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“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 19(3), Mumbai vs. Skyway Constructon Co., Mumbai

ITA 5865/MUM/2017[2009-10]Status: DisposedITAT Mumbai30 Jan 2019AY 2009-10

Bench: Shri Shamim Yahya, Am & Shri Amarjit Singh, Jm

For Appellant: NoneFor Respondent: Shri Chaudhary Arun Kumar
Section 143(1)Section 145(3)

order of Hon’ble Supreme Court in the case of N K Protein Ltd. dated 16.01.2017, which is on the similar issue of bogus purchases and when the apex court order was already the law of ITA. No. 5865/M/2017 A.Y.2009-10 the land when the Ld. CIT(A) has given ... 5865/M/2017 A.Y.2009-10 Thereafter, the notice was given to the assessee and after the reply of the assessee, the AO disallowed the claim of the bogus purchase and added to the income of the assessee. The total income of the assessee was assessed to the tune of Rs.2

DCIT, New Delhi vs. M/S. Metro Tyres Ltd., New Delhi

In the result, the Departmental appeals are not maintainable as the appeals are filed against the Board instructions referred to above and therefore, the appeals of the Department are liable to be ...

ITA 5351/DEL/2015[2007-08]Status: DisposedITAT Delhi29 Jan 2019AY 2007-08

Bench: Shri Bhavnesh Saini, J.M. & Shri O.P. Kant, A.M.

For Respondent: Shri S.S. Rana, CIT-D.R

A.Ys. 2006-2007 and 2007-2008, challenging the deletion of addition of Rs.46,60,000/- and Rs.56,10,000/- on account of bogus purchases respectively. 2. Learned Counsel for the Assessee did not press the cross objections and the same are accordingly dismissed as withdrawn. 3. Admittedly, the tax effect

DCIT, New Delhi vs. M/S. Metro Tyres Ltd., New Delhi

In the result, the Departmental appeals are not maintainable as the appeals are filed against the Board instructions referred to above and therefore, the appeals of the Department are liable to be ...

ITA 5350/DEL/2015[2006-07]Status: DisposedITAT Delhi29 Jan 2019AY 2006-07

Bench: Shri Bhavnesh Saini, J.M. & Shri O.P. Kant, A.M.

For Respondent: Shri S.S. Rana, CIT-D.R

A.Ys. 2006-2007 and 2007-2008, challenging the deletion of addition of Rs.46,60,000/- and Rs.56,10,000/- on account of bogus purchases respectively. 2. Learned Counsel for the Assessee did not press the cross objections and the same are accordingly dismissed as withdrawn. 3. Admittedly, the tax effect

Naushad Ahmed Khan, Mumbai vs. Income Tax Officer 26(2)(3), Mumbai

In the result, the appeal of assessee is allowed

ITA 6573/MUM/2017[2009-2010]Status: DisposedITAT Mumbai28 Jan 2019AY 2009-2010

Bench: Sri Mahavir Singh, Jm & Sri Rajesh Kumar, Am

For Appellant: Shri M H Patel, ARFor Respondent: Shri Ashish V. Pophare, DR
Section 143(3)Section 271(1)(c)

against the order of CIT(A) confirming the penalty levied by AO u/s 271(1)(c) of the Act on estimated profit on bogus purchases at the rate of 12.5%. 3. Briefly stated facts are that the department received information from DGIT, Investigation Mumbai, who in turn received information from ... also made purchase from grey market and for that he agreed that an estimate of profit @ 12.5% can be made of the bogus purchases and for this the assesse agreed and addition of Rs. 2,68,488/- was made vide Para 2.8 by the AO as under:- “2.8 After taking

Adarsh Kaul, Mumbai vs. Assistant Commissioner of Income Tax 31(1), Mumbai

In the result, the appeal is partly allowed

ITA 5906/MUM/2017[2009-10]Status: DisposedITAT Mumbai28 Jan 2019AY 2009-10

Bench: Shri Joginder Singh () & Shri N.K. Pradhan () Assessment Year: 2009-10 Adarsh Kaul C/O Vav Assistant Commissioner Airconditioning Unit No. 2, Of Income Tax 31(1), Vs. It Park, Techniplex-Ii, Room No. 110, C-13, Junction Of Veer Savarkar Pratyakshakarbhavan, Flyover, Sv Road, Goregaon Bandrakurla Complex, Mumbai-400062. Mumbai-400051. Pan No. Ahrpk7595A Appellant Respondent Assessee By : Mr. M.N. Nandgaonkar, Ar Revenue By : Mr. Pankaj Kumar, Dr Date Of Hearing : 01/01/2019 Date Of Pronouncement : 28/01/2019

