“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

Deputy Commissioner of Income Tax, ( Central)-2, Raipur vs. Shri Sanjay Kumar Agrawal, Raipur

In the result, both appeals of the revenue are dismissed

ITA 179/RPR/2019[2015-16]Status: DisposedITAT Raipur20 Sept 2022AY 2015-16

Bench: Shri Ravish Sood, Jm & Shri Arun Khodpia, Am आयकर अऩीऱ सं./Ita No.169 & 179/Rpr/2019 (ननधाारण वषा / Assessment Year : 2015-2016 & 2016-2017) Acit-2, Raipur Vs Shri Sanjay Kumar Agrawal, Shri Shyam Tower, Kavita Nagar, Main Road, Avanti Vihar, Raipur Pan No. : Afdpa 6944 B (अऩीऱाथी /Appellant) (प्रत्यथी / Respondent) ..

For Appellant: Shri Veekaas S Sharma, CAFor Respondent: Shri P.K.Mishra, CIT-DR

Section 132Section 145(3)

infirmities and irregularities in his books of accounts for the said preceding years. However, neither of any such infirmity, viz. (i). booking of any bogus purchases; or (ii). inflating of expenses by the assessee had either been pointed out by the AO while framing the assessment in the case

Assistant Commissioner of Income Tax (Central)-2, Raipur vs. Shri Sanjay Kumar Agrawal, Raipur

In the result, both appeals of the revenue are dismissed

ITA 169/RPR/2019[2016-17]Status: DisposedITAT Raipur20 Sept 2022AY 2016-17

For Appellant: Shri Veekaas S Sharma, CAFor Respondent: Shri P.K.Mishra, CIT-DR

Section 132Section 145(3)

Alok Madangopal Todi, Mumbai vs. Asst CIT Circle- 19(1), Mumbai

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

ITA 528/MUM/2020[2010-11]Status: DisposedITAT Mumbai20 Sept 2022AY 2010-11

Bench: Shri Kuldip Singh, Hon'Ble & Shri S. Rifaur Rahman, Hon'Blealok Madangopal Todi V. Acit – Circle – 19(1) Flat No. 5, 2Nd Floor Room No. 203, 2Nd Floor Bedekar Building, Hf Society Road Matru Mandir, Tardev Road Jogeshwari (E), Mumbai - 400060 Mumbai – 400 007 Pan: Aadpt0044Q (Appellant) (Respondent)

For Appellant: Shri R.S. KhandelwalFor Respondent: Shri Manoj Sinha

without purchase. (4) On the facts and in law, the Ld. CIT (A) erred in not giving credit of GP already declared on alleged bogus purchases and/or restricting it to GP rate of other genuine purchases. (5) Appellant prays for leave to add, amend or delete any ground/s of appeal ... record. On a perusal of the Ld.CIT(A) order, we observe that Assessing Officer completed the assessment by finding that the assessee has made bogus purchases and sustained 12.5% of the purchase value. Whereas Ld.CIT(A) did not accept the same and issued enhancement notice through ITBA Portal, we find

Credo Brands Marketing Pvt Ltd, Mumbai vs. Assl CIT 9 (1_, Mumbai

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

ITA 7771/MUM/2019[2011-12]Status: DisposedITAT Mumbai20 Sept 2022AY 2011-12

Bench: Shri Vikas Awasthy & Shri Amarjit Singhcredo Brands Marketing Vs. Addl. Cit, Range 9(1) Pvt. Ltd. Aayakar Bhavan, Plot No. B-8, Midc Churchgate, Central Road, Marol, Mumbai - 400020 Andheri (East), Mumbai – 400093 स्थायी लेखा सं./जीआइआर सं./ Pan/Gir No: Aabcc5073H Appellant .. Respondent

