“ bogus purchases ”

CIT v. Bholanath Poly Fab. Pvt. Ltd.

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.

355 ITR 290 · 2013 · High Court

712

Sanjay Oilcake Industries v. CIT

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.

316 ITR 274 · 2009 · High Court

460

Vijay Proteins Ltd. v. Asst. CIT

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.

58 ITD 428 · 1996 · ITAT

430

CIT v. Odeon Builders Pvt. ltd.

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.

418 ITR 315 · 2019 · Supreme Court

408

CIT v. Nikunj Exim Enterprises Pvt. Ltd.

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.

372 ITR 619 · 2015 · High Court

391

Nikunj Eximp Enterprises v. CIT

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.

216 Taxmann 171 · 2013 · High Court

325

54 Taxmann.com 108 · 2015 · High Court

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

279

ITA 6597/MUM/2017[2010-11]Status: DisposedITAT Mumbai12 Apr 2019AY 2010-11

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

DCIT 15(3)(2), Mumbai vs. Savani Constructin Co. P.Ltd, Mumbai

The appeal of the revenue is dismissed

Bench: Shri Mahavir Singh & Shri Rajesh Kumarassessment Year: 2010-11 Dcit 15(3)(2) M/S Savani Construction Co.Pvt.Ltd. Room No.451, 4Th Floor, 21, Sotta Buvann, Lt Road Vs. Aayakar Bhavan, Mulund (East) Mumbai- 400020 Mumbai-400 081

For Appellant: Shri Ryan SaldanhaFor Respondent: Shri Choudhary Arun Kumar Singh

ITA 5563/MUM/2017[2010-11]Status: DisposedITAT Mumbai12 Apr 2019AY 2010-11

circumstances of the case and in law, the Ld. CIT(A) erred in restricting the addition of Rs. 67,82,266/- on account of bogus purchases to only 12.5% of the such bogus purchases, without giving any findings as to how 12.5% has been worked out and also ignoring that ... facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the addition on account of bogus purchases to only 12.5% of the bogus purchase, without appreciating the ratio of the decision of the Hon’ble Gujarat High Court in the case

Income Tax Officer 33(1)(2), Mumbai vs. Shri Banwarilal Maheshwari, Mumbai

In the result, appeal of the Revenue is partly allowed

Bench: Shri C.N. Prasad, Hon'Ble & Shri Manoj Kumar Aggarwal, Hon'Bleincome Tax Officer – 33(1)(2) V. Shri Banwarilal Maheshwari Room No. 704, 7Th Floor, C-12, Row House No. 3, Pratyakshkar Bhavan, Sheetal Nagar, Ashok Chakraborthy Cross Road, Bandra Kurla Complex, Kandivali (East) Bandra(E), Mumbai – 400 051 Mumbai – 400 101 Pan: Afypm 7592 N (Appellant) (Respondent) Assessee By : Shri Hitesh Shah Department By : Shri Chaudhary Arun Kumar

For Appellant: Shri Hitesh ShahFor Respondent: Shri Chaudhary Arun Kumar

Section 133(6)

facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting addition made in bogus purchases and restricting the addition to 0.75% of bogus purchases whereas the assessee could not substantiate the claim of genuine purchases. The CIT(A) could have made inquiry ... Assessing Officer be restored." 3. The only issue is that the Ld. CIT(A) erred in restricting the addition to @0.75% on alleged bogus purchases. The Assessing Officer while completing the assessment required the assessee to prove the genuineness of the purchases made from nine dealers as referred

Shri Haji Mohmmadsafi Abdulrehman Shaikh, Baroda vs. The DCIT, Circle-3 (1), Baroda

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

ITA 1690/AHD/2017[2012-13]Status: DisposedITAT Ahmedabad11 Apr 2019AY 2012-13

For Appellant: Shri Mukund Bakshi, A.RFor Respondent: Shri/Ms. Sonia Kumar, Sr. D.R