For Appellant: Mr. M.N. Nandgaonkar, ARFor Respondent: Mr. Pankaj Kumar, DR
Section 133(6)Section 142(1)Section 143(3)Section 148

assessee filed an appeal before the Ld. CIT(A). It is observed by the Ld. CIT(A) that if the bogus purchases are unproved or where the alleged purchases are declared consumed by the assessee itself in its trading, manufacturing or non- trading activities and which is not substantiated ... bogus expenditure. 5. Before us, the Ld. counsel of the assessee submits that only the profit element embedded in the so-called bogus purchases may be brought to tax instead of the full amount. On the other hand, the Ld. DR relies on the order passed

ITO-6(3)(1), Mumbai vs. Fanatic Fashion Pvt. Ltd, Mumbai

In the result, appeal of the revenue is dismissed

ITA 439/MUM/2019[2010-11]Status: DisposedITAT Mumbai28 Jan 2019AY 2010-11

Bench: Shri R.C. Sharma: A.Y : 2010-11

For Appellant: Shri Vizti KothariFor Respondent: Shri Anoop Hiwase
Section 143(3)

u/s.143(3) of the Income Tax Act, 1961. 2. Revenue is aggrieved for upholding addition to the extent of 12.5% in respect of alleged bogus purchases which was made by the AO at 100%. 3. I had gone through the orders of the authorities below and found that ... restricted addition on account of alleged bogus purchases @12.5% after observing as under:- 2 M/s. Fanatic Fashion Pvt. Ltd. “4.2 I have considered the assessment order and the submissions of the appellant including the case laws cited. The AO on account of non- availability of the suppliers at the given

ITO-27(1)(3), Mumbai vs. Shri. Hasmukhlal T. Mehta, Mumbai

In the result, appeal of the revenue is dismissed

ITA 438/MUM/2019[2009-10]Status: DisposedITAT Mumbai28 Jan 2019AY 2009-10

Bench: Shri R.C. Sharma: A.Y : 2009-10

For Respondent: Shri Anoop Hiwase
Section 133(6)Section 143(3)Section 69C

appeal filed by the revenue is against the order of CIT(A) for the A.Y.2009-10 in the matter of addition upheld on account of bogus purchases, order passed u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961. 2. I have gone through the orders of the authorities below ... found that AO has made 100% addition in respect of alleged bogus purchases. After controverting the findings of AO, the CIT(A) has upheld the addition to the extent of 12.5% after observing as under:- “6.1. Ground No. 1, 2 & 3 of the appeal are against addition

Shri Ajay Gupta (HUF), Mumbai vs. ACIT Cent. Cir. 43, Mumbai

In the result, all the three appeals of assessee are allowed and that of the Revenue are dismissed

ITA 2147/MUM/2016[2010-11]Status: DisposedITAT Mumbai28 Jan 2019AY 2010-11

Bench: Sri Mahavir Singh, Jm & Sri Rajesh Kumar, Am

For Appellant: Shri RC Jain, ARFor Respondent: Shri BB Rajendra Prasad, DR
Section 132Section 143(3)Section 153C

gone through the facts and circumstances of the case. We find from the assessment orders in these three years that the only issue of bogus purchase added by AO and restricted by CIT(A) at 12.5% and also commission of these bogus purchases added at 3% and restricted ... Revenue ITAs No. 2149, 2145, 2147/Mum/2016 & ITAs No. 1829 to 1830/Mum/2016 is in appeal against restriction of addition of bogus purchases and commission. And assessee is in appeal for deletion of entire addition and also raised this jurisdictional issue. 7. We have gone through the facts and noted that search

Income Tax Officer-19(1)(2), Mumbai vs. Ashish V. Gandhi, Mumbai

In the result, the appeal is dismissed

ITA 4893/MUM/2017[2007-08]Status: DisposedITAT Mumbai28 Jan 2019AY 2007-08

Bench: Shri Joginder Singh () & Shri N.K. Pradhan () Assessment Year: 2007-08 Ito-19(1)(2), Room No. 204, Ashish V. Gandhi 501, Matrumandir, Mumbai- Vs. Shirin Apartments, 400020. Tardeo, Mumbai- 400007. Pan No. Aafog5444F Appellant Respondent Revenue By : Mr. V. Justin, Dr Assessee By : Mr. R.S. Choksi & Ms. M.K. Patel, Ars Date Of Hearing : 06/11/2018 Date Of Pronouncement : 28/01/2019

