“bogus purchases”

DisallowancesSection 69CSection 69C9,532 judgments

The decision most relied on for bogus purchases is CIT v. Simit P. Sheth (356 ITR 451), cited in 1,465 judgments on BharatTax.

Leading authorities on bogus purchases

CIT v. Simit P. Sheth

356 ITR 451 · 2013 · High Court

1,465

citing judgments

Additions for alleged bogus purchases should be restricted to the profit element, not the entire turnover. The profit element is often estimated at 12.5% of the purported 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.

CIT v. Nikunj Exim Enterprises Pvt. Ltd.

372 ITR 619 · 2015 · High Court

391

citing judgments

Transactions defying human probability cannot be applied to isolated purchases if sales are accepted as genuine, and purchases cannot be disallowed without considering the entire transaction and documentary evidence. Failure to produce parties in an assessment proceeding may not be fatal to the assessee.

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.

Judgments citing bogus purchases

ACIT, Circle-3, Kalyan vs. Mohan Balkrishna Karve, Mumbai

In the result, the appeal of the Revenue is dismissed

ITA 1291/MUM/2019[2009-10]Status: DisposedITAT Mumbai04 Mar 2020AY 2009-10

Bench: Shri R.C. Sharma () & Shri Pawan Singh () Assessment Year: 2009-10

For Appellant: Mr. S.L. Jain, ARFor Respondent: Mr. Mohammed Rizwan, DR

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

record. The Ld. DR for the Revenue submits that the Assessing Officer while passing the assessment order made the disallowance on account of bogus purchases. The assessee has shown purchases from hawala traders. The hawala traders were indulging in Mohan Balkrishna Karve 3 providing accommodation entry. The assessee avail

Shri. Rajesh K Shah (HUF), Mumbai vs. ITO 27 (3)(1), Mumbai

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

ITA 1234/MUM/2019[2010-11]Status: DisposedITAT Mumbai04 Mar 2020AY 2010-11

Bench: Shri R.C.Sharma, Am & Shri Pawan Singh, Jm

Section 143(3)

short, the Act). 2. Common grievance of the assessee in both the years relate to upholding addition of 12.5% in respect of alleged bogus purchases made by the A.O.. 3. Rival contentions have been heard and record perused. Facts in brief are that the assessee is engaged in trading ... assessee involved in taking accommodation bill of purchases, the A.O. reopened the assessment and in the reassessment proceedings, the A.O. added 12.5% of alleged bogus purchases in assessee’s income. By the impugned order, the ld. CIT(A) confirmed the action of the A.O. against which the assessee

Shri. Rajesh K Shah (HUF), Mumbai vs. ITO 27 (3)(1), Mumbai

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

ITA 1233/MUM/2019[2009-10]Status: DisposedITAT Mumbai04 Mar 2020AY 2009-10

Bench: Shri R.C.Sharma, Am & Shri Pawan Singh, Jm

Section 143(3)

Vijay B Shah (HUF), Mumbai vs. ITO 17 (3)(5), Mumbai

In the result, appeal of the assessee is dismissed

ITA 667/MUM/2019[2009-10]Status: DisposedITAT Mumbai03 Mar 2020AY 2009-10

Bench: Shri R.C.Sharmavijay B Shah (Huf), Vs. I.T.O.-17(3)(5) Prop.- Of M/S Vijay Room No. 137, Aayakar Enterprises, 12A, Giriraj Bhavan, M.K. Road, Building, S.T. Road, Mumbai-400020 Carnac Bunder, Mumbai- 400009. Pan/Gir No. Aabhv 7438 J (Appellant) .. (Respondent)

Section 143(3)

ITAT, Mumbai has held that in such cases which are essentially of trading, estimation of 12.5% profit as having been embedded in the bogus purchase transaction was held to be a fair and just outcome. Some of these decisions are quoted below:- a) Meru impex Ex in ITA No.2660/Mum./2017 ... enquiry, the A.O. found the alleged purchases as non-genuine. However, the A.O. upheld addition only to the extent of 12.5% of the alleged bogus purchases and did not disturb the sales. By the impugned order, the ld. CIT(A) after considering various judicial pronouncements on the issue