Section 143(2)Section 143(3)Section 68

builder and developer. The remaining facts pertaining to the issues in the appeal are discussed as under:- Ground No. 1 (addition on account of bogus purchases) 4. During the course of assessment, the assessing officer has called detail of purchases exceeding Rs. 10 lacs per party made during the year ... addition on account of unexplained purchases, the ld. CIT(A) has partly allowed the appeal of the assessee and deleted the addition out of bogus purchases to the extent of Rs. 62,89,643/-. The relevant part of the decision of the ld. CIT(A) is reproduced as under

Megha Jewellery, Jaipur vs. Income Tax Officer, Ward-6-2, Jaipur

In the result, appeals of the assessee are allowed in part in terms indicated hereinabove

ITA 499/JPR/2018[2010-11]Status: DisposedITAT Jaipur10 Apr 2019AY 2010-11

For Appellant: Shri S.L. Poddar (Adv)For Respondent: Shri Ashok Khanna (JCIT)

ITA 498/JPR/2018[2009-10]Status: DisposedITAT Jaipur10 Apr 2019AY 2009-10

these appeals, common grievance of the assessee relate to addition upheld by the ld. CIT(A) in respect of bogus purchases. 3. Rival contentions have been heard the record perused. The facts in brief are that the assessee is a partnership firm engaged in manufacturing, trading and export of gems ... Rajendra Jain was recorded and as per incriminating documents found during the search, the A.O. reached to the conclusion that the assessee had made bogus purchases from this group, accordingly the assessment was reopened by issuing notice U/s 148 of the Act and the A.O. after rejecting the book results

Megha Jewellery, Jaipur vs. Income Tax Officer, Ward-6-2, Jaipur

In the result, appeals of the assessee are allowed in part in terms indicated hereinabove

For Appellant: Shri S.L. Poddar (Adv)For Respondent: Shri Ashok Khanna (JCIT)

ITA 497/JPR/2018[2008-09]Status: DisposedITAT Jaipur10 Apr 2019AY 2008-09

Megha Jewellery, Jaipur vs. Income Tax Officer, Ward-5-4, Jaipur

In the result, appeals of the assessee are allowed in part in terms indicated hereinabove

For Appellant: Shri S.L. Poddar (Adv)For Respondent: Shri Ashok Khanna (JCIT)

ITA 496/JPR/2018[2007-08]Status: DisposedITAT Jaipur10 Apr 2019AY 2007-08

Megha Jewellery, Jaipur vs. Income Tax Officer ( T & J), Jaipur

In the result, appeals of the assessee are allowed in part in terms indicated hereinabove

For Appellant: Shri S.L. Poddar (Adv)For Respondent: Shri Ashok Khanna (JCIT)

ITA 35/JPR/2018[2009-10]Status: DisposedITAT Jaipur10 Apr 2019AY 2009-10

Sh. Gauri Shankar Sharma, Ajmer vs. Income Tax Officer, Ajmer

In the result appeal of assessee is allowed in terms indicated hereinabove

For Appellant: Shri Sanjeev Jain (CA)For Respondent: Ms. Anuradha (JCIT)

Section 131Section 132(4)Section 143(3)Section 147Section 69

22/02/2011, wherein Court held as under:- "The question raised in this appeal is, -whether the Tribunal justified in deleting the addition on account of bogus purchases allegedly made by the appellant from M/s. Thakkar Agro Industrial Chem Supplies P. Ltd. According to the revenue, the Director of M/s. Thakkar Agro

DCIT 3(2)(2), Mumbai vs. Premier Ltd, Mumbai

Appeal are allowed for statistical purposes

ITA 1358/MUM/2016[2008-09]Status: DisposedITAT Mumbai10 Apr 2019AY 2008-09

Bench: Shri Ravish Sood & Shri N.K. Pradhandcit-3(2)(2), M/S Premier Ltd R. No. 674, 6Th Floor, 58, Nariman Point, Aayakar Bhavan, M.K. Road, Vs. Mumbai -21 Mumbai – 400 020

