“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

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

The appeals of the assessee are partly allowed

ITA 3257/AHD/2015[2009-10]Status: DisposedITAT Ahmedabad17 Sept 2018AY 2009-10

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

Shri Jabarsingh D. Rajpurohit, Mumbai vs. I.T.O. - 19(2)(1), Mumbai

ITA 135/MUM/2018[2009-10]Status: DisposedITAT Mumbai17 Sept 2018AY 2009-10

Bench: Shri Joginder Singh & Shri Rajesh Kumarassessment Year: 2009-10

For Appellant: NoneFor Respondent: Shri S.K. Bepari, Sr. D.R

Section 147

declared by Ld. CIT(A) as against 2 Shri Jabarsingh D. Rajpurohit the addition of Rs. 10,37,461/- being 12.50% of the bogus purchases. 3. At the outset, we would like to mention that the assessee did not appear before the Bench today when the case was called ... facts of the case as the issue is squarely covered by the several decisions of the co-ordinate benches of the Tribunal qua the bogus purchases. After perusing the order of Ld. CIT(A) and after hearing the Ld. D.R., we find that the case of the assessee has been

M/S G.B. Impex, Jaipur vs. Income Tax Officer, Ward-5-3, Jaipur

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

ITA 800/JPR/2018[2011-12]Status: DisposedITAT Jaipur14 Sept 2018AY 2011-12

For Appellant: Shri P.C. Parwal (CA)For Respondent: Shri J.C. Kulhari (JCIT)

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

absence of failure on the part of the assessee to disclose all material facts necessary for assessment, the reopening on the ground of bogus purchases is not permitted. The ld AR has referred to the reasons recorded by the Assessing Officer and submitted that even the Assessing Officer ... basis of information available on record it is gathered that during the year assessee has taken accommodation entry in the nature of bogus purchase. The assessee has obtained accommodation entry from following concern as under:- S. No. Name of concern/ Transaction Group Beneficiary entry provider Amount Name 1. Kothari Impex

M/S G.B. Impex, Jaipur vs. Income Tax Officer, Ward-6-4, Jaipur

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

ITA 624/JPR/2018[2009-10]Status: DisposedITAT Jaipur14 Sept 2018AY 2009-10

For Appellant: Shri P.C. Parwal (CA)For Respondent: Shri J.C. Kulhari (JCIT)

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

Sk Saphiruddi, Purba Medinipur vs. ITO, Ward - 27(4), Haldia, Purba Medinipur

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

ITA 397/KOL/2018[2013-14]Status: DisposedITAT Kolkata12 Sept 2018AY 2013-14

Bench: Sri J. Sudhakar Reddy) Assessment Year: 2012-13

Section 143(2)Section 147Section 148Section 250Section 68

addition was made u/s 68 of the Act, in the computation portion he has made an addition of Rs.35,00,000/-, under the head bogus purchases. Aggrieved the assessee carried the matter in appeal before the ld. First Appellate Authority. 3 Assessment Year: 2012-13 Assessment Year

Sk Saphiruddi, Purba Medinipur vs. ITO, Ward - 27(4), Haldia, Purba Medinipur

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

ITA 180/KOL/2018[2012-13]Status: DisposedITAT Kolkata12 Sept 2018AY 2012-13

Bench: Sri J. Sudhakar Reddy) Assessment Year: 2012-13

Section 143(2)Section 147Section 148Section 250Section 68

Pankaj Enterprises, Mumbai vs. Income Tax Officer 32(2)(5), Mumbai

In the result, assessee’s appeal is partly allowed for statistical purposes

ITA 909/MUM/2018[2012-13]Status: DisposedITAT Mumbai12 Sept 2018AY 2012-13

Bench: Shri Saktijit Dey

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

Section 143(3)Section 147

learned Departmental Representative. ITA no.910/Mum./2018 Assessment year – 2010–11 3. The only dispute in the present appeal relates to disallowance sustained @ 12.5% of bogus purchases of ` 21,41,058. 4. Brief facts are, the assessee a partnership firm is engaged in the business of supply of building materials ... that the assessee has been able to establish the genuineness of the purchases. Therefore, in my considered opinion, estimation of profit @ 12.5% of the bogus purchases as has been done by the 5 Pankaj Enterprises learned Commissioner (Appeals) is fair and reasonable, hence, does not call for any interference. Grounds

