“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

ITO 6(3)(2), Mumbai vs. Jaydeep Profiles P.Ltd, Mumbai

ITA 3236/MUM/2016[2009-10]Status: DisposedITAT Mumbai25 Sept 2018AY 2009-10

Bench: Shri Joginder Singh & Shri G. Manjunathaassessment Year: 2009-10 Income Tax Officer 6(3)(2), Jaydeep Profiles P. Ltd., R No.503, 5Th Floor, Aayakar 142/7 Lakdi Bunder Road, बनाम/ Bhavan, M.K.Road, Darukhana, Reay Road, Vs. Mumbai 400 020 Mumbai 400 086 (राज"व /Revenue) ("नधा"रती /Assessee) P.A. No. Aaacj8998B Assessment Year: 2009-10 Jaydeep Profiles P. Ltd., Income Tax Officer 6(3)(2), 142/7 Lakdi Bunder Road, R No.503, 5Th Floor, Aayakar बनाम/ Darukhana, Reay Road, Bhavan, M.K.Road, Vs. Mumbai 400 086 Mumbai 400 020 ("नधा"रती /Assessee) (राज"व /Revenue) P.A. No. Aaacj8998B 2 & 2698/Mum/2016

Section 133(6)Section 139Section 142Section 143Section 147Section 148

with the Assessing Officer and independent application of mind is concerned, we find that there was information with the Assessing Officer that assessee made bogus purchases from the Hawala parties and the notices sent u/s.133(6) were returned back unserved by the postal department, in this background, we shall analyze ... considered the rival submissions and perused the material available on record. We note that the learned Assessing Officer made the addition @100% of such bogus purchases, which was reduced to 12.5% by the learned CIT(A). The assessee has challenged the retention of addition to the extent of 12.5% whereas

Jaydeep Profiles Pvt. Ltd., Mumbai vs. ITO WD 6 (3)(2), Mumbai

ITA 2698/MUM/2016[2009-10]Status: DisposedITAT Mumbai25 Sept 2018AY 2009-10

Section 133(6)Section 139Section 142Section 143Section 147Section 148

Zee Bangles, Mumbai vs. ITO 18(3)(5), Mumbai

In the result, the appeal filed by the assessee is hereby ordered to be partly allowed

ITA 494/MUM/2017[2009-10]Status: DisposedITAT Mumbai24 Sept 2018AY 2009-10

Bench: Shri B. R. Baskaran, Am & Shri Amarjit Singh, Jm आयकर अपील सं/ I.T.A. No.494/Mum/2017 (निर्धारण वर्ा / Assessment Year: 2009-10) Zee Bangles बिधम/ Ito Ward 18(3)(5) 3Rd Floor Earnest House 148, L.K. Mkt, Zaveri Vs. Nariman Point Mumbai- Bazar, Mumbai-400002. 400021. स्थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaafz3532C (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) Revenue By: Shri V.Vidhyadhar (Sr.Dr) Assessee By: Shri Vimal Punmiya सुनवाई की तारीख / Date Of Hearing: 27.06.2018 घोषणा की तारीख /Date Of Pronouncement: 24.09.2018 आदेश / O R D E R Per Amarjit Singh, Jm: The Assessee Has Filed The Present Appeal Against The Order Dated 02.08.2016 Passed By The Commissioner Of Income Tax (Appeals)-29 Mumbai [Hereinafter Referred To As The “Cit(A)”] Relevant To The Ay. 2009- 10. 2. The Assessee Has Raised The Following Grounds: - “1. In The Facts & Circumstances & In Law, The Impugned Assessment Order Is Patently Illegal Passed In Violation Of Provisions Of Section 143(2), Non-Compliance Of Mandate Given By Hon. Sc [259 Itr 10 Pg. & Non-Compliance Of Principle Of Natural Justice & Thus Liable To Be Quashed.

For Appellant: Shri Vimal PunmiyaFor Respondent: Shri V.Vidhyadhar (Sr.DR)

Section 133(6)Section 143(1)Section 143(2)Section 234CSection 27lSection 69C

Thus the order passed is liable to declared as non-est. 5 The CIT (A) erred in making addition @ 12.5% of alleged bogus purchases of Rs,78,19,735/- as profit element embedded in the said purchases. The addition made is bad in law and liable to be deleted ... accommodation entries to the tune of Rs.78,19,735/- from M/s. Om Shanti Trading Co. Thereafter, considering the reply of the assessee, the said bogus purchase to the tune of Rs. 78,19,735/- was added to the income of the assessee. Thereafter, the assessee filed an appeal before