For Appellant: Shri Abi Rama Kartikiyen, D.RFor Respondent: Shri Jayesh Dadia &

Section 115JSection 133ASection 143(3)Section 147Section 69A

wherein the following ratios were laid down.  In absence of any, direct evidence showing non - genuineness of purchases, addition made on account of bogus purchases by merely relying on statements of third parties recorded tinder survey proceedings, was not sustainable  Whether once assessee ha discharged its onus by producing necessary ... assessee, therefore, as per the provisions of section 69A, it is required to be taxed. It is also noted that the alleged "bogus purchases" were recorded in the appellants books of account The payments to suppliers was also made through cheques from appellants known bank accounts and duly recorded

Pratibha Pipes and Structurals Ltd, Mumbai vs. DCIT Cen Cir 17 & 28, Mumbai

In the result, appeal filed by the assessee is dismissed

ITA 3874/MUM/2015[2007-08]Status: DisposedITAT Mumbai10 Apr 2019AY 2007-08

Bench: Shri G Manjunatha () & Shri. Ravish Sood ()

Section 143(3)Section 153D

given facts, circumstances and judicial pronouncements; Hon. CIT (A) erred in confirming the action of the Ld. Assessing Officer on account of bogus purchases of Rs. 43,14,0767- under the head business income; such addition is bad in law and liable to be deleted. 2. Without prejudice to above ... judicial pronouncements; Hon. CIT(A) erred in confirming the action of the Ld. 3 Pratibha Pipes & Structurals Ltd Assessing Officer on account of bogus purchases of Rs. 43»14>O76/- under the head business income; such addition is excessive and liable to be reduced. 3. On the given facts, circumstances

J.K.Bros., Mumbai vs. ITO, WD-19(2)(1), Mumbai

In the result, the appeal filed by the assessee is hereby ordered to be allowed for statistical purposes

ITA 3010/MUM/2018[2009-10]Status: DisposedITAT Mumbai09 Apr 2019AY 2009-10

Bench: Shri B. R. Baskaran, Am & Shri Amarjit Singh, Jm आयकर अपील सं/ I.T.A. No.3010/Mum/2018 (निर्धारण वर्ा / Assessment Year: 2009-10) M/S. J.K. Bros बिधम/ Ito Ward 19(2)(1) C/O Kirit K. Gandhi B-131, Mumbai. Vs. Simandhar City, Trimandir Sankul, Ahmedabad Kalol Highway, Adalaj, Gandhinagar 382421. स्थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aadfj5267B (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) Revenue By: Shri Chaitanya Anjaria (Dr) Assessee By: Shri Vijay Mehta सुनवाई की तारीख / Date Of Hearing: 09/04/2019 घोषणा की तारीख /Date Of Pronouncement: 09/04/2019 आदेश / O R D E R Per Amarjit Singh, Jm: The Assessee Has Filed The Present Appeal Against The Order Dated 15.03.2018 Passed By The Commissioner Of Income Tax (Appeals) -30, Mumbai [Hereinafter Referred To As The “Cit(A)”] Relevant To The A.Y.2009- 10. 2. The Assessee Has Raised The Following Grounds: - “1. The Id Cit(Appeals) Erred Both In Law & On Facts In Confirming The Additions Of Rs.26.62.510/- Being A 12.5 % Of The Alleged A.Y.2009-10

For Appellant: Shri Vijay MehtaFor Respondent: Shri Chaitanya Anjaria (DR)

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

Appeals) erred both in law and on facts in confirming the additions of Rs.26.62.510/- being a 12.5 % of the alleged A.Y.2009-10 bogus purchases made by the appellant to the tune of Rs.2.13,00,078/-. 2. The Id CIT(Appeals) erred on facts that the proper opportunities was not given ... Trading Co 2008-09 12,32,380 22 Mahavir Enterprises 2008-09 13,73,736 Total 2,13,00,078 The assessee took the bogus purchase entries in sum of Rs.2,13,00,078/- in total. The notice was given to the assessee and finding non-satisfactory reply

Shri Alok Haldia, Jaipur vs. Assistant Commissioner of Income Tax, Circle-1, Jaipur