For Appellant: Mr. R.S. Choksi & Ms. M.K. Patel, ARsFor Respondent: Mr. V. Justin, DR
Section 132Section 143(1)Section 143(3)Section 148

Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in restricting the disallowance of @ 3% on bogus purchases of Rs.3,76,56,327/- made from M/s Mohit Enterprises, M/s AZ Jewels and M/s Ashish V. Ghandi 2 Shree Balaji International, which ... documents forwarded by the DGIT (Inv.), the Assessing Officer (AO) noticed that the assessee had obtained accommodation entries of bogus purchases from the following concerns of Shri Bhanwarlal Jain & his group during the financial year 2006-07 relevant to the AY 2007-08 : Sr. No. Name of the entry issuer

Manoj Sharma, New Delhi vs. ITO, Ward- 39(5), New Delhi

In the result on merits addition made by the AO is deleted and consequently assessee’s appeal is allowed

ITA 4342/DEL/2018[2009-10]Status: DisposedITAT Delhi28 Jan 2019AY 2009-10

Bench: Shri Amit Shukla

For Appellant: Shri Ved Jain, AdvocateFor Respondent: Shri S.L. Anuragi Sr. DR
Section 143Section 147Section 148Section 69C

challenged the validity of reopening u/s 147; and on merits he has challenged the addition of Rs. 12,56,068/- made on account of bogus purchases. The facts in brief are that assessee has filed his return of income on 19.8.2009, declaring income of Rs. 2,85,650/- which ... Central Circle II, New Delhi, enclosing letter dated 13.3.2013 of ACIT Central Circle -10, which contained the list of the persons to whom bogus purchases / accommodation entries were provided by Shri Rakesh Gupta, Shri Vishesh Gupta, Shri Navneet Jain, Shri Vaibhav Jain. Since assessee was also one of the name

Siraj Ahmed Shamshuddin Dalvi, Panvel vs. Income-Tax Officer, Ward - 1, Panvel

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

ITA 1071/PUN/2018[2011-12]Status: DisposedITAT Pune25 Jan 2019AY 2011-12

Bench: Ms. Sushma Chowla, Jm आयकर अपीऱ सं. / Ita Nos.1070 & 1071/Pun/2018 यििाारण वषा / Assessment Years : 2010-11 & 2011-12

For Appellant: NoneFor Respondent: Shri Rajesh Gawali
Section 143(3)Section 148

short ‘the Act’). ITA Nos.1070 & 1071/PUN/2018 2 2. Both the appeals relating to the same assessee on estimation of profit on bogus purchases were heard together and are being disposed of by this consolidated order for the sake of convenience. However, in order to adjudicate the issue, reference is being ... appeals after hearing the learned Departmental Representative for the Revenue. 5. The assessee is in appeal on the estimation of profits on alleged bogus purchases made from two different parties. ITA Nos.1070 & 1071/PUN/2018 3 6. The case of assessee was reopened under section 148 of the Act on the ground

Siraj Ahmed Shamshuddin Dalvi, Panvel vs. Income-Tax Officer, Ward - 1, Panvel

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

ITA 1070/PUN/2018[2010-11]Status: DisposedITAT Pune25 Jan 2019AY 2010-11

Bench: Ms. Sushma Chowla, Jm आयकर अपीऱ सं. / Ita Nos.1070 & 1071/Pun/2018 यििाारण वषा / Assessment Years : 2010-11 & 2011-12

For Appellant: NoneFor Respondent: Shri Rajesh Gawali
Section 143(3)Section 148

short ‘the Act’). ITA Nos.1070 & 1071/PUN/2018 2 2. Both the appeals relating to the same assessee on estimation of profit on bogus purchases were heard together and are being disposed of by this consolidated order for the sake of convenience. However, in order to adjudicate the issue, reference is being ... appeals after hearing the learned Departmental Representative for the Revenue. 5. The assessee is in appeal on the estimation of profits on alleged bogus purchases made from two different parties. ITA Nos.1070 & 1071/PUN/2018 3 6. The case of assessee was reopened under section 148 of the Act on the ground

Income-Tax Officer vs. M/S. Metal United Alloys Fusion Products Ltd., Nashik

In the result, the appeal of the Revenue in ITA

ITA 2287/PUN/2016[2011-12]Status: DisposedITAT Pune25 Jan 2019AY 2011-12

Bench: Shri Anil Chaturvedi, Am & Shri P.S. Chaudhury, J.M.