For Appellant: M. SubramanianFor Respondent: Love Kumar

Section 143(2)Section 143(3)

assessee failed to produce documentary evidence such as delivery challan etc. Therefore, the A.O treated the alleged purchases amounting of Rs.22,08,434/- as bogus purchases and added to the total income of the assessee. 4. During the course of assessment proceedings the A.O also noticed that assessee has incurred ... assessee. 5. Aggrieved, the assessee filed the appeal before the ld. CIT(A). In respect to addition of Rs.22,08,434/- on account of bogus purchases the ld. CIT(A) after reiterating the facts reported by the A.O confirmed the disallowance. ITA No.7771/Mum/2019 A.Y. 2011-12 4 Credo Brands Marketing

Navunda Abdulla Badruddin, Udupi vs. Principal Commissioner of Income Tax, Central, Bangalore

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

ITA 508/BANG/2022[2018-19]Status: DisposedITAT Bangalore20 Sept 2022AY 2018-19

Bench: Shri N.V. Vasudevan & Ms. Padmavathy S.Shri Navunda Abdulla Badruddin Vs Pcit, Central O Thuwfeeq Manzil C.R. Building, Queen'S Road Maski Navunda, Kundapur Bengaluru 560001 Udupi 576224 Pan – Aevpa6893G (Appellant) (Respondent) Assessee By: Shri V. Narendra Sharma, Advocate Revenue By: Shri Manjunath Karkihalli, Cit-Dr Date Of Hearing: 14/09/2022 Date Of Pronouncement: 20/09/2022 O R D E R Per: Padmavathy, A.M. This Is An Appeal Filed By The Assessee Against The Order Of The Principal Commissioner Of Income Tax(Pcit) U/S.263 Of The Income Tax Act 1961 (The Act), Bangalore In Appeal No. 263/Pr.Cit(C)/2001-02 Dated 28.03.2022 For Ay 2018-19. 2. The Assessee Has Raised The Following Grounds Of Appeal: - “1. The Order Of Revision Passed By The Learned Principal Commissioner Of Income Tax [Central], Bengaluru, Under Section 263 Of The Act Dated 28/03/2022, In So Far As It Is Against The Appellant Is Opposed To Law, Weight Of Evidence, Probabilities, Facts & Circumstances Of The Appellant'S Case. 2. The Learned Principal Commissioner Of Income Tax Is Not Justified In Law & On Facts To Set Aside The Assessment Order Passed Under Section 143[3] R.W.S. 153D Of The Act Dated 19/12/2019 & Direct

For Appellant: Shri V. Narendra Sharma, AdvocateFor Respondent: Shri Manjunath Karkihalli, CIT-DR

Section 115BSection 143Section 153DSection 263Section 69C

factually verifying what is submitted and without calling for any details. Though the assessee declared that the source for the expenditure is from the bogus purchases, this fact needs to be examined based of further enquiry and evidences which in our considered view the AO has not done

K.S. Softnet Solutions Pvt. Ltd., Mumbai vs. ACIT, New Delhi

The appeal is allowed

ITA 947/DEL/2017[2010-11]Status: DisposedITAT Delhi20 Sept 2022AY 2010-11

Bench: Sh. Shamim Yahya & Sh. Anubhav Sharmaita No. 947/Del/2017, A.Y. 2010-11

Section 143(3)Section 145(3)Section 250

facts and circumstances of the case in confirming the addition of Rs. 53,88,909/-/- made by Id assessing officer on account of alleged bogus purchases in the total income of the appellant company only on the basis of information received from investigation unit without pointing out any defect

Magan Vadhaji Prajapati, Mumbai vs. Income Tax Officer WD 19(2) 93), Mumbai

In the result, appeal by the assessee for assessment year 2009–10 is partly allowed

ITA 560/MUM/2022[2010-11]Status: DisposedITAT Mumbai19 Sept 2022AY 2010-11

Bench: Shri Om Prakash Kant & Shri Sandeep Singh Karhail

For Appellant: Shri Bharat KumarFor Respondent: Shri Ajeya Kumar Ojha, Sr. AR

Section 133Section 143Section 147Section 250

circumstances of the case and in law, the learned CIT(A) erred in confirming addition of Rs.8,60,860, which was 12.50% of alleged bogus purchase.” 4. The only grievance of the assessee is against addition made on account of bogus purchases. 5. The brief facts of the case pertaining ... record. In the present case, on the basis of information received from investigation wing, Mumbai that assessee is one of the beneficiary of bogus purchases from parties who were found by the Sales Tax Department of Maharashtra to be indulged in practice of providing bogus sales/purchase bills without supplying