Madan Singh H Chouhan, Mumbai vs. ITO 19(2)(3), Mumbai

In the result this appeal filed by the assessee stands partly allowed

ITA 5004/MUM/2019[2010-11]Status: DisposedITAT Mumbai03 Mar 2020AY 2010-11

Bench: Shri Shamim Yahya (Am)

appeals by the assessee wherein the assessee is aggrieved that the learned CIT-A has erred in sustaining 12.5% disallowance on account of bogus purchases, for A.Y. 2010-11 & 2011-12. 2. Brief facts of the case are that assessee is engaged in the business of trading in ferrous ... ferrous material. Information was received from the sales tax Department that assessee has that in bogus purchases. The assessment was accordingly reopened. The assessing officer in this case has made 12.5% addition on account of bogus purchase amounting

ITO Ward 1(3), Thane vs. Shri. Chandraprakash M Agarwal, Mumbai

In the result, appeal filed by the revenue for assessment year 2009-2010

ITA 1297/MUM/2019[2009-10]Status: DisposedITAT Mumbai03 Mar 2020AY 2009-10

Bench: Shri Rajesh Kumar (Am) & Shri Ram Lal Negi (Jm) Assessment Year: 2009-2010 The Income Tax Officer, Shri Chandraprakash M. Ward – 1(3), Thane, Agarwal, Room No. 10, 6Th Floor, B-Wing, 51, Ground Floor, M.G. Road, Wagle Industrial Estate, Vs. Sindu Wadi, Ghatkopar (E), Thane (W) - 400604 Mumbai - 400077 Pan: Afzpa6269D (Appellant) (Respondent) Revenue By : Shri Rajesh Kumar Mishra (Dr) Assessee By : Shri Kaushik Agrawal (Ar) Date Of Hearing: 03/03/2020 Date Of Pronouncement: 03/03/2020

For Appellant: Shri Kaushik Agrawal (AR)For Respondent: Shri Rajesh Kumar Mishra (DR)

Section 271

penalty levied u/s 271 (1) (c) without appreciating the fact that there was a definite finding in the assessment order in respect of bogus purchases and of furnishing inaccurate particulars of income relating to purchases resulting into concealment of income. 3. It is humbly requested that present appeal is being

ITO 33(1)(4), Mumbai vs. De & Nephew, Mumbai

In the result, appeal of the revenue is dismissed

ITA 7422/MUM/2018[2009-10]Status: DisposedITAT Mumbai03 Mar 2020AY 2009-10

Bench: Shri R.C. Sharma & Shri Pawan Singh

For Appellant: Mohammed Rizwan (Sr. DR)For Respondent: Shri Kiran Mody (AR)

Section 133(6)Section 143(1)Section 143(2)Section 147Section 148Section 254(1)

respectively. In both the appeals, the revenue has raised the identical grounds of appeal except variation of figures deleting the addition on account of bogus purchases. The revenue has raised the identical grounds of appeal on both the appeals, therefore, both the appeals were clubbed, heard and are decided ... circumstances of the case and in law, the Ld. CIT(A) has erred in restricting GP percentage to 12.5% of the bogus purchases without appreciating the fact that the AO has held it to be non- genuine after carrying out proper independent investigation in the case. (2) "On the facts

ACIT - Circle- 4, Thane vs. Ajay V. Prasad, Mumbai

In the result, this appeal filed by the Revenue stands dismissed

ITA 6415/MUM/2018[2011-12]Status: DisposedITAT Mumbai03 Mar 2020AY 2011-12

Bench: Shri Shamim Yahya (Am) & Shri Ravish Sood (Jm)

Section 271(1)(c)

case leading to levy of penalty are enumerated as under:- There was information from sales tax authority that the assessee had made bogus purchases. The Proprietor/Partner of the above mentioned parties has given statements before the Sales Tax Authorities and stated therein that they have indulged in bogus billing under ... amounting to Rs. 88,454/-. 4. Upon assessee’s appeal learned CIT(A) found that the assessee has tried its best to prove alleged bogus purchases by providing purchase bills, evidence of payment made through banking channel etc. However, adverse inference was taken because of the inability of the assessee

I.T.O. - 19(2)(4), Mumbai vs. Omkar Metal & Alloys Corporation, Mumbai

In the result, the appeals filed by the revenue are hereby dismissed and appeals filed by the assessee are hereby allowed