In the result, appeal of the assessee is allowed

ITA 925/JPR/2018[2007-08]Status: DisposedITAT Jaipur08 Apr 2019AY 2007-08

For Appellant: Shri M.L. Borad (Adv.)For Respondent: Shri J.C. Kulhari (JCIT)

Section 143(3)Section 147Section 271(1)(c)

assessment proceedings U/s 143(3) read with Section 147 of the Act, the Assessing Officer made addition by estimating 25% of the alleged bogus purchases. The ld. CIT(A) has reduced the estimated addition to the extent of 15% of the bogus purchases. However, the A.O. also levied penalty ... Alok Haldia Vs ACIT 4. On the other hand, the ld DR has contended that the quantum addition to the extent of 15% on bogus purchases has been confirmed by the Tribunal, therefore, penalty relating to 15% of the addition should be upheld. 5. We have considered the rival contentions

Laxmi Sanitary Engineers & Contracts, Mumbai vs. Assistant Commissioner of Income Tax 19(2), Mumbai

The appeal stands partly allowed

ITA 561/MUM/2018[2010-11]Status: DisposedITAT Mumbai08 Apr 2019AY 2010-11

Bench: Shri Saktijit Dey, Jm & Shri Manoj Kumar Aggarwal, Am

For Appellant: Somnath M. Wajale - Ld.DR

Section 143(1)Section 143(3)Section 147Section 148

Assessment Years [AY] 2010-11 & 2011-12 contest separate orders of first appellate authority qua confirmation of certain additions on account of alleged bogus purchases. Although the assessee, in its ground of appeal, has challenged the legality of reassessment proceedings u/s 147/148, however, no arguments, in this regard, have been ... read with Section 147 on 19/03/2014 wherein the assessee was saddled with estimated additions of 25% on account of alleged bogus purchases for Rs.228.76 Lacs stated to be made from 6 parties. The party- wise details have already been extracted in the quantum assessment order at para 4.1. The original

The Dy. Commissioner of Income Tax, Circle-2(1)(2), Ahmedabad vs. M/S. Kintech Synergy Pvt. Ltd., Ahmedabad

In the result, the appeal is dismissed

ITA 1842/AHD/2016[2012-13]Status: DisposedITAT Ahmedabad05 Apr 2019AY 2012-13

ITA 2378/AHD/2015[2010-11]Status: DisposedITAT Ahmedabad05 Apr 2019AY 2010-11

appellant are as follows :- “1. The Ld. CIT(A) has erred in law and on facts in restricting the disallowance on account of bogus purchases by adopting 12.5% of the profit thereby giving relief of Rs.1,69,94,698/- as against Rs.1,94,22,850/- made in the assessment order ... consistently held that a profit percentage of 12.5% can be applied in the cases Assessment Year: 2012-13 Page 2 of 2 of such bogus purchases. The learned CIT(A), after referring the decision of CIT(A)-2, Ahmedabad, in appellant’s own case for the A.Ys

The Dy. CIT, (OSD)-I, Circle-4, Ahmedabad vs. M/S. Kintech Synergy Pvt. Ltd., Ahmedabad

In the result, the appeals are dismissed

ITA 2377/AHD/2015[2009-10]Status: DisposedITAT Ahmedabad05 Apr 2019AY 2009-10

jurisdictional High Court judgements wherein it is consistently held that a profit percentage of 12.5% can be applied in the cases of such bogus purchases. That is precisely what the learned CIT(A) has done, as evident from the following observation in the impugned CIT(A)’s order ... Simit P. Sheth (2013) 219 Taxman 85 (Guj.) :- Section 145 of the Income-tax Act, 1961 - Method of accounting -Estimation of Profits [Bogus purchases] - Assessment year 2006-07 - Assessee was engaged in business of trading in steel on wholesale basis - Assessing Officer having found that some of alleged suppliers

The Dy. CIT, (OSD)-I, Circle-4, Ahmedabad vs. M/S. Kintech Synergy Pvt. Ltd., Ahmedabad

In the result, the appeals are dismissed