Magan Vadhaji Prajapati, Mumbai vs. Income Tax Officer WD 19(2) (3), Mumbai

In the result, appeal by the assessee for assessment year 2009–10 is partly allowed

ITA 559/MUM/2022[2009-10]Status: DisposedITAT Mumbai19 Sept 2022AY 2009-10

Bench: Shri Om Prakash Kant & Shri Sandeep Singh Karhail

For Appellant: Shri Bharat KumarFor Respondent: Shri Ajeya Kumar Ojha, Sr. AR

Section 133Section 143Section 147Section 250

Ram Ujagir Ram Sabda Pandey, Mumbai vs. Circle 20(3) (1), Mumbai

In the result, appeal filed by the assessee is partly allowed with the above directions

ITA 2254/MUM/2021[2009-10]Status: DisposedITAT Mumbai19 Sept 2022AY 2009-10

Bench: Shri Kuldip Singh & Shri Gagan Goyal

For Appellant: NoneFor Respondent: Sh. Ashish Kumar, Sr. DR

Section 133(6)Section 147Section 148Section 33(6)Section 69CSection 69c

Thereafter an information received from the office of DGIT (Inv.), Mumbai about various parties involved as hawala dealers involved as issuer of bogus purchase bills to various assesses of Mumbai to suppress the profit. Names of the parties involved in issuing the bills and beneficiaries also confirmed by the sales ... Assesses case was assessed u/s 147 based on inputs received from state sales tax department and DGIT (Inv.), Mumbai ; b) Parties involved in issuing bogus purchase bills, confessed about their modus operandi before the state sales tax authorities c) Assessee was not able to produce any evidence about actual delivery

Income Tax Officer-13(3)(1), Mumbai vs. Shri Kiritbhai K. Thummar, Mumbai

In the result, assessee‟s cross objection is allowed for statistical purpose

ITA 697/MUM/2018[2012-13]Status: DisposedITAT Mumbai19 Sept 2022AY 2012-13

Bench: Shri Om Prakash Kant & Shri Sandeep Singh Karhail

For Appellant: Shri Ashwin ChhagFor Respondent: Shri Vinay Sinha

Section 132Section 133(6)Section 142(1)Section 143(1)Section 143(2)Section 143(3)Section 147Section 148Section 250Section 68

section 132 of the Act in the case of Shri Bhanwarlal Jain group on 03/10/2013, who has been indulged in providing accommodation entries like bogus purchases, sales, unsecured loans, share capital etc., statement of Shri Bhanwarlal Jain, and various other persons who assisted him in providing bogus loans and advances

M/S. R M Tradelink, Rajkot vs. The Pr. CIT-1, Rajkot

In the result, appeal of the assessee is allowed

ITA 68/RJT/2022[2018-19]Status: DisposedITAT Rajkot16 Sept 2022AY 2018-19

For Appellant: Shri Deepak Rindani, A.RFor Respondent: Shri Sanjeev Jain, CIT-D.R

Section 143(3)Section 206CSection 263Section 40Section 69C

seller who had made sales to the assessee. Hence, the AO treated purchases made by the assessee of " 2,53,99,953/- as bogus purchases and made addition of " 76,86,510/- disallowing 30% of the purchase of " 2,53,99,953/- since no TCS was collected on the same ... instant case cannot be a subject matter of proceedings under section 263 of the Act, for the reason that on the issue of bogus purchases, the matter is pending before Ld. CIT(Appeals), where this issue is under consideration before him. Accordingly, it is settled proposition of law that when

