U/S 250 Of The Income Tax Act, 1961 [Hereinafter Referred To As The “Act”].

Section 132Section 139Section 142(1)Section 143(2)Section 143(3)Section 250Section 69C

From the assessment order, it is observed that the Assessing Officer made addition of Rs.56,96,400/- u/s 69C of the Act as unexplained expenditure for bogus purchase. 4. Aggrieved by the said order, the assessee preferred appeal before the ld. CIT(A) wherein the appeal of the assessee ... these purchases into books of accounts and hence, treated the amount of Rs. 92,48,695/- (aggregate of all four purchase bills amount) as unexplained expenditure u/s 69C of the Act. 7.2.2. In the course of appellate proceeding, the assessee submitted that the AO has wrongly presumed the prefix

Public Health Research Institute of India(Phrii) Trust, Mysuru vs. Income Tax Officer, Exemption, Ward-1, Mysuru

In the result, the appeal of the assessee is allowed for statistical purposes

ITA 830/BANG/2025[2018-19]Status: DisposedITAT Bangalore19 Sept 2025AY 2018-19

Bench: Shri Waseem Ahmed & Shri Keshav Dubeyassessment Year: 2018-19

For Appellant: Shri V Srinivasan, AdvocateFor Respondent: Shri Subramanian S, JCIT (DR)
Section 11Section 12ASection 69C

Since the source of excess expenditure amounting to ₹1,16,58,563 was not explained to his satisfaction, the AO treated it as unexplained expenditure under section 69C of the Act and denied exemption under section 11 of the Act. 3. On appeal, the ld. CIT(A) confirmed the order ... reconciliation statement and fund-flow chart for FY 2017-18 to FY 2018-19 has now been prepared, showing that the so-called “unexplained expenditure” was actually met out of earlier year’s funds. The trust had maintained separate books for domestic and FCRA accounts which were duly audited. Therefore

Ramachandra Naveen, Bangalore vs. DCIT, Central Circle-1(1), Bengaluru

ITA 2152/BANG/2024[2014-15]Status: DisposedITAT Bangalore19 Sept 2025AY 2014-15

Bench: Shri. Laxmi Prasad Sahu & Shri. Soundararajan K

For Appellant: Shri. V. Srinivasan, AdvocateFor Respondent: Shri. Muthu Shankar, CIT(DR)(ITAT), Bangalore
Section 131Section 132(4)Section 153A

Page 14 of 31 10. On the basis of above observation of the assessee, AO made addition under section 69C of the Act as unexplained expenditure for the Assessment Years as under Assessment Year Amount ... section 69C of the Act as under: ITA Nos.2149 to 2152/Bang/2024 Page 28 of 31 “Section 69C in The Income Tax Act, 1961 69C. [ Unexplained expenditure, etc. [Inserted by Act 41 of 1975, Section 14 (w.e.f. 1.4.1976).] - Where in any financial year an assessee has incurred any expenditure

Ramachandra Naveen, Bangalore vs. DCIT, Central Cirlce-1(1), Benglauru

ITA 2151/BANG/2024[2013-14]Status: DisposedITAT Bangalore19 Sept 2025AY 2013-14

Bench: Shri. Laxmi Prasad Sahu & Shri. Soundararajan K

For Appellant: Shri. V. Srinivasan, AdvocateFor Respondent: Shri. Muthu Shankar, CIT(DR)(ITAT), Bangalore
Section 131Section 132(4)Section 153A

Page 14 of 31 10. On the basis of above observation of the assessee, AO made addition under section 69C of the Act as unexplained expenditure for the Assessment Years as under Assessment Year Amount ... section 69C of the Act as under: ITA Nos.2149 to 2152/Bang/2024 Page 28 of 31 “Section 69C in The Income Tax Act, 1961 69C. [ Unexplained expenditure, etc. [Inserted by Act 41 of 1975, Section 14 (w.e.f. 1.4.1976).] - Where in any financial year an assessee has incurred any expenditure

