“bogus purchases”

DisallowancesSection 69CSection 69C9,532 judgments

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

Leading authorities on bogus purchases

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.

Sanjay Oilcake Industries v. CIT

316 ITR 274 · 2009 · High Court

460

citing judgments

In cases of alleged bogus or unverifiable purchases, rather than disallowing the entire purchase value, a reasonable profit element or a proportionate percentage of the purchases should be added back 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.

CIT v. Odeon Builders Pvt. ltd.

418 ITR 315 · 2019 · Supreme Court

408

citing judgments

Income tax additions cannot be sustained merely on the basis of uncorroborated statements or allegations. The Revenue must bring on record sufficient material and allow the assessee to produce evidence to prove such additions.

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. Shyam R. Pawar

54 Taxmann.com 108 · 2015 · High Court

279

citing judgments

Transactions involving the purchase and sale of shares cannot be considered bogus where the assessee provides documentary evidence, unless the revenue brings substantial evidence on record to reject such proof. This principle is consistently applied in cases concerning claims of bogus long-term capital gains arising from penny stock transactions.

CIT v. Simit P. Seth

38 Taxmann.com 385 · 2013 · High Court

278

citing judgments

When an assessee obtains accommodation bills for purchases but the corresponding sales are genuine, the addition to income is limited to the gross profit margin embedded in such purchases. This principle acknowledges that the underlying sales were real, but profit was suppressed through bogus invoices.

CIT v. Vijay M. Mistry Construction Ltd.

355 ITR 498 · 2013 · High Court

252

citing judgments

In cases of alleged bogus or hawala purchases where the existence of transactions is not entirely denied, only the profit element embedded in such purchases, and not the entire purchase price, can be added to the assessee's income. The focus is on determining a reasonable profit percentage for such additions.

Judgments citing bogus purchases

M/S Special Steels & Alloys, Mumbai vs. Income Tax Officer Ward 19(3)(4), Mumbai

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

ITA 1680/MUM/2024[2009-10]Status: DisposedITAT Mumbai11 Jul 2024AY 2009-10

Bench: Shri Satbeer Singh Godara & Shri Amarjit Singh

For Appellant: NoneFor Respondent: Shri B. Laxmi Kanth, Sr. DR

Section 143(1)Section 144Section 147Section 148Section 250(6)

Subsequently information was received from the DDIT (Inv.), Mumbai that assessee has M/s. Special Steel & Alloys A.Y. 2009-10 obtained accommodation entries of bogus purchases from the following parties: “i. Navkar Impex ii. Gravity Metal & Alloys Pvt. Ltd.” 3. On the basis of information, the case of the assessee ... officer. Therefore, the assessing officer has treated the whole amount of purchases of Rs. 28,08,416/- made from the accommodation entry provider as bogus purchases and added to the total income of the assessee. 4. The assessee filed appeal before

Shri Khatu Shyam Builders, Jaipur vs. ACIT Central Circle 2, Jaipur

In the result, the appeal of the assessee is allowed

ITA 486/JPR/2024[2014-15]Status: DisposedITAT Jaipur10 Jul 2024AY 2014-15

For Appellant: Shri Rohan Sogani, CAFor Respondent: Mrs. Monisha Choudhary, Addl. CIT-DR

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

ITAT, deleting the penalty imposed u/s 271(1)(c). In this case, in the quantum proceedings, ld. AO made addition on account of bogus purchases. Ld. CIT (A) disallowed the loss claimed by the Assessee on sale of some of the unbranded items out of the purported purchases. Further certain ... basis of the same notice. Also, the Court concurs with the CIT (A) and the ITAT that once the finding of the AO on bogus purchases was set aside, it could not be said that there was any concealment of facts or furnishing of inaccurate particulars by the Assessee that

J C Home Tex, Jaipur vs. Assistant Commissioner of Income Tax Circle - 7, Jaipur

ITA 292/JPR/2024[2016-17]Status: DisposedITAT Jaipur10 Jul 2024AY 2016-17

For Appellant: Sh. Tarun Mittal, CA &For Respondent: Sh. Anoop Singh (Addl. CIT)