ITA 2119/MUM/2018[2008-09]Status: DisposedITAT Mumbai03 Mar 2020AY 2008-09

Bench: Shri R. C. Sharma, Am & Shri Amarjit Singh, Jm आयकर अपील सं/ I.T.A. Nos. 1114 To 1116/Mum/2018 (निर्धारण वर्ा / Assessment Years: 2008-09, 2010-11 & 2011-12) Omkar Metal & Alloys बिधम/ Ito-19(2)(4) Corporation Matru Mandir, Nana Chowk, Vs. Room No.47, Balkrishna Mumbai-400007. Niwas, 2Nd Floor, 2Nd Panjarapole Lane, Mumbai- 400004. Ita. Nos. 2119 To 2121/Mum/2018 (निर्धारण वर्ा / Assessment Years: 2008-09, 2010-11 & 2011-12) Ito-19(2)(4) बिधम/ Omkar Metal & Alloys Matru Mandir, Nana Chowk, Corporation Vs. Mumbai-400007. Room No.47, Balkrishna Niwas, 2Nd Floor, 2Nd Panjarapole Lane, Mumbai- 400004. स्थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaafo4997N (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) Assessee By: Shri N. M. Porwal Revenue By: Shri Kumar Padmapani Bora (Dr) सुनवाई की तारीख / Date Of Hearing: 23/01/2020 घोषणा की तारीख /Date Of Pronouncement: 03/03/2020 आदेश / O R D E R Per Amarjit Singh, Jm: The Assessee As Well As Revenue Have Filed The Above Mentioned Appeals Against The Different Order Passed By The Commissioner Of Income Tax (Appeals)-30, Mumbai [Hereinafter Referred To As The “Cit(A)”] Relevant To The A.Ys.2008-09, 2010-11 & 2011-12. Since Common Grounds

For Appellant: Shri N. M. PorwalFor Respondent: Shri Kumar Padmapani Bora (DR)

Section 143(1)Section 143(2)Section 147Section 148

reopened on the basis of information received from the DGIT(Inv.) Wing, Mumbai in which it was conveyed that the assessee has taken the bogus purchase entries from the 12 parties. After the reply of the assessee, the AO made the addition to the extent of 12.5% of bogus purchase ... Court dated 10.01.2017 in the case of N K. Proteins Ltd. wherein the Hon'ble Supreme Court confirmed the entire addition on account of bogus purchases?" 2 "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in confirming

Omkar Metal & Alloys Corporation, Mumbai vs. I.T.O. - 19(2)(4), Mumbai

In the result, the appeals filed by the revenue are hereby dismissed and appeals filed by the assessee are hereby allowed

ITA 1114/MUM/2018[2008-09]Status: DisposedITAT Mumbai03 Mar 2020AY 2008-09

For Appellant: Shri N. M. PorwalFor Respondent: Shri Kumar Padmapani Bora (DR)

Section 143(1)Section 143(2)Section 147Section 148

Ajay P Vadhar, Mumbai vs. ITO (22)(1)(1), Mumbai

In the result, appeal of the assessee is allowed in part

ITA 617/MUM/2019[2009-10]Status: DisposedITAT Mumbai02 Mar 2020AY 2009-10

Bench: Shri R.C.Sharmaajay P. Vadhar, Vs. I.T.O.-22(1)(1) Cit(Appeals) 25, 4Th Floor, 202/5524, Amar Jyot, R.N.N. Road, 90 Feet Tower No. 6, Rly Station Road, Ghatkopar (East), Commercial Complex, Vashi- Mumbai-400075. 700703. Pan/Gir No. Aabpv 83334 M (Appellant) .. (Respondent)

Section 133(6)Section 143(3)

authorities below and found that the assessee is engaged in the business of sun glasses. The A.O. got information that the assessee has taken bogus purchase bills. After making enquiry by issuing notice U/s 133(6) of the Act to find out the genuineness of the purchases, the A.O. found ... that all the notices were returned unserved with remark “left”. Accordingly, the A.O. added 2 Ajay V Vadhar Vs ITO 100% of the alleged bogus purchases in assessee’s income. By the impugned order, the ld. CIT(A) has confirmed the action of the A.O., against which the assessee