Shantivijay Jewels Limited, Mumbai vs. Income Tax Officer-11(2)(2), Mumbai

In the result, appeal filed by the Revenue for A

ITA 4393/MUM/2017[2009-10]Status: DisposedITAT Mumbai24 Sept 2018AY 2009-10

Bench: Shri B.R. Baskaran (Am) & Shri Ravish Sood(Jm)

Section 131Section 132

convenience. 2 M/s. Shantivijay Jewels Ltd. 2. Issue urged by both the parties relates to addition made by the Assessing Officer in respect of bogus purchases made by the assessee. 3. The Assessing Officer added 12.5% of the value of bogus purchases in all these four years and the learned ... reduced the same to 3% of the value of bogus purchases. The Revenue is contesting relief granted by the learned CIT(A) in all these years and the assessee is challenging the addition sustained by the learned CIT(A). 4. The assessee is engaged in the business of manufacture

Cms Computers Ltd, Mumbai vs. Asst CIT Cen Cir 3(2), Mumbai

In the result, appeal of assessee is dismissed

ITA 3763/MUM/2017[2009-10]Status: DisposedITAT Mumbai24 Sept 2018AY 2009-10

Bench: Shri R.C.Sharma, Am & Shri Sandeep Gosain, Jm M/S. Cms Computers Ltd., Vs. Acit – Cc 3(2) Cms Lake Centre, 70 Mumbai Lake Road, Bhandup (W) Mumbai – 400 078 Pan/Gir No.Aaacc1758L (Appellant) .. (Respondent)

Section 143(3)Section 147Section 148

passed u/s.143(3) r.w.s. 147 of the IT Act. 2. The grievance of assessee relates to upholding the addition of 12.5% in respect of bogus purchases. Nobody appeared on behalf of the assessee inspite of giving the opportunity, the Bench, therefore, decided to dispose of the appeal after hearing learned ... basis of statements / deposition filed before the Sales Tax Authorities and the assessee was found to be one of the beneficiaries of such bogus purchases or accommodation entries. Consequently, the assessment in the case of the assessee was reopened u/s 147 vide issue of a notice u/s 148. While completing

Rupali Aum Entertainment P.Ltd, Mumbai vs. Asst CIT Cir 11(1), Mumbai

In the result, appeal is allowed in part

ITA 5843/MUM/2016[2011-12]Status: DisposedITAT Mumbai24 Sept 2018AY 2011-12

Bench: Shri R.C.Sharma, Am & Shri Ram Lal Negi, Jm

Section 131Section 143(3)

matter of order passed u/s.143(3) of the IT Act. Common issue in both the years relate to addition made on account of bogus purchases. 4. We have gone through the orders of the authorities below and found that in the A.Y.2011-12, AO disallowed Rs.60,96,636/- as bogus expenses ... Entertainment Pvt. Ltd., hence, in consequence it has to be reduced, as admitted by the Appellant in subsequent year.” 7. We find that the bogus purchase was not claimed as expenditure during the year under consideration, therefore the CIT(A) has correctly held that no disallowance can be made

Shree Rubber Works, Mumbai vs. Assistant Commissioner of Income Tax - Circle 3, Mumbai

In the result, assessee’s appeal is partly allowed

ITA 934/MUM/2018[2011-12]Status: DisposedITAT Mumbai19 Sept 2018AY 2011-12

Bench: Shri Saktijit Dey

For Appellant: Shri Rajesh S. ShahFor Respondent: Shri S.K. Bepari

Section 147Section 69C

dispute in the present appeal is confined to the addition of an amount of ` 5,04,000 on account of bogus purchases. 3. Brief facts are, the assessee, a partnership firm, is engaged in the business of manufacturing rubber products. For the assessment year under dispute, the assessee filed ... gross 3 Shree Rubber Works profit rate of 21.20% in the impugned assessment year. Therefore, no addition should have been made on account of bogus purchases. However, ultimately, he submitted that 100% of the purchases cannot be treated as income of the assessee but only the profit element embedded

Haresh Sohanraj Jain Prop.: Navpad Steel Centre, Mumbai vs. Deputy Commissioner of Income Tax 15(2), Mumbai

