“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

Navratna Metal Corporation, Mumbai vs. Income Tax Officer Ward 19(2)(4), Mumbai

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

ITA 4461/MUM/2018[2009-10]Status: DisposedITAT Mumbai22 Jul 2019AY 2009-10

Bench: Shri Shamim Yahya (Am)

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 16.3.2015 pertaining to A.Y. 2009-10 2. Brief facts of the case are that assessee is engaged in the business of metal ... trading. 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 to Rs. 65,967/-. 3. Upon assessee’s appeal Id CIT A confirmed

Shri Babulal B. Suthar, Mumbai vs. ITO 19(1)(2), Mumbai

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

ITA 4453/MUM/2018[2009-10]Status: DisposedITAT Mumbai22 Jul 2019AY 2009-10

Bench: Shri Shamim Yahya (Am)

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 11.5.2018 for A.Y. 2009-10. 2. Brief facts of the case are that assessee is engaged in the business of trading ... ferrous and non-ferrous metal. Information was received from the sales tax Department that assessee has that in bogus purchases. The assessment was accordingly reopened. 3. The assessing officer in this case has made 12.5% addition on account of bogus purchase amounting to Rs.6,71,746/-. 4. Upon assessee

Styroplast Trading Private Limited, Mumbai vs. ITO 11(2)(3), Mumbai

In the result both the appeals filed by the assessee stands partly allowed

ITA 4445/MUM/2018[2009-10]Status: DisposedITAT Mumbai22 Jul 2019AY 2009-10

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. 2009-10 & 2011-12. 2. Brief facts of the case are that assessee is engaged in the business of dealer in chemical, solvent ... steel, steel, furniture etc. Information was received from the sales tax Department that assessee has that in bogus purchases. The assessment was accordingly reopened. 3. The assessing officer in this case has made 12.5% addition on account of bogus purchase resultantly in following disallowances

Sidhartha Mishra (Prop. Shraddha Chemicals), Mumbai vs. ITO 3(4), Kalyan

In the result assessee's appeal is partly allowed

ITA 4442/MUM/2018[2011-12]Status: DisposedITAT Mumbai22 Jul 2019AY 2011-12

Bench: Shri Shamim Yahya (Am)

assessee wherein the assessee is aggrieved that the learned CIT-A has erred in sustaining Rs. 6,41,094/- disallowance on account of bogus purchases, vide order dated 27.4.2018 pertaining to assessment year 2011-12. 2. Brief facts of the case are that assessee in this case is engaged ... solvent and chemicals. 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

Tulsi Extrusions Ltd., Jalgaon vs. Joint Commisssioner of Income-Tax

In the result, appeal of the Revenue in ITA No

ITA 1434/PUN/2014[2010-11]Status: DisposedITAT Pune19 Jul 2019AY 2010-11

Bench: Shri R.S.Syal, Vp & Shri Partha Sarathi Chaudhury, Jm आयकर अपीऱ सं. / Ita No.1434/Pun/2014 नििाारण वषा / Assessment Year : 2010-11 Tulsi Extrusions Ltd. N-99 & 100, Midc Area, Ajantha Road, Jalgaon, Dist. Jalgaon, Pin-425 003 Pan : Aaact8441P .......अऩीऱाथी / Appellant बिाम / V/S. The Joint Commissioner Of Income Tax, Range-1, Jalgaon. ……प्रत्यथी / Respondent

For Appellant: Shri Sunil GanooFor Respondent: Ms. Kesang Y Sherpa

Section 14A

Thus, ground No.1 raised in appeal by the assessee is allowed. 6. Ground No.2 is with regard to the addition on bogus purchase of machinery and interest thereon on borrowed funds. 7. The Assessing Officer on this issue after considering the submissions of the assessee which are on record observed ... purchase, therefore, interest over it calculated by the assessee at Rs.80,787/- was also disallowed. 8. The Ld. CIT(Appeals) upheld the addition of bogus purchases as well as interest disallowed on the amount taken for such purchases for two reasons: (i) That the assessee had agreed for the said

Income Tax Officer-19(3)(3), Mumbai vs. Shri Shankarlal L. Jain, Mumbai

In the result, the assessee’s appeal is partly allowed and the revenue’s appeal is dismissed