R.S.Castor Trading Private Limited, Mumbai vs. Income Tax Officer-2(2), Thane

In the result, appeals of assessee are allowed in part

ITA 1602/MUM/2018[2010-11]Status: DisposedITAT Mumbai12 Sept 2018AY 2010-11

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

Section 143(3)

contentions have been heard and record perused. 3. In both these appeals, assessee is aggrieved for upholding addition of 12.5% in respect of alleged bogus purchases. 4. Rival contentions have been heard and record perused. 5. Briefly stated the facts of the case are that in these cases the returns ... after making the additions of Rs. 75,50,187- & Rs. 38,32,926/-, respectively, on account of bogus purchases. Aggrieved with the orders of the AO, the assessee preferred appeals before CIT(A). 6. By the impugned order, CIT(A) confirmed the action of the AO after following the decision

Anant Halwai P.Ltd, Thane vs. ITO WD 1(1), Mumbai

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

ITA 1192/MUM/2016[2009-10]Status: DisposedITAT Mumbai12 Sept 2018AY 2009-10

Bench: Shri R.C.Sharma, Am & Shri Amarjit Singh, Jm M/S. Anant Halwai Pvt. Ltd., Vs. Ito, Ward – 1(1) Matru Smruti, Kasarhat Bazarpeth, Kalyan 1St Floor, Mohan Plaza, Mahavir Prabhu Chowk, Kalyan (W) Wayale Nagar, Khadak Dist: Thane – 421301 Pada, Kalyan (W) – 421 301 Pan/Gir No.Aadca3392B Appellant) .. Respondent) Assessee By Shri Subodh Ratnaparkhi Revenue By Shri Chaitanya Anjaria Date Of Hearing 05/09/2018 Date Of Pronouncement 12/09/2018 आदेश / O R D E R Per R.C.Sharma (A.M):

Section 143(3)Section 148

income for the year under appeal has been filed on 26.09.2009 declaring total income of Rs.12,52,988/-. AO received certain information regarding bogus purchases made by the assessee, accordingly assessment was reopened by issue of notice u/s.148 on 21/03/2013. The AO made addition of Rs.3,03,713/- by disallowing ... totality of facts and circumstances of the case, we direct the AO to restrict the disallowance to the extent of 15% of the alleged bogus purchases. We direct accordingly. 7. In the result, appeal of the assessee is allowed in part. Order pronounced in the open court on this 12/09/2018

Fdc Ltd, Mumbai vs. DCIT Cir 9(3)(2), Mumbai

In the result, the appeal is partly allowed

ITA 2060/MUM/2017[2009-10]Status: DisposedITAT Mumbai12 Sept 2018AY 2009-10

Bench: Shri Saktijit Dey & Shri Manoj Kumar Aggarwalassessment Year : 2009-10 Fdc Ltd., Dcit Cir 9(3)(2), 142-148 S.V.Road, Mumbai Vs. Jogeshwari (W), Mumbai 400 102

For Appellant: Shri Ajay R Singh & Shri Ravindra PoojaryFor Respondent: Shri Rajeev Gubgotra

Section 133(6)Section 143(3)Section 147Section 148

been cancelled by Sales Tax Authorities. On the basis of the aforesaid information, the Assessing Officer formed a belief that by virtue of such bogus purchases shown by the assessee, income chargeable to tax has escaped assessment. Accordingly, he re-opened assessment u/s. 147 of the Act by issuing notice ... ground raised by the assessee. 6. In ground no. II. (2 & 3), assessee has challenged addition of ` 37,20,244/- on account of bogus purchases. Since we have already discussed the facts relating to this issue earlier, there is no need to repeat them again. Suffice to say, the Assessing

Nageshwar Steel House, Mumbai vs. Income Tax Officer, Ward 19(2)(4), Mumbai

In the result, assessee’s appeal is partly allowed

ITA 960/MUM/2018[2009-10]Status: DisposedITAT Mumbai11 Sept 2018AY 2009-10

Bench: Shri Saktijit Dey

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

Section 133(6)Section 143(1)Section 147Section 148Section 234B

pressed, hence, dismissed. 3. In ground no.5, the assessee has challenged the addition of ` 15,59,175, made on account of bogus purchases. 4. Brief facts are, the assessee a Hindu Undivided Family (HUF) is carrying on business of trading in ferrous and non–ferrous metals. For 2 Nageshwar Steel ... learned Authorised Representative submitted that the assessee has shown a gross profit rate of 3% and it has also paid VAT on the alleged bogus purchases @ 4%. Thus, he submitted, considering the profit ratio in this particular line of business, the maximum addition which can be made

Rishabha Consumer Products Private Limited, Mumbai vs. Income Tax Officer - Ward 15(3)(1), Mumbai