In the result, assessee’s appeal is partly allowed

ITA 920/MUM/2018[2009-10]Status: DisposedITAT Mumbai19 Sept 2018AY 2009-10

Bench: Shri Saktijit Dey

For Appellant: Shri Satish ModiFor Respondent: Shri S.K. Bepari

Section 133(6)Section 143(3)Section 147Section 69C

addition of ` 15,55,840 made under section 69C of the Income Tax Act, 1961 (for short “the Act”) on account of bogus purchases. 2 Shri Haresh Sohanraj Jain 3. Brief facts are, the assessee an individual is a wholesaler in ferrous and non–ferrous metal. For the assessment year ... Therefore, he called upon the assessee to explain why the purchases made from the concerned parties should not be treated as bogus purchases. In response to the query raised by 3 Shri Haresh Sohanraj Jain the Assessing Officer, the assessee submitted that the purchases made from the concerned parties

Kanak Steel India, Mumbai vs. Income Tax Officer - Ward 18(2)(1), Mumbai

In the result, assessee’s appeal is partly allowed

ITA 911/MUM/2018[2011-12]Status: DisposedITAT Mumbai19 Sept 2018AY 2011-12

Bench: Shri Saktijit Dey

For Appellant: Shri Vimal PunamiyaFor Respondent: Shri S.K. Bepari

Section 143(1)Section 147Section 234C

no.1 to 4 are not pressed, hence, dismissed. 3. In ground no.5, the assessee has challenged addition of ` 1,15,990 on account of bogus purchases. 4. Brief facts are, the assessee, a partnership firm, is a dealer in ferrous and non–ferrous metals. For the assessment year under ... materials on record. The only submission made by the learned A.R. is that the assessee has paid VAT of ` 37,117, on the alleged bogus purchases of ` 9,27,922. Therefore, even if the profit element on the alleged bogus purchases is estimated at 12.5% but the VAT amount paid

Spectrochem Private Limited, Mumbai vs. Pr.CIT-4, Mumbai

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

ITA 3930/MUM/2018[2010-11]Status: DisposedITAT Mumbai19 Sept 2018AY 2010-11

For Appellant: Shri Mehulle V. ChoksiFor Respondent: Shri Sanjay Singh,CIT D.R

Section 143(3)Section 263

case and in law, there is no requisite satisfaction by the learned Pr CIT on the issue or ground of addition of alleged bogus purchases by the 2 M/s. Spectrochm P. Ltd. learned AO to the extent of 2,35,125/- (being 12.5% of alleged bogus purchases ... said order under Section 263 of the Act. It was the contention of the learned A.R. that in respect of the issue of bogus purchases two views are possible viz. (i) addition of the profit element involved in making of such purchases from the open/grey market be made

M/S.S.N.Mohanlal & Co, Mumbai vs. Income Tax Officer 13(1)(2), Mumbai

In the result, assessee’s appeal is partly allowed

ITA 1214/MUM/2018[2010-11]Status: DisposedITAT Mumbai19 Sept 2018AY 2010-11

Bench: Shri Saktijit Dey

For Appellant: Shri Sunil HirawatFor Respondent: Shri S.K. Bepari

Section 133(6)Section 69C

opportunity of being heard to the assessee. 7. In ground no.2, the assessee has challenged addition of ` 2,14,346, on account of bogus purchases. 8. Brief facts are, during the assessment proceedings, to verify the genuineness of purchases made from M/s. Conver Concept and M/s. Ashok Spares, the Assessing ... cannot be disallowed and treated as income of the assessee. Therefore, we direct the Assessing Officer to restrict the addition to 12.5% of the bogus purchases. 13. In ground no.3, the assessee has challenged ad–hoc disallowance out of general expenses. 6 M/s. N. Mohanlal & Co. 14. During the assessment

M/S.Lords Shoes Bandra, Mumbai vs. Income Tax Officer-19(3)(2) Now ACIT-23(2), Mumbai

In the result, assessee’s appeal is partly allowed

ITA 1189/MUM/2018[2010-11]Status: DisposedITAT Mumbai19 Sept 2018AY 2010-11

Bench: Shri Saktijit Dey

For Appellant: NoneFor Respondent: Shri S.K. Bepari

Section 131Section 133(6)

year 2010–11. 2. The only dispute in the present appeal is in relation to the addition of ` 3,96,364, on account of bogus purchases. 3. When the appeal was called for hearing, none was present on behalf of the assessee. It is seen from record, notice of hearing ... profit element embedded in the unproved purchases. Thus, in view of the aforesaid, I direct the Assessing Officer to sustain addition @ 12.5% of the bogus purchases of ` 3,96,364. Grounds raised are partly allowed. 8. In the result, assessee’s appeal is partly allowed. Order pronounced in the open