ITA 427/MUM/2018[2009-10]Status: DisposedITAT Mumbai19 Jul 2019AY 2009-10

Bench: Shri Rajesh Kumar (Am) & Shri Ram Lal Negi (Jm) Assessment Year: 2009-2010 Shri Shankarlal L. Jain, The Ito-18(3)(3), 577/579, Om Shanti Bhavan, (Erstwhile Ito 19(3)(3), Khatavi Building, Jss Rd, Earnest House, Opp. Chandanwadi, Vs. Mumbai Mumbai - 400002 Pan: Aabpj3924F (Appellant) (Respondent) Assessment Year: 2009-2010 The Ito-19(3)(3), Shri Shankarlal L. Jain, Matru Mandir, 2Nd Floor, Bokadia Spinning Mills Pvt. Ltd., R. No. 219, Tardeo Road, 577/579, Om Shanti Bhavan, Mumbai - 400007 Vs. Khatavi Building, Jss Rd, Opp. Chandanwadi, Mumbai - 400002 Pan: Aabpj3924F (Appellant) (Respondent) Assessee By : Shri Rajesh Sanghvi (Ca) Revenue By : Shri Chaudhary Arun Kumar Singh (Dr) Date Of Hearing: 25/04/2019 Date Of Pronouncement: 19/07/2019

For Appellant: Shri Rajesh Sanghvi (CA)For Respondent: Shri Chaudhary Arun Kumar Singh (DR)

Section 143Section 148

order before the Ld. CIT (A). The Ld. CIT (A) after hearing the assessee restricted the addition to 12.5% of the total amount of bogus purchases determined by the AO. 3. The assessee has challenged the impugned order passed by the Ld. CIT (A) by raising the following grounds:- Assessment ... counsel for the assessee submitted that the Ld. CIT (A) has wrongly sustained the addition of 12.5% of the total amount of bogus purchases without appreciating that the AO had neither provided copy of material and statement relied upon nor afforded any opportunity to cross examine the witnesses whose statements

Shri Shankarlal L. Jain, Mumbai vs. Income Tax Officer-19(3)(3), Mumbai

In the result, the assessee’s appeal is partly allowed and the revenue’s appeal is dismissed

ITA 178/MUM/2018[200910]Status: DisposedITAT Mumbai19 Jul 2019

For Appellant: Shri Rajesh Sanghvi (CA)For Respondent: Shri Chaudhary Arun Kumar Singh (DR)

Section 143Section 148

The ITO, Ward-2(3)(7), Surat vs. Shri Dipak Banwarilal Agarwal, Surat

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

ITA 3277/AHD/2016[2007-08]Status: DisposedITAT Surat18 Jul 2019AY 2007-08

Bench: Shri H. S. Sidhu & Shri O. P. Meenaआ.अ.सं./I.T.A No.2932 & 3277/Ahd/2016: िनधा"रणवष"/Assessment Year: 2007-08 1. Shri Dipak Banwarilal Agarwal, V. 1. Income Tax Officer, Ward- 103 Devsagar, Dalgiya Street, 2(3)(7), Mahidarpura Surat Surat 2. Shri Dipak Banwarilal Agarwal, Pan:Afppa6178M 103 Devsagar, Dalgiya Street, Mahidarpura Surat 2. Income Tax Officer, Ward- 2(3)(7), Pan:Afppa6178M Surat अपीलाथ" Appellant ""यथ"/Respondent

Section 143Section 147

without issuing any show-cause notice in this regard. 3. The Hon'ble CIT (Appeals)-4, has erred in confirming the addition made against bogus purchase to the extent of Rs.6,69,69,018/- by estimating net profit of 5% on total sales. 4. The Hon'ble CIT (Appeals ... case and in Law, the Ld. CIT (A) has erred in deleting the additions of Rs.2,15,33,387/- on account of bogus purchase. 2. On the facts and in the circumstances of the case and in Law, ld. CIT(A) has erred in estimating income @ 5% of bogus purchases