Section 133ASection 142(1)Section 143(1)Section 143(2)Section 143(3)Section 145(3)

shows that the excess stock was over and above the regular gross profit ratio maintained by the appellant. Excess cash if generated out of bogus purchases or out of suppression of sales would show actual gross profit ratio is over and above what is already declared by the appellant

Bhuraram V. Choudhary, Mumbai vs. I.T.O., Ward-19(1)(2), Mumbai

In the result, all the appeals of the assesse are allowed

ITA 4404/MUM/2023[2011-12]Status: DisposedITAT Mumbai10 Jul 2024AY 2011-12

Bench: Shri Amarjit Singh & Shri Raj Kumar Chauhan

For Appellant: Ravi GuptaFor Respondent: Ashok Kumar Ambastha

Section 143(1)Section 147Section 148Section 271(1)(c)

perused the material on record. The case was reopened u/s 147 of the Act on the basis of information received from investigation wing regarding bogus purchases made by the assessee during the year under consideration as discussed supra in this order. The assessing officer stated that assessee failed to prove ... rival sides. It is an undisputed fact that the Assessing Officer has made addition in the case of assessee on account of alleged bogus purchases. The Assessing Officer made addition of 100% of unproved purchases, the CIT(A) restricted the addition to 12.5% of such

Bhuraram V. Choudhary, Mumbai vs. I.T.O., Ward-19(1)(2), Mumbai

In the result, all the appeals of the assesse are allowed

ITA 4403/MUM/2023[2010-11]Status: DisposedITAT Mumbai10 Jul 2024AY 2010-11

Bench: Shri Amarjit Singh & Shri Raj Kumar Chauhan

For Appellant: Ravi GuptaFor Respondent: Ashok Kumar Ambastha

Section 143(1)Section 147Section 148Section 271(1)(c)

Bhuraram V. Choudhary, Mumbai vs. I.T.O., Ward-19(1)(2), Mumbai

In the result, all the appeals of the assesse are allowed

ITA 4402/MUM/2023[2009-10]Status: DisposedITAT Mumbai10 Jul 2024AY 2009-10

Bench: Shri Amarjit Singh & Shri Raj Kumar Chauhan

For Appellant: Ravi GuptaFor Respondent: Ashok Kumar Ambastha

Section 143(1)Section 147Section 148Section 271(1)(c)

Amit Savlaram Parte, Mumbai vs. Commissioner of Income Tax (Appeals), Mumbai

In the result, the appeal in ITA No

ITA 2281/MUM/2024[2021-2022]Status: DisposedITAT Mumbai09 Jul 2024AY 2021-2022

Bench: Shri Prashant Maharishi & Shri Anikesh Banerjee

For Appellant: Shri Nimesh Chothani, C.AFor Respondent: ShriManoj Kumar Sinha (SR.DR.)

Section 133(6)Section 144Section 144rSection 234Section 250

facts in making the disallowance of Rs.4,79,91,750/- i.e. 4,79,91,750/- i.e. 100 per cent of alleged bogus purchases of Rs.4,79,91,750/- without any basis as to percentage of alleged bogus purchases. 5. The learned CIT(A) has erred in treating the amount ... purchases made by the Assessee of Rs.4,79,91,750/- as bogus purchases and adding the same to the total income of the Assessee without appreciating the fact that the addition of alleged bogus purchases cannot be made on the basis of the information available with the office