In the result, assessee’s appeal is partly allowed for statistical purposes

ITA 921/MUM/2018[2010-11]Status: DisposedITAT Mumbai11 Sept 2018AY 2010-11

Bench: Shri Saktijit Dey

For Appellant: Ms. Dinkle HariyaFor Respondent: Shri S.K. Bepari

Section 143(1)Section 147

assessee from Laxmi Enterprises remained unproved. However, on the basis of submissions made by the assessee for addition of gross profit @ 11.17% of the bogus purchases the Assessing Officer made addition of ` 8,81,595. Being aggrieved of such addition, though, the assessee filed an appeal before the first appellate ... proper and authentic documentary evidence is entirely on the assessee. Accordingly, I restore the issue relating to the addition made on account of alleged bogus purchases to the file of the Assessing Officer for de novo adjudication after due opportunity of being heard to the assessee. In view

Humcha Impex Private Limited, Kolkata vs. ITO, WD-12(3), Kolkata

In the result, the appeal of the assessee is treated as allowed for statistical purpose

ITA 1413/KOL/2016[2009-10]Status: DisposedITAT Kolkata10 Sept 2018AY 2009-10

Bench: Shri P.M. Jagtap, Am & Shri A.T. Varkey, Jm] I.T.A. No. 1413/Kol/2016 Assessment Year: 2009-10 Humcha Impex Pvt. Ltd.....................…………………………………………..........................Appellant P-17, Kalakar Street, 3Rd Floor, Kolkata – 700 007. [Pan: Aabcc 3596 K] Ito Ward 12(3) Kolkata.............................................................................................Respondent P-7, Chowringhee Square, Kolkata – 700 069. Appearances By: Shri Saurabh Bagaria & Debosmita Mitra Advocate, Appearing On Behalf Of The Assessee. Shri Kapil Mondal, Jcit, Sr. Dr Appearing On Behalf Of The Revenue. Date Of Concluding The Hearing : September 10, 2018 Date Of Pronouncing The Order : September 10, 2018 Order Per P.M. Jagtap, Am This Appeal Filed By The Assessee Is Directed Against The Order Of Ld. Cit(A) – 4, Kolkata Dated 18.01.2018 Whereby He Confirmed All The 3 Additions Made By The Ao To The Total Income Of The Assessee.

Section 10ASection 10BSection 131Section 142(1)Section 143(2)Section 143(3)Section 68

after making the following 3 additions: “1. Disallowance of assessee’s claim u/s 10AA/10B Rs. 44,10,514/- 2. Alleged bogus purchases Rs. 13,56,500/- Rs. 65,00,000/-” 3. Share capital as unexplained cash credit u/s 68 4. Against the order passed ... inclined to accept the contentions of the appellant and the action of AO is upheld. This ground of appeal is dismissed.” Alleged bogus purchases “5.2 I have considered the matter in the light of both the assessment order as well as the submission of the appellant. The AR appearing

Haryana Jewellers P.Ltd, Delhi vs. ITO, Ward-11(1), New Delhi

In the result, the appeal of the assessee stands allowed in

ITA 2315/DEL/2018[2013-14]Status: DisposedITAT Delhi10 Sept 2018AY 2013-14

Bench: Shri N.K.Billaiya & Shri Sudhanshu Srivastavaassessment Year: 2013-14 Haryana Jewellers P. Ltd. Ito, 1157/1124, 1St Floor, Ward-11(1) Kucha Mahajani, Vs New Delhi Chandni Chowk, Delhi-110006 Pan : Aabch7315P Appellant Respondent Assessee By : Shri Repu Daman Thakur, Adv. Revenue By : Shri Ravi Kant Gupta, Sr. Dr Date Of Hearing : 12.06.2018 Date Of Pronouncement :

For Appellant: Shri Repu Daman Thakur, AdvFor Respondent: Shri Ravi Kant Gupta, Sr. DR

Section 132Section 143(2)Section 143(3)Section 153ASection 153A(1)Section 153C

make a disallowance of Rs. 30,01,478/-. In addition, the Assessing Officer also made another addition of Rs. 8,07,272/- being alleged bogus purchase from M/s Parul Diamond Private Limited on the ground of not having been genuinely substantiated. The assessment was completed at an income ... Aggrieved, the assessee approached the learned First Appellate Authority challenging the additions who partly allowed the assessee’s appeal by deleting the alleged bogus purchase of Rs. 8,07,272/- from M/s Parul Diamond Private Limited but partly upheld the disallowance of alleged bogus purchase from M/s Avi Exports

S.T. Electricals Pvt. Ltd., Pune vs. Deputy Commissioner of Income-Tax

In the result, the impugned order is set aside and the appeal of assessee is allowed

ITA 831/PUN/2016[2009-10]Status: DisposedITAT Pune07 Sept 2018AY 2009-10

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

For Appellant: Shri Pramod ShingteFor Respondent: Shri M.K. Verma

Section 139(1)Section 143(3)

thus, additional income of Rs.1,99,38,083/- was disclosed. The additional income declared by the assessee was in respect of alleged bogus purchases. The assessee in assessment year 2010-11 declared the balance amount of alleged bogus purchases i.e. Rs.1,21,36,825/-. The ld. AR submitted that