Pushpaben Chandulal Shah, Mumbai vs. CIT (A) NFAC, Mumbai

In the result, appeal filed by the assessee is allowed with the above directions

ITA 2096/MUM/2021[2011-12]Status: DisposedITAT Mumbai16 Sept 2022AY 2011-12

Bench: Shri Kuldip Singh & Shri Gagan Goyalpushpaben Chandulal Shah, D-3, Siddhapura Industrial Estate, L.B.S Marg, Ghatkopar (W), Mumbai-400086. Pan: Aapps2890B ...... Appellant Vs. Commissioner Of Income Tax (Appeals), National Faceless Appeal Centre (Nfac), Mumbai. ..... Respondent Appellant By : Sh. Rajesh Shah & Sh. Nimish Shah Respondent By : Sh. Ashish Kumar, Sr. Dr Date Of Hearing : 04/07/2022 Date Of Pronouncement : 16/09/2022 Order Per Gagan Goyal, A.M:

For Appellant: Sh. Rajesh Shah & Sh. Nimish ShahFor Respondent: Sh. Ashish Kumar, Sr. DR

Section 133(6)Section 143(1)Section 148Section 250Section 33(6)

disallowed, particularly in such cases where the corresponding sales are not doubted. Alternatively, the profit embedded in such sale against the alleged bogus purchases should be brought to tax. 2. G.P. Ratio of assessee For A.Y. 2009-10 16.23 G.P. Ratio of assessee For A.Y. 2010-11 15.17 G.P. Ratio ... from the office of DGIT (Inv.), Mumbai about various parties involved as 3 ITA No. 2096/Mum/2021-Pushpaben Chandulal Shah hawala dealers involved as issuer of bogus purchase bills to various assesses of Mumbai to suppress the profit. Names of the parties involved in issuing the bills and beneficiaries also confirmed

ITO WD - 25(2)(3), Mumbai vs. Denish Harilal Shah, Mumbai

In the result, appeal filed by the Revenue is dismissed with the above directions

ITA 3617/MUM/2018[2012-13]Status: DisposedITAT Mumbai16 Sept 2022AY 2012-13

Bench: Shri Aby T Varkey & Shri Gagan Goyalito, Ward-25(2)(3), C-10, R.No. 504, 5Th Floor, Pratyakshkar Bhavan, Bkc, Bandra, Mumbai-400051. ..... Appellant Vs. Mr. Denish Harilal Shah Flat No. 101, 1St Floor, Paan Villa, Sarojini Road, Vile Parle (W), Mumbai-400057 Pan: Awgps3773C ...... Respondent C.O. No. 48/Mum/2020 In Ita No. 3617/Mum/2018 (A.Y. 2012-13) Mr. Denish Harilal Shah Flat No. 101, 1St Floor, Paan Villa, Sarojini Road, Vile Parle (W), Mumbai-400057 Pan: Awgps3773C ...... Appellant Vs. Ito, Ward-25(2)(3), C-10, R.No. 504, 5Th Floor, Pratyakshkar Bhavan, Bkc, Bandra, Mumbai-400051. ..... Respondent Appellant/Assessee By : Sh. Bharat Kumar Respondent/Respondent By : Sh. Mahita Nair

For Appellant: Sh. Bharat KumarFor Respondent: Sh. Mahita Nair

Section 143(1)Section 151

circumstances of the case and in Law, the Ld.CIT (A) has erred in deleting the addition of Rs.8, 60, 33,182/- on account of bogus purchases. 2. On the facts and in the circumstances of the case and in Law, the Ld CIT (A) erred in not considering that ... addition was made on the basis of information received from the DGIT (Inv), Mumbai, with regard to bogus purchases made by the assessee that all the concerns controlled and managed by Shri Rajendra Jain and his group are not doing any real trading in diamonds but indulged in paper transactions

DCIT, Circle-4, Jaipur vs. M/S Kandoi Metal Powders Manufacturing Company Pvt. Ltd., Jaipur

In the result, both the appeals are partly allowed

ITA 244/JPR/2022[2012-13]Status: DisposedITAT Jaipur15 Sept 2022AY 2012-13

For Appellant: Sh. S. L. Poddar (Adv.)For Respondent: Sh. Sanjay Dhariwal (CIT) a