Sri Ramachandra Naveen, Bangalore vs. DCIT, Central Circle-1(1), Bengaluru

ITA 2150/BANG/2024[2012-13]Status: DisposedITAT Bangalore19 Sept 2025AY 2012-13

Bench: Shri. Laxmi Prasad Sahu & Shri. Soundararajan K

For Appellant: Shri. V. Srinivasan, AdvocateFor Respondent: Shri. Muthu Shankar, CIT(DR)(ITAT), Bangalore
Section 131Section 132(4)Section 153A

Page 14 of 31 10. On the basis of above observation of the assessee, AO made addition under section 69C of the Act as unexplained expenditure for the Assessment Years as under Assessment Year Amount ... section 69C of the Act as under: ITA Nos.2149 to 2152/Bang/2024 Page 28 of 31 “Section 69C in The Income Tax Act, 1961 69C. [ Unexplained expenditure, etc. [Inserted by Act 41 of 1975, Section 14 (w.e.f. 1.4.1976).] - Where in any financial year an assessee has incurred any expenditure

Sri. Ramachandra Naveen, Bangalore vs. DCIT, Central Cirlce-1(1), Bangalore

ITA 2149/BANG/2024[2011-12]Status: DisposedITAT Bangalore19 Sept 2025AY 2011-12

Bench: Shri. Laxmi Prasad Sahu & Shri. Soundararajan K

For Appellant: Shri. V. Srinivasan, AdvocateFor Respondent: Shri. Muthu Shankar, CIT(DR)(ITAT), Bangalore
Section 131Section 132(4)Section 153A

Page 14 of 31 10. On the basis of above observation of the assessee, AO made addition under section 69C of the Act as unexplained expenditure for the Assessment Years as under Assessment Year Amount ... section 69C of the Act as under: ITA Nos.2149 to 2152/Bang/2024 Page 28 of 31 “Section 69C in The Income Tax Act, 1961 69C. [ Unexplained expenditure, etc. [Inserted by Act 41 of 1975, Section 14 (w.e.f. 1.4.1976).] - Where in any financial year an assessee has incurred any expenditure

DCIT(CC)-8(3), Mumbai vs. Shapoorji Pallonji and Company Private Limited, Mumbai

The appeal of the revenue is dismissed on merits the various legal contentions in the C

ITA 2242/MUM/2025[2012-13]Status: DisposedITAT Mumbai19 Sept 2025AY 2012-13

Bench: Justice (Retd.) C V Bhadang & Ms Padmavathy S, Am

For Respondent: Shri Rajan Vora & Shri Nikhil
Section 115JSection 143(3)Section 147Section 151Section 250

cause as to why the bogus payments to Sme Mayaben V. Parmar to the tune of Rs. 2.18.98.416/- should not be disallowed as being unexplained expenditure and added back to the total income for the year under consideration. In compliance, the assessee company made its submission vide letter dated ... enquiry proceedings and after detailed enquiry of the facts, the transaction of the assessee company with Smt. Mayaben V. Parmar was held as unexplained expenditure of the assessee company. In the ongoing scrutiny proceedings, the assessee could not produce any new facts with respect to the transaction or any adducing

ITO, Mumbai vs. Shemon Jewels, Mumbai

ITA 2049/MUM/2025[2014-15]Status: DisposedITAT Mumbai19 Sept 2025AY 2014-15

Bench: SHRI PAWAN SINGH (Judicial Member), SHRI ARUN KHODPIA (Accountant Member)

Section 250Section 254(1)Section 37Section 74

been allowed, by rejecting the ITAT's decision of estimating the profit rate @12.5% on bogus purchases and thereby impliedly grant deduction of such unexplained expenditure incurred u/s. 69C of the Act, eventhough the assessee failed to discharge its onus to prove the genuineness of alleged purchases and has offered