For Appellant: Shri Pramod ShingteFor Respondent: Shri Sanjeev Ghei
Section 143(1)Section 143(3)Section 147Section 148Section 292B

circumstances of the case, the Learned CIT(A)-1, Nashik was justified in deleting the addition of Rs.93,67,890/- on account of alleged bogus purchases from Hawala dealers/parties? 2. Whether on the facts and in the circumstances of the case, the Learned CIT(A)-1, Nashik was justified

Shri Nileshkumar Bhagvanbhai Bodara, Surat vs. The Income Tax Officer, Ward-3(3)(3), Surat

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

ITA 2776/AHD/2015[2012-13]Status: DisposedITAT Surat25 Jan 2019AY 2012-13

Bench: Smt. Diva Singh & Shri O.P.Meenaआ.अ.सं./I.T.A No. 2776/Ahd/2015 िनधा"रण वष"/A.Y.:2012-13

Section 40ASection 40A(3)

dated 17.11.2014 [2014] 11 (TMI) 812 (Gujarat) wherein their Lordship have laid down the ratio that addition on allegation of bogus purchases has to be made based on gross profit rate of 1 to 5% of total alleged disputed purchases. We find that the assessee had maintained the quantity stock

Softcon Systems Pvt. Ltd., Pune vs. Deputy Commissioner of Income-Tax

In the result, appeal of the assessee is partly allowed

ITA 213/PUN/2015[2010-11]Status: DisposedITAT Pune24 Jan 2019AY 2010-11

Bench: Shri R.S. Syal, Vp & Shri Partha Sarathi Chaudhury, Jm

For Appellant: Shri Pramod JadhavFor Respondent: Shri S. Das
Section 133(6)

grievance of the assessee in all these grounds is confirmation of addition of Rs.34,25,000/- made by the Assessing Officer on account of bogus purchases. 3. The brief facts in this case are that during the course of assessment proceedings, the Assessing Officer verified the purchases made ... assessee submitted that in the previous year i.e. assessment year 2009-10, the Assessing Officer had disallowed 20% of the bogus purchases. Similarly in the subsequent year i.e. assessment year 2011-12, the Assessing Officer disallowed 20% of the bogus purchases. Showing these statistics, the Ld. AR of the assessee

Yusuf Ismail Shaikh, Pune vs. Income-Tax Officer, Ward - 1(3), Pune

In the result, appeals are allowed for statistical purpose

ITA 1282/PUN/2018[2011-12]Status: DisposedITAT Pune22 Jan 2019AY 2011-12

Bench: Shri Anil Chaturvedi, Am & Shri Vikas Awasthy, Jm

For Appellant: Shri Rohit TapadiyaFor Respondent: Shri Rajesh Gawali

Both sides heard. Orders of the Authorities below perused. The addition in both the assessment years under appeal has been made on account of bogus purchases. A perusal of the impugned order shows that notice of hearing of the appeal was sent to the assessee, however, it is not emanating

Yusuf Ismail Shaikh, Pune vs. Income-Tax Officer, Ward - 1(3), Pune

In the result, appeals are allowed for statistical purpose

ITA 1281/PUN/2018[2009-10]Status: DisposedITAT Pune22 Jan 2019AY 2009-10

Bench: Shri Anil Chaturvedi, Am & Shri Vikas Awasthy, Jm

For Appellant: Shri Rohit TapadiyaFor Respondent: Shri Rajesh Gawali

Both sides heard. Orders of the Authorities below perused. The addition in both the assessment years under appeal has been made on account of bogus purchases. A perusal of the impugned order shows that notice of hearing of the appeal was sent to the assessee, however, it is not emanating

Kuruvilla Alexander, Pune vs. Income-Tax Officer, Ward - 8(1), Pune

In the result, the appeal of assessee is dismissed

ITA 644/PUN/2018[2011-12]Status: DisposedITAT Pune17 Jan 2019AY 2011-12

Bench: Ms. Sushma Chowla, Jm & Shri Anil Chaturvedi, Am आयकर अपीऱ सं. / Ita No.644/Pun/2018 यििाारण वषा / Assessment Year : 2011-12 Kuruvila Alexander, Flat No.2, Plot No.85, Premsagar Apartment, अऩीऱाथी/Appellant Udyam Nagar, Pune …. Pan: Aanpa4943K Vs. The Income Tax Officer, …. प्रत्यथी / Respondent Wad 8(1), Pune