ITO WD 2(1), Mumbai vs. Deepak Ramchandra Tekwani, Ambernath

In the result, the appeals filed by the assessee is partly allowed and the cross appeal filed by the revenue is dismissed

ITA 4151/MUM/2017[2011-12]Status: DisposedITAT Mumbai19 Sept 2018AY 2011-12

Bench: Shri R.C. Sharma (Am) & Shri Ram Lal Negi (Jm) Assessment Year: 2011-2012 Deepak Ramchand Teckwani, The Income Tax Officer, M/S Rajesh Hardware Store, Ward 2(1), Prop. Deepak R. Teckwani, 2Nd Floor, Mohan Plaza, Shop No. 622, Near Ashok Talkies, Vs. Wayale Nagar, Khandakpada, Ulhasnagar- 421003 Kalyan (West) - 421301 Pan: Aajpt4381Q (Appellant) (Respondent) & Assessment Year: 2011-2012 The Income Tax Officer, Deepak Ramchandra Tekwani, Ward 2(1), Prop Of M/S Sai Tools, 2Nd Floor, Mohan Plaza, Plot No. W/98, Midc (Additional), Wayale Nagar, Khandakpada, Vs. Ambernath - 421501 Kalyan (West) - 421301 Pan: Aajpt4381Q (Appellant) (Respondent) Assessee By : Neha Paranjpe (Ar) Revenue By : Shri Chaitanya Anjaria (Dr) Date Of Hearing: 11/09/2018 Date Of Pronouncement: 19/09/2018

For Appellant: Neha Paranjpe (AR)For Respondent: Shri Chaitanya Anjaria (DR)

Section 143Section 148Section 69Section 69C

assessment was re-opened on the basis of information received from Sales Tax Department, Maharashtra to the effect that the assessee had obtained bogus purchase bills from four bogus parties amounting to Rs. 1,76,21,255/- in order to inflate its purchases. In reply to notice ... same before the Ld. CIT (A). The Ld.CIT (A) after hearing the assessee restricted the addition to 25% of the total amount of bogus purchases. Still aggrieved, the assessee is in appeal before this Tribunal. Assessment Year: 2011-12 5. The assessee has raised the following effective grounds of appeal

Deepak Ramchand Teckwani, Mumbai vs. ITO 2(1), Kalyan

In the result, the appeals filed by the assessee is partly allowed and the cross appeal filed by the revenue is dismissed

ITA 4029/MUM/2017[2011-12]Status: DisposedITAT Mumbai19 Sept 2018AY 2011-12

For Appellant: Neha Paranjpe (AR)For Respondent: Shri Chaitanya Anjaria (DR)

Section 143Section 148Section 69Section 69C

Hitesh S. Shah, Mumbai vs. ITO 25(2)(4), Mumbai

ITA 3423/MUM/2017[2009-10]Status: DisposedITAT Mumbai19 Sept 2018AY 2009-10

Bench: Shri Manoj Kumar Aggarwal & Shri Ravish Soodshri Hitesh S. Shah Income Tax Officer-25(2)(4), Block No. 7, Hem Niketan, 6Th Floor, Pratykshakar Bhavan Suvarna Nagar, Ns Road, C-10, Room No. 608, Vs. Juhu, Scheme Road, Bandra Kurla Complex, Bandra (E) Vile Parle (West), Mumbai- 400 051 Mumbai- 400 056 Pan – Aacps6061R (Appellant) (Respondent)

For Appellant: Mrs. Ruchi M. Rathod, A.RFor Respondent: Shri Manoj Kumar Singh, D.R

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

imposed on him in respect of the disallowance of Rs. 7,52,963/- made in his hands in context of the bogus purchases booked by him in his books of account. The assessee in his reply tried to persuade the A.O that no such penalty under ... liable to be imposed in his hands on the ground viz. (i) that the addition on account of bogus purchases was made on the basis of a statement of a third party; (ii) that the aforesaid addition was in itself backed by a process of estimation; (iii) that mere addition

Gheverchand Damji Haria, Mumbai vs. ACIT 21(3), Mumbai

Accordingly the claim is quite justifiable hence liable to be allowed

ITA 300/MUM/2017[2011-12]Status: DisposedITAT Mumbai19 Sept 2018AY 2011-12

Bench: Shri B. R. Baskaran, Am & Shri Amarjit Singh, Jm

For Appellant: Shri Chhangur S. ChauhanFor Respondent: Shri V. Vidhyadhar(DR)