Smt. Mintusayermal Jain, Mumbai vs. DCIT-CC1(2), Mumbai

In the result assessee's appeal is partly allowed

ITA 220/MUM/2019[2011-12]Status: DisposedITAT Mumbai02 Mar 2020AY 2011-12

Bench: Shri Shamim Yahyaita No.220 /Mum/2019 Assessment Year : 2011-12

For Appellant: NoneFor Respondent: Shri Dharm Veer Singh

appeal by the assessee wherein the assessee is aggrieved that the learned CIT-A has erred in sustaining 12.5% disallowance on account of bogus purchases, vide order dated 17.08.2018 pertaining to assessment year 2011-12. 2. Brief facts of the case are that assessee in this case is engaged ... ferrous metals. The Assessment in this case was reopened upon receipt of information from the sales tax Department that assessee has made bogus purchases. The assessee submitted the purchase vouchers and the payments were made through banking channel. However, the suppliers were not produced before the Assessing Officer. Sales

Proto Chemicals Industries, Mumbai vs. ITO 32(2)(5), Mumbai

In the result this appeal filed by the assessee stands partly allowed

ITA 218/MUM/2019[2009-10]Status: DisposedITAT Mumbai02 Mar 2020AY 2009-10

Bench: Shri Shamim Yahyaita No.218 /Mum/2019 Assessment Year : 2009-10

For Appellant: Shri Mahesh SabooFor Respondent: Shri Dharm Veer Singh

assessee, wherein the assessee is aggrieved by the order of the learned CIT(A)-44, Mumbai, in sustaining 12.5% disallowance on account of bogus purchases. 2. Brief facts of the case are that assessee is engaged in the business of manufacturing of chemicals. Information was received from the Sales ... Department that assessee has claimed bogus purchases. The assessment was accordingly reopened. The Assessing Officer in this case has made 15% addition on account of bogus purchase amounting to Rs 74,982/- On appeal, the learned CIT(A) restricted the addition to 12.5%. Aggrieved, the assessee is in appeal before

ITO 28(3)(4), Mumbai vs. M/S Valson Fabricators, Mumbai

In the result, the Revenue’s appeal and the assessee’s cross-objections are

ITA 207/MUM/2019[2009-10]Status: DisposedITAT Mumbai02 Mar 2020AY 2009-10

Bench: Shri Shamim Yahyaita No.207 /Mum/2019 Assessment Year : 2009-10

For Appellant: Ms. Neha ParanjpeFor Respondent: Shri Dharm Veer Singh

Revenue and cross-objection by the assessee arise out of the order of the learned CIT-A sustaining 25% disallowance on account of bogus purchases. 2. Brief facts of the case are that assessee is engaged in the business of fabrication. Information was received from the Sales tax Department that ... assessee has indulged in bogus purchases. The assessment was accordingly reopened. The 2 & CO No.06/Mum/2020 Valson Fabricators Assessing Officer in this case has made 100% addition on account of bogus purchases amounting to Rs 5,06,766/-. Upon assessee’s appeal learned CIT(A) restricted the addition

Tejash Suresh Shah, Mumbai vs. ITO 26(3)(5), Mumbai

In the result, appeal of the assessee is dismissed

ITA 7252/MUM/2018[2010-11]Status: DisposedITAT Mumbai02 Mar 2020AY 2010-11

Bench: Shri, R.C. Sharma & Shri Pawan Singh

For Appellant: NoneFor Respondent: Shri Satishchandra Rajore (DR)

Section 143(1)Section 143(2)Section 147Section 148Section 254(1)

appeals, the assessee has raised certain common grounds of appeal. Facts for both the Assessment Years are identical except variation of figures of bogus purchases, therefore, both the appeals were, heard together and are decided by a consolidated order for the sake of gravity. For appreciation of fact, the appeal ... than the above percentage. 4. The Learned Commissioner of Income Tax (Appeals) grossly erred in upholding the impugned addition on the alleged ground of bogus purchase made by the appellant and earning a gross profit of 12.5% thereon without any basis whatsoever. 5. The Learned Commissioner of Income Tax (Appeals