Dipak Banwarilal Agarwal, Surat vs. The Income Tax Officer, Ward-2(3)(7), Surat

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

ITA 2932/AHD/2016[2007-08]Status: DisposedITAT Surat18 Jul 2019AY 2007-08

Section 143Section 147

M/S. Ctr Manufacturing Industries Limited, Pune vs. Deputy Commissioner of Income Tax, Pune

In the result, the appeal of assessee is partly allowed

ITA 1056/PUN/2017[2011-12]Status: DisposedITAT Pune17 Jul 2019AY 2011-12

Bench: Ms. Sushma Chowla, Jm & Shri Anil Chaturvedi, Am आयकर अपीऱ सं. / Ita No.1056/Pun/2017 यििाारण वषा / Assessment Year : 2011-12 M/S. Ctr Manufacturing Industries Ltd., Nagar Road, अऩीऱाथी/Appellant Pune – 411014 …. Pan: Aaacc7256R Vs. The Dy. Commissioner Of Income Tax, …. प्रत्यथी / Respondent Circle 1(1), Pune

For Appellant: Shri Nikhil PathakFor Respondent: Shri M.K. Verma

Section 143(3)Section 69C

added to the income of the appellant. 3. The only issue raised in the present appeal is against addition made on account of bogus purchases and the aforesaid addition was made on the basis of information received from Maharashtra State Sales Tax Department, which had conducted enquiries and unearthed certain ... heard the rival contentions and perused the record. The issue which arises in the present appeal is against addition made on account of alleged bogus purchases. The case of assessee before the Revenue authorities was that the said goods were utilized in the manufacturing activity carried

M/S. Vraj Diamond, Surat vs. The Dy, CIT, Circle-2(3), Surat

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

ITA 1008/AHD/2016[2007-08]Status: DisposedITAT Surat17 Jul 2019AY 2007-08

Bench: Shri H. S. Sidhu & Shri O. P. Meenaआ.अ.सं./I.T.A No.1008/Ahd/2016:िनधा"रणवष"/Assessment Year: 2007-08 M/S. Vraj Diamond V. Deputy Commissioner Of Income-Tax, 111/112, Ist Floor , Dharamandan Circle -2(3) Surat Building , 6/1892, Balisheri, Mahidharpura, Surat 395003 Pan: Aacfv 0335 K अपीलाथ" Appellant ""यथ"/Respondent

Section 143Section 147

action of the AO in making addition of Rs. 39,55,968 on account of total purchase transaction from M/s. Mayank Impex as alleged bogus purchases. Page 2 of 5 Vraj Diamond v. DCIT-2(3) Surat I.T.A. No.1008/AHD/2016/A.Y.2007-08 4. Succinct facts are that a search and seizure action carried ... purchases, when he himself has not doubted the genuineness of the purchase transaction. 7. The ld. D.R. submitted that the assessee has made bogus purchases from M/s. Mayank Impex during the year and therefore, the AO was right in making addition of entire purchases to total income. 8. We have

Mahendra Himmatlal Shah (HUF), Surat vs. The Income Tax Officer, Ward-1(3)(3), Surat

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

ITA 2273/AHD/2016[2007-08]Status: DisposedITAT Surat15 Jul 2019AY 2007-08

Bench: Shri Mahavir Prasad & Shri O. P. Meena)

For Appellant: Shri Sapnesh Sheth, C.AFor Respondent: Shri P.S. Choudhary Sr. D.R

Section 132(4)Section 148

operated by them in the names of their employees, provided accommodation entries to various parties in respect of bogus unsecured loans and bogus purchases. Various evidences found and seized from the premises of the said Shri Rajendra Jain and his son proved the above facts. The evidences having details ... material facts found during the course of search and survey in the case of Shri Rajendra Jain group 4 . A.Y. 2007-08 proves that bogus purchase bills of Rs.9,95,625/- to the instant assessee, it is prima facie apparent that the assessee has utilized such bogus entries to introduce

Shri Nilesh Rameshchandra Shah, Ahmedabad vs. The DCIT, Circle-6(1), Ahmedabad

The appeals of the assessee are partly allowed

ITA 2249/AHD/2017[2011-12]Status: DisposedITAT Ahmedabad15 Jul 2019AY 2011-12

Bench: Shri Waseem Ahmed & Ms. Madhumita Royआयकर अपील सं./Ita Nos. 2248 & 2249/Ahd/2017 ("नधा"रण वष"/Assessment Years : 2010-11 & 2011-12)