For Appellant: Shri M.K. KulkarniFor Respondent: Shri Rajesh Gawali
Section 143(3)Section 148

justified in dismissing the appeal of the assessee upholding the addition made by the A.O. of 100% bogus purchase on the reason that the assessee himself had admitted the said disallowance of bogus purchases. The admission was under mis-conception of law and facts. The reasonable percentage of income ... directed to be estimated instead of 100% addition of such bogus purchases. 3. The present appeal has been filed by the assessee after delay of eight days and the assessee has filed an application for condonation of delay. In view of the facts and circumstances, we find merit

M/S Holy Faith International Pvt. Ltd, Jalandhar vs. The Dy Commissioner of Income Tax, Jalandhar

In the result, the appeal of the assessee is allowed

ITA 181/ASR/2017[2008-09]Status: DisposedITAT Amritsar15 Jan 2019AY 2008-09

Bench: Sh. N. K. Saini, Hon’Ble & Sh. Ravish Soodita No.181/Asr./2017 : Asstt. Year : 2008-09 M/S Holy Faith International Vs Deputy Commissioner Of Income Tax, Pvt. Ltd., Mbd House, Central Circle-Ii, Railway Road, Jalandhar Jalandhar (Appellant) (Respondent) Pan No. Aaach6111J Assessee By : Sh. Sudhir Sehgal, Adv. Revenue By : Sh. Bhawani Shankar, Dr Date Of Hearing : 07.01.2019 Date Of Pronouncement : 15.01.2019 Order Per N. K. Saini: This Is An Appeal By The Assessee Against The Order Dated 20.03.2017 Of Ld. Cit(A)-I, Jalandhar. 2. Following Grounds Have Been Raised In This Appeal: “1. That The Worthy Commissioner Of Income Tax (A)-1, Jalandhar Has Erred In Dismissing The Appeal Filed By The Assessee. 2. That The Ld. Cit(A) Has Erred In Confirming The Contention Of The Assessing Officer In Reopening The Case U/S 148 Of The Income Tax Act And, Thus, Framing Of Assessment U/S 147 R.W.S.143(3)/153C At An Income Of Rs. 4,95,13,441/- Against The Returned Income Of Rs. 4,63,33,441/-. 3. That The Ld. Cit(A) Has Erred In Not Considering That There Was No Reason To Believe That The Income Of The

For Appellant: Sh. Sudhir Sehgal, AdvFor Respondent: Sh. Bhawani Shankar, DR
Section 131Section 132Section 147Section 148Section 153C

search on Sh. Sanjay Chaudhary Group that the said group was engaged in providing accommodation entries to different assessees for bogus unsecured loans and bogus purchases. Such an entry was also provided to the assessee by M/s Nazar Impex Pvt. Ltd., one of its group companies of Rs.31 ... Choudhary Group, it emerged that the group is engaged in providing accommodation entries to different assessees in the nature of bogus unsecured loans and bogus purchases. In his statement recorded on oath, Sh. Sanjay Choudhary has admitted that his concern M/s Nazar Impex Pvt. Ltd., bearing PAN AACCN3603R is providing

M/S. Nandan Associates, Pune vs. Income-Tax Officer, Ward - 3(1), Pune

In the result, the appeal of assessee is partly allowed

ITA 1106/PUN/2018[2011-12]Status: DisposedITAT Pune15 Jan 2019AY 2011-12

Bench: Shri R.S. Syal & Shri Vikas Awasthy, Jm

For Appellant: Shri C.H. NaniwadekarFor Respondent: Shri Rajesh Gawali
Section 143(3)Section 148

hereinafter referred to as „the Act‟). In ground No.2, the assessee has assailed upholding addition of ₹ 3,71,494/- on account of alleged bogus purchases. 3. Shri C.H. Naniwadekar appearing on behalf of assessee submitted at the outset that he is not pressing ground No.1. 3.1 In respect of ground ... orders of authorities below. The solitary issue raised in the present appeal is with respect to addition of ₹ 3,71,494/- on account of bogus purchases. 8. The ld. AR stated at the Bar that he is not pressing ground No.1. Accordingly, the same is dismissed as not pressed