ITO 27 (2)(5), Mumbai vs. Priya Dwedi, Mumbai

In the result these appeals filed by the Revenue stand dismissed

ITA 6823/MUM/2018[2010-11]Status: DisposedITAT Mumbai02 Mar 2020AY 2010-11

Bench: Shri Shamim Yahya (Am) & Shri Amarjit Singh (Jm)

revenue wherein the revenue is aggrieved that the learned CIT-A has deleted the addition by sustaining only 12.5% disallowance on account of bogus purchases, vide respective orders pertaining to A.Y. 2010-11 & 2011-12. 2. The assessee in this case is engaged into manufacturing of packing materials. The assessment ... department that assessee has made purchases from bogus dealers. The assessing officer in this case has made hundred percent addition on account of bogus purchase amounting to Rs. 3,04,032 in A.Y. 2010-11 & Rs. 2,09,926 in A.Y. 2011-12. 3. Up on assessee's appeal learned

Reliance Forge (India), Mumbai vs. Income Tax Officer Ward 19(3)(1), Mumbai

In the result, appeal of the assessee is dismissed

ITA 6661/MUM/2018[2009-10]Status: DisposedITAT Mumbai02 Mar 2020AY 2009-10

Bench: Shri R.C. Sharma & Shri Pawan Singh

For Appellant: NoneFor Respondent: Shri Satishchandra Rajore

Section 143(3)

u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961. 2. In this appeal assessee is aggrieved for confirming addition of 12.5% of alleged bogus purchases made by the assessee. 3. Nobody appeared on behalf of the assessee inspite of issuance and service of notice and no adjournment petition ... made detailed enquiry with regard to the alleged purchases and found that purchases were not genuine, accordingly, AO added only 12.5% of alleged bogus purchases in assessee’s income by following the decision of Gujarat High Court in case of Simit P Sheth 356 ITR 451. 5. By the impugned

Anil Jagannath Tiwari Proprietor M/S. Anil and Brothers, Mumbai vs. Income Tax Officer Ward 2(1), Kalyan

In the result, appeal filed by the assessee is partly allowed

ITA 6493/MUM/2017[2011-12]Status: DisposedITAT Mumbai02 Mar 2020AY 2011-12

Bench: Shri R.C. Sharma & Shri Pawan Singh: A.Y : 2010-11 A.Y: 2011-12

For Appellant: Shri Paresh C ShapariaFor Respondent: Shri Sarishchandra Rajore

Section 133(6)Section 143(3)Section 69C

r.w.s. 147 of the Income Tax Act, 1961. 2. Common grievance of assessee in both the years relate to upholding addition on account of bogus purchases. 3. Rival contentions have been heard and record perused. Facts in brief are that assessee is engaged in trading in steel material ... assessee’s own case for the immediately preceding A.Y.2009-10, wherein under similar facts and circumstances, addition was restricted to 8% of the alleged bogus purchases. 6. We have gone through the orders of the authorities below and found that AO has added entire purchases in assessee’s income. However, before

Anil Jagannath Tiwari Proprietor M/S. Anil and Brothers, Mumbai vs. Income Tax Officer Ward 2(1), Kalyan

In the result, appeal filed by the assessee is partly allowed

ITA 6492/MUM/2017[2010-11]Status: DisposedITAT Mumbai02 Mar 2020AY 2010-11

Bench: Shri R.C. Sharma & Shri Pawan Singh: A.Y : 2010-11 A.Y: 2011-12

For Appellant: Shri Paresh C ShapariaFor Respondent: Shri Sarishchandra Rajore

Section 133(6)Section 143(3)Section 69C

Tejas Harakchand Shah, Mumbai vs. Income Tax Officer 30(3)(4), Mumbai

In the result, assessee’s appeal is partly allowed

ITA 6271/MUM/2017[2009-10]Status: DisposedITAT Mumbai02 Mar 2020AY 2009-10

Bench: Shri Shamim Yahya (Am) & Shri Amarjit Singh (Jm)

appeal by the assessee wherein the assessee is aggrieved that the learned CIT-A has erred in sustaining 10% disallowance on account of bogus purchases, vide order dated 5.6.2017 pertaining to assessment year 2009-10. 2. At the outset it is noted that there is a delay of 40 days ... ferrous metal. The Assessment in this case was reopened upon receipt of information from the sales tax Department that assessee has made bogus purchases. The assessee submitted the purchase vouchers and the payments were made through banking channel. However the suppliers were not produced before the assessing officer. Sales