Section 143(1)Section 143(2)Section 148Section 40Section 40A(3)

appeal before the CIT(A) who partly allowed the claim of the assessee but restricted the claim to the extent of 25% of the bogus purchase and advance to the tune of Rs.3,47,000/-. Feeling aggrieved, the assessee has filed the present appeal before us. ISSUE ... disallowed and was added to the income of the assessee. The Assessing Officer restricted the addition to the extent of 100% of the bogus purchase. On appeal, the CIT(A) has restricted the addition of bogus purchases to the extent of 25%. The Ld. Representative of the assessee has argued

Loot India P.Ltd, Mumbai vs. DCIT 7(3), Mumbai

In the result, all the appeals by the assessee and Revenue are partly allowed

ITA 3025/MUM/2015[2009-10]Status: DisposedITAT Mumbai18 Sept 2018AY 2009-10

Bench: Shri Shamim Yahya, Am & Shri Sandeep Gosain, Jm

For Appellant: Shri R. P. Meena & Shri Sridhar E

Section 1Section 139(5)Section 147

year 2009-10 and 2010-11 is that the ld. CIT(A) erred in confirming the addition made by the A.O. on account of bogus purchase without appreciating the factual evidence. On this issue, the addition was made on account of bogus purchases by the A.O. pursuant to the information ... received from the Sales Tax Department regarding the bogus purchase. In this regard, the submission of the assessee is that the assessee was not in a position to submit the complete details before the A.O. That the complete details were submitted before the ld. CIT(A) who has not properly

Income Tax Officer vs. Ranjeet Suresh Ghate, Aurangabad

In the result, the appeal of Revenue is dismissed

ITA 237/PUN/2017[2011-12]Status: DisposedITAT Pune17 Sept 2018AY 2011-12

Bench: Shri D. Karunakara Rao, Am & Shri Vikas Awasthy, Jm

For Appellant: Shri Pramod ShingteFor Respondent: Shri Achal Sharma

Section 143(1)Section 143(3)

genuine. The Assessing Officer has made addition merely on the basis of presumptions and thus, deleted the entire addition made on account of bogus purchases. Against the order of Commissioner of Income Tax (Appeals), the Revenue is in appeal before the Tribunal assailing the findings of First Appellate Authority ... grounds : “1. Whether Ld. CIT(A)-2, Aurangabad was right deleting the entire addition of Rs.36,79,125/- which was 12% of the total bogus purchase of Rs.3,06,59,371/-. 3 ITA No. 237/PUN/2017, A.Y. 2011-12 2. Whether Ld. CIT(A)-2, Aurangabad was right in holding bogus

The ITO, Ward-4(2)(5), Ahmedabad vs. M/S. Shubh Construction, Ahmedabad

In the result, the appeal of the revenue is dismissed

ITA 1736/AHD/2016[2012-13]Status: DisposedITAT Ahmedabad17 Sept 2018AY 2012-13

For Appellant: NoneFor Respondent: Shri V.K. Singh, Sr. D.R

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

deleting the addition of R/1,08,94,360/-out of the total addition made of Rs.1,24,50,697/- on account of bogus purchases: I.T.A No. 1736/Ahd/2016 A.Y. 2012-13 Page No 2 ITO vs. M/s. Shubh Construction 2. On the facts and in the circumstances of the case ... appellant, nothing was submitted before the AO to prove the genuineness of these purchases, therefore, the AO is correct in holding these as bogus purchases. However, the additions made to the extent of total purchases of Rs.1,24,50,697/- cannot be justified for the reason that the appellant

Jyoti Pipes Pvt. Ltd., Ahmedabad vs. The Income Tax Officer, Ward-4(2), Ahmedabad

The appeals of the assessee are partly allowed

ITA 3258/AHD/2015[2010-11]Status: DisposedITAT Ahmedabad17 Sept 2018AY 2010-11

Bench: Shri Pradip Kumar Kedia & Ms. Madhumita Roy

For Appellant: Shri S.N. Divatia, ARFor Respondent: Shri Saurabh Singh, Sr.DR

Section 142(1)Section 147Section 148Section 250

order passed u/s.250 on 10.09.2015 for A.Y. 2009-10 by CIT(A)-2, Abad upholding the addition of ₹2,37,183/- as bogus purchases made by AO is wholly illegal, unlawful and against the principles of natural justice. 1.2. The Ld. CIT(A) has grievously erred ... grievously erred in law and on facts in confirming the addition towards the purchases of ₹ 2,37,183/- from M/s.Siddhivinayak Steel as bogus purchase. 2.2. That in the facts and circumstances of the case as well as in law, the Ld. CIT(A) ought not to have upheld addition towards