For Appellant: Shri Nupur Shah, ARFor Respondent: Shri Mudit Nagpal, Sr.DR

Section 44A

made any qualification in the Auditor’s report and they have not pointed out any defects,. II. DISALLWOANCE ON ACOUNT OF ALLEGED BOGUS PURCHASES – RS. 63,44,326/- 1. The ld. CIT(A) has erred in law and on facts in confirming the disallowance made by the Ld. Assessing Officer ... alleged bogus purchases of Rs.63,44,326/- by treating the purchases made by the appellant as bogus. 2. The Ld. CIT(A) has erred in law and on facts in failing to properly consider appellant’s submissions and various judicial pronouncements relied upon by the appellant. ITA Nos.2248 & 2249/Ahd/2017 Nilesh

Shri Nilesh Rameshchandra Shah, Ahmedabad vs. The DCIT, Circle-6(1), Ahmedabad

The appeals of the assessee are partly allowed

ITA 2248/AHD/2017[2010-11]Status: DisposedITAT Ahmedabad15 Jul 2019AY 2010-11

Bench: Shri Waseem Ahmed & Ms. Madhumita Royआयकर अपील सं./Ita Nos. 2248 & 2249/Ahd/2017 ("नधा"रण वष"/Assessment Years : 2010-11 & 2011-12)

For Appellant: Shri Nupur Shah, ARFor Respondent: Shri Mudit Nagpal, Sr.DR

Section 44A

ITO 20 (2)(1), Mumbai vs. Shri Jairam P. Gupta, Mumbai

In the result, both, the appeals of Revenue are dismissed

ITA 3456/MUM/2018[2010-11]Status: DisposedITAT Mumbai15 Jul 2019AY 2010-11

Bench: Sri Mahavir Singh, Jm & Sri M Balaganesh, Am आयकर अपील सुं./ Ita No. 3455 & 3456/Mum/2018 (यिर्ाारण वर्ा / Assessment Years 2009-10 & 2010-11)

For Appellant: Shri Rajiv Gubgotra, DRFor Respondent: Shri Jairam P. Gupta, AR

Section 143(3)Section 147Section 41(1)

Revenue of assessee is against the order of CIT(A) restring the disallowance made by AO applying the profit rate at 6.65% of the bogus purchase. For this assessee has raised identically worded grounds in both the years except the quantum. The facts and circumstances are exactly identical in both ... erred in granting relief of Rs. 4,58,497/- by restricting the addition to 6.65% of the alleged bogus purchases from hawala parties. 2. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has failed to appreciate the fact that the onus

ITO 20 (2)(1), Mumbai vs. Shri Jairam P.Gupta, Mumbai

In the result, both, the appeals of Revenue are dismissed

ITA 3455/MUM/2018[2009-10]Status: DisposedITAT Mumbai15 Jul 2019AY 2009-10

Bench: Sri Mahavir Singh, Jm & Sri M Balaganesh, Am आयकर अपील सुं./ Ita No. 3455 & 3456/Mum/2018 (यिर्ाारण वर्ा / Assessment Years 2009-10 & 2010-11)

For Appellant: Shri Rajiv Gubgotra, DRFor Respondent: Shri Jairam P. Gupta, AR

Section 143(3)Section 147Section 41(1)

Sahebrao S. Khilari, Mumbai vs. ACIT 28(3), Mumbai

Appeal stand partly allowed

ITA 2972/MUM/2018[2011-12]Status: DisposedITAT Mumbai15 Jul 2019AY 2011-12

Bench: Hon’Ble Shri Sandeep Gosain, Jm & Hon’Ble Shri Manoj Kumar Aggarwal, Am

For Appellant: Chaudhary Arun Kumar Singh- Ld. DR

Section 133(6)Section 143(2)Section 143(3)Section 148

Appeal No. CIT(A)- 2 Sahebrao S. Khilari Assessment Year-2011-12 26/IT/230/2016-17 dated 20/03/2018 qua confirmation of certain additions on account of alleged bogus purchases. For this the assessee has raised Ground Nos. 1 to 7. Ground No. 8 has not been pressed before us whereas Ground ... case of Khilari Infrastructure Pvt. Ltd., we find that the impugned additions have been estimated at 6% of alleged bogus purchases. Therefore, without delving much deeper into the issue and following the stand of Tribunal in the case of associated concerns of the assessee, we accept the estimated additions