Section 139Section 143(3)Section 147Section 148

justified in directing the AO to apply GP@ 6% on total turnover whereas the AO had disallowed 25% of bogus purchase. (ii) Whether on the facts and circumstances of the case and in law, the CIT(A) was justified in directing the AO to charge commission @ 6% on restricted addition ... only, whereas commission @6% had been charged on bogus purchase disallowed by the AO. (iii) Whether CIT(A) was justified in law in ignoring the fact that the assessee has failed to discharge its burden to establish the genuineness of the alleged purchase claimed to have made in its books

J V Shah, Mumbai vs. ITO Ward-29(1)(5), Mumbai

In the result, appeal by the assessee is dismissed

ITA 3992/MUM/2019[2013-14]Status: DisposedITAT Mumbai15 Sept 2022AY 2013-14

Bench: Shri Om Prakash Kant & Shri Sandeep Singh Karhail

For Appellant: Shri Aditya RamchandranFor Respondent: Smt. Smita Nair

Section 250Section 68

sons are operating and managing 70 benami concerns in the names of their employees through which they provided accommodation entries of unsecured loans and bogus purchases to various beneficiaries. The assessee has been identified as one of the beneficiaries of such modus operandi. Shri Bhanwarlal Jain and his sons provided

Pr. Commissioner of Income Tax-4 vs. M/S. Ggc Constructions Pvt. Ltd

Accordingly, the same is dismissed

ITA/325/2022HC Delhi13 Sept 2022

Bench: HON'BLE MR. JUSTICE MANMOHAN,HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA

Section 139(5)Section 154

made the said addition in the absence of confirmation from the sundry creditors after concluding that the said figure correspond to the value of bogus purchases. The CIT(A) sought the bank statement of the Assessee, which evidenced payments made through account payee cheques to most of the creditors ... deficiency in the said concurrent finding of the appellate authorities. The learned counsel's endeavor to urge this Court to examine the issue of bogus purchases by perusing the bills and statements of alleged suppliers in these proceedings cannot be accepted. This Court in exercise of its jurisdiction under Section

Shri Bhupendra S. Chokshi, Vadodara vs. The DCIT, Circle 1 (2), Vadodara

In the result, the appeal of the assessee is partly allowed

ITA 1854/AHD/2017[2007-08]Status: DisposedITAT Ahmedabad13 Sept 2022AY 2007-08

Bench: Smt.Annapurna Guptaasstt.Year : 2007-08 Shri Bhupendra S. Chokshi Dcit, Cir.1(2) Prop: S. Kanjibhai Jewellers Vs Vadodara. Sb-35-36, Siddarth Complex Rc Dutt Road Vadodara 390 005 Pan : Abfpc 5333C

For Respondent: Shri Mukesh Thawani

Section 148Section 250(6)

assessment by issue of notice u/s. 148, which is claimed to have been based on receipt of information from the third party regarding bogus purchase transactions made by the appellant. The Ld. CIT(A) ought to have quashed and set aside the impugned assessment being ... Vadodara has erred in law and in facts in - (a) confirming the addition of Rs. 6,80,400/- made on account of bogus purchase of cut and polished diamonds; (b) rejecting the appellant's alternate plea of taxing only the profit embedded in such purchases and not the entire amount

Pr. Commissioner of Income Tax-4 vs. M/S. Ggc Constructions Pvt. Ltd

Accordingly, the same is dismissed

ITA - 325 / 2022HC Delhi13 Sept 2022

Section 139(5)Section 154

Manav Gems, Mumbai vs. Asstt Comm of Income Tax Circle 19(2), Mumbai

In the result, both the appeals of the assessee are allowed

ITA 1882/MUM/2022[2009-10]Status: DisposedITAT Mumbai12 Sept 2022AY 2009-10

Section 271(1)(C)Section 271(1)(c)

confirming the levy of penalty u/s.271(1)(c)of the Act made by the ld. AO in respect of addition made on account of bogus purchases on an estimated basis. 3. We have heard rival submissions and perused the materials available on record. It is not in dispute that

Manav Gems, Mumbau vs. Circle 19(2), Mumbai

In the result, both the appeals of the assessee are allowed

ITA 1881/MUM/2022[2008-09]Status: DisposedITAT Mumbai12 Sept 2022AY 2008-09

Section 271(1)(C)Section 271(1)(c)