I.T.O., Mumbai vs. Royal Steel Traders, Mumbai

In the result, appeal of the revenue is dismissed

ITA 1242/MUM/2024[2009-10]Status: DisposedITAT Mumbai09 Jul 2024AY 2009-10

Bench: Shri Narendra Kumar Billaiya, Hon’Ble & Shri Rahul Chaudhary, Hon’Ble

For Appellant: NoneFor Respondent: Shri Himanshu Sharma, CIT, D/R

Section 143(3)

facts and in circumstances of the case and in law, the Ld. CIT(A) was correct in restricting the addition made on account of bogus purchase from Rs. 29,87,661/-to Rs. 7,45,275/- of total bogus purchases ignoring the fact that the Sales Tax Department has proved ... facts and in circumstances of the case and in law, the 14. CIT(A) erred in restricting the addition made on account of bogus purchase to Rs. 7,45,275/- taking into consideration the bogus bills against which no goods have been received?". 4. "Whether on the facts

M/S. Shanker Logistices (P) Ltd., Kolkata vs. DCIT, Cir-7(1), Kolkata

The appeal of the assessee stands allowed

ITA 829/KOL/2023[2012-13]Status: DisposedITAT Kolkata08 Jul 2024AY 2012-13

Bench: Shri Sanjay Garg & Dr. Manish Boradi.T.A. No.829/Kol/2023 Assessment Year: 2012-13 M/S Shankar Logistics (P) Ltd.….…….…............…...……………....Appellant 207, Maharshi Divendra Road, West Bengal-700007. [Pan: Aajcs8693P] Vs. Dcit, Circle-7(1), Kolkata….....…........................................…..…..... Respondent Appearances By: Shri Miraj D. Shah, Ar, Appeared On Behalf Of The Appellant. Shri P. P. Barman, Addl. Cit-Sr. Dr, Appeared On Behalf Of The Respondent. Date Of Concluding The Hearing : April 10, 2024 Date Of Pronouncing The Order : July 08, 2024 आदेश / Order संजय गग", "या"यक सद"य "वारा / Per Sanjay Garg: The Present Appeal Has Been Preferred By The Assessee Against The Order Dated 23.06.2023 Of The National Faceless Appeal Centre [Hereinafter Referred To As ‘Cit(A)’] Passed U/S 250 Of The Income Tax Act (Hereinafter Referred To As The ‘Act’). 2. The Assessee In This Appeal Has Agitated Against The Confirmation Of Addition Of Rs.85,98,795/- By The Ld. Cit(A) As Made By The Assessing Officer Treating The Unsecured Loans Taken By The Assessee As Bogus & Thereby Making The Addition Of The Aforesaid Amount As Unexplained Income Of The Assessee. The Assessee Apart From Challenging The Additions On Merits Has Also Contested The Validity Of The Reopening Of The Assessment.

Section 143(3)Section 147Section 148Section 250

their unaccounted money in the books. Thus, the assessee has introduced its unaccounted cash back in the books without paying any tax by taking bogus purchases or payment entries from these shell companies. 4. Basis of Forming reason to believe and details of escapement of income: There is specific information

Income Tax Officer, Mumbai vs. Sandeep Ramesh Shah, Mumbai

In the result, we dismiss both the appeal of the assessee as well of Revenue

ITA 251/MUM/2024[2011-12]Status: DisposedITAT Mumbai04 Jul 2024AY 2011-12

Bench: Shri Amarjit Singh & Shri Rahul Chaudhary, Income Tax Officer- Vs. Sandeep Ramesh Shah 19(3)(1), Piramal Reshmo Mac Tools Centre Chamber, Room No.405, 2/10, Summit House, Lalbaug Forjett Hill Road, Opp Mumbai – 400 012 Bhatia Hospital, Mumbai – 400036 "थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aafps2666B Appellant .. Respondent

For Appellant: NoneFor Respondent: H.M. Bhatt

Section 133(6)Section 143(1)Section 147Section 148

decision of CIT(A) is reproduced as under: “5. The issue of assessment of income under the Act in the context of alleged bogus purchase found by sales tax department initially and then investigated by Income Tax department is no more res integra. There are several cases adjudicated by courts ... basis of some alleged information received from Sales Tax Department of Maharashtra and from DGIT (Inv.), Mumbai that "the assessee has taken bogus purchase bills without having taken any delivery of the goods, without applying their mind. It is also not in dispute that the AO has also not examined