Income Tax Officer-11(2)(2), Mumbai vs. Shree Gajanana Industries (India) Private Limited, Mumbai

Appeals are dismissed, accordingly

ITA 6242/MUM/2017[2011-12]Status: DisposedITAT Mumbai15 Jul 2019AY 2011-12

Bench: Hon’Ble Shri Sandeep Gosain, Jm & Hon’Ble Shri Manoj Kumar Aggarwal, Am

For Appellant: Shri M. Subramanian- Ld. ARFor Respondent: Chaudhary Arun Kumar- Ld. DR

Section 143(1)Section 143(3)

case of M/s NK Proteins Ltd. Vs. DCIT (2017-TIOL-23-SC-IT) has held that the entire undisclosed income generated out of bogus purchase transactions deserves to be added to total income. f) Whether on the facts and in the circumstances of the case ... Rs.51,18,7507- on the alleged purchase of plant & machinery without appreciating the fact that the purchase of plant & machinery is through bogus purchase that has been disallowed by the AO in A.Y.2009-10 which was not capitalized to qualify for claiming depreciation. Further, the entire bogus purchases of A.Y.2009-10

Hiren Narayandas Shah, Raigad vs. ITO Ward - 2, Panvel, New Panvel

In the result, the appeal assessee is partly allowed

ITA 2151/MUM/2016[2009-10]Status: DisposedITAT Mumbai15 Jul 2019AY 2009-10

Bench: Sri Mahavir Singh, Jm & Sri M Balaganesh, Am आयकर अपील सुं./ Ita No. 2151/Mum/2016 (यिर्ाारण वर्ा / Assessment Year 2009-10) Hiren Narayandas Shah The Income Tax Officer, Prop. Riddhi Siddhi Ward-2, Panvel, 2 Nd Floor, Enterprises, Rameshwar Trifed Tower, Opp. Khanda Vs. Steel, Co., Kolkhe Village Colony, New Panvel, Pin Mumbai-Pune Road, Panvel, 410206 Dist.Raigad, Pin-410 206 (अपीलार्थी / Appellant) (प्रत्यर्थी/ Respondent) .. स्र्थायी लेखा सुं./Pan No. Aeips0593Q

For Appellant: NoneFor Respondent: Shri Rajiv Gubgotra, DR

Section 143(3)Section 145(3)Section 147Section 148Section 251(2)

order of CIT(A) directing the AO to restrict the addition made by AO being estimating profit percentage at the rate of 25 % on bogus purchases. For this assessee has raised following ground: - “1. The Hon. CIT(A) erred in not appreciating that the re-opening of assessment ... show cause as provided u/s 251(2) of the IT Act 1961. 3 the addition made by the Id AO in respect of alleged bogus purchases was not appropriate considering that the appellant had adequately established the genuineness of purchases with the help of substantial evidences including quantitative analysis

Shri Ravi Kumar Rawat, Jaipur vs. Income Tax Officer, Ward-2-5, Jaipur

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

ITA 1013/JPR/2018[2007-08]Status: DisposedITAT Jaipur12 Jul 2019AY 2007-08

For Appellant: Shri Saurabh Harsh (Adv)For Respondent: Shri A.S. Nehra (JCIT)

Section 143(3)Section 147Section 148

basis of information received from the Investigation Wing of the department that the assessee has taken accommodation entries in the form of bogus purchases bills of Rs. 23,60,295/- from M/s Sparsh Exports, Surat and Rs. 27,87,133/- from M/s Vitrag Jewels, Surat, entities controlled and managed ... from the facts of the instant case. However, we found that in assessee’s own case, the Tribunal have passed the order for similar bogus purchases and upheld the addition by taking G.P. rate at 10.28%. The precise observation of the ld. CIT(A) while upholding the addition by estimating