Shailesh S. Mody, Mumbai vs. Asst CIT 25(1), Mumbai

Appeals stand allowed in terms of our above order

ITA 2254/MUM/2017[2012-13]Status: DisposedITAT Mumbai07 Sept 2018AY 2012-13

Bench: Shri Joginder Singh, Jm & Shri Manoj Kumar Aggarwal, Am

For Appellant: Deepak Tikeker, Ld. ARFor Respondent: V.K.Chaturvedi, Ld. Sr. DR

Section 133(6)Section 143(3)Section 147Section 23(1)(a)Section 271(1)(c)

said properties as Rs.10.13 Lacs and added the same to the income of the assessee. The assessee suffered another addition of alleged bogus purchases of Rs.6.81 Lacs pursuant to receipt of certain information from Sales Tax Department, Maharashtra that the assessee stood benefitted by bogus purchases stated to be made ... penalty has been levied against notional income which was not fair & justified. Reliance has been placed on several judicial pronouncements. Regarding addition of alleged bogus purchases, it has been submitted that the assessee was in possession of primary purchase documents and the payments were through banking channels and the claim

Shailesh S. Mody, Mumbai vs. Asst CIT 25(1), Mumbai

Appeals stand allowed in terms of our above order

ITA 2251/MUM/2017[2009-10]Status: DisposedITAT Mumbai07 Sept 2018AY 2009-10

Bench: Shri Joginder Singh, Jm & Shri Manoj Kumar Aggarwal, Am

For Appellant: Deepak Tikeker, Ld. ARFor Respondent: V.K.Chaturvedi, Ld. Sr. DR

Section 133(6)Section 143(3)Section 147Section 23(1)(a)Section 271(1)(c)

Shailesh S. Mody, Mumbai vs. Asst CIT 25(1), Mumbai

Appeals stand allowed in terms of our above order

ITA 2250/MUM/2017[2010-11]Status: DisposedITAT Mumbai07 Sept 2018AY 2010-11

Bench: Shri Joginder Singh, Jm & Shri Manoj Kumar Aggarwal, Am

For Appellant: Deepak Tikeker, Ld. ARFor Respondent: V.K.Chaturvedi, Ld. Sr. DR

Section 133(6)Section 143(3)Section 147Section 23(1)(a)Section 271(1)(c)

Rajender Parsad, New Delhi vs. ITO, Ward- 63(3), New Delhi

In the result, the appeal filed by the assessee in ITA No

ITA 7060/DEL/2017[2007-08]Status: DisposedITAT Delhi07 Sept 2018AY 2007-08

Bench: Shri N.K. Billaiya[Assessment Year: 2007-08] Rajender Parsad Vs. The I.T.O Prop. M/S. Priya Enterprises Ward 63(3) 5897/2, Basti Harphool Singh, New Delhi Sadar Bazar, Delhi -110006 Pan : Anlpp 8555 H [Appellant] [Respondent]

For Appellant: Shri Naveen Kumar Goyal, CAFor Respondent: Shri Anil Kumar Sharma, Sr. DR

Section 143(1)Section 147Section 148Section 153A

forwarded through CIT, Central Circle 2, New Delhi and CCIT, New Delhi-1. A CD was provided wherein list of parties to whom the bogus purchases /accommodation entries provided by Shri Rakesh Gupta, Vishesh Gupta, Shri Navneet Jain and Shri Vaibhav Jain were appearing. 4. On the basis of information ... details of accommodation entries provided by Sh. Rakesh Gupta & Sh. Vishesh Gupta and Sh. Navneet jain & Sh. Vaibhav Jain in the shape of bogus purchases and directing this office to take necessary action as per section 148 in respect of entries pertaining to A.Y. 2006-07, which were going

Washist Metals, Mumbai vs. Principal Commissioner of Income Tax - 29, Mumbai

In the result, the assessee’s appeal is allowed

ITA 2681/MUM/2018[2010-11]Status: DisposedITAT Mumbai06 Sept 2018AY 2010-11

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

For Appellant: Shri S. L. JainFor Respondent: Shri Abhijit Patankar

Section 263

revenue without properly appreciating the facts of the case that Ld. Assessing Officer made a disallowance of 12.5%, after due enquiries of alleged bogus purchases of Rs.14,97,817/- following certain judicial pronouncements and after considering all the material produced during the course of assessment proceedings ... purchase was made through non genuine party known as tainted purchases and made an addition of Rs. 1,87,227/- (being 12.5% of bogus purchase of Rs. 14,97,817/-) by citing the decision of the Hon'ble High Court' of Gujarat in case of CIT-1 vs. SimitP. Sheth