“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 Cir 28(3), Navi Mumbai vs. Subhash V. Kanekar, Navi Mumbai

In the result, appeals filed by the assessee and the revenue are partly

ITA 1566/MUM/2017[2011-12]Status: DisposedITAT Mumbai22 Nov 2017AY 2011-12

Bench: Shri Mahavir Singh () & Shri G Manjunatha ()

Section 143(2)Section 143(3)Section 50CSection 69C

Income-tax Act, 1961. The 3 Subhash V Kanekar CIT(A) also allowed partial relief to the addition made by the AO towards bogus purchases u/s 69C by directing the AO to estimate net profit of 15% on bogus purchases. Aggrieved by the order of CIT(A), assessee as well ... consideration from grounds 1 & 2 of assessee’s appeal and ground 1 of revenue’s appeal is addition made by the AO towards bogus purchases u/s 69C of the Income-tax Act, 1961. The AO made additions of Rs.94,69,753 u/s 69C of the Act, on the ground that

ITO 5(2)(2), Mumbai vs. Kanak Alloys Steel Ltd, Mumbai

In the result, appeal filed by the revenue is dismissed

ITA 6778/MUM/2016[2009-10]Status: DisposedITAT Mumbai22 Nov 2017AY 2009-10

Bench: Shri Mahavir Singh () & Shri G Manjunatha ()

Section 143(3)Section 145Section 2

Subsequently the case has been reopened u/s 2 147, on the basis of information received from the DGIT (Inv), Mumbai / Sales- tax department regarding bogus purchases made from hawala dealers. The assessment was completed u/s 143(3) r.w.s. 147 on 19-03-2015 determining the total income at Rs.20 ... making additions towards alleged bogus purchases from 8 parties as listed by the AO in his order at paragraph 5 for the reason that the parties were indulging in providing accommodation entries and the assessee failed to justify purchases with any evidence. Aggrieved by the assessment order, assessee preferred appeal

K. Rajnikat & Co., Mumbai vs. ACIT 19(2), Mumbai

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

ITA 5825/MUM/2016[2012-13]Status: DisposedITAT Mumbai22 Nov 2017AY 2012-13

Bench: Shri Saktijit Dey & Shri G. Manjunatha

For Appellant: Shri Vijay Kumar S. BiyaniFor Respondent: Shri Ram Tiwari

common issue in dispute in the present appeals relate to the addition sustained / deleted by the learned Commissioner (Appeals) on account of bogus purchase. 3. Brief facts are, the assessee a partnership firm is engaged in manufacture and trading of gold and diamond jewellery. For the assessment year under consideration ... assessment procedure (BAP) as introduced in the budget speech of Finance Minister on 28th February 2007, he estimated the profit @ 8% of the alleged bogus purchases and made addition of an amount of ` 81,17,498. The assessee challenged the addition before the first appellate authority. 4 M/s. K. Rajnikant

ITO WD 3(1), Thane vs. Omkar Heavy Engineering Ltd, Thane

In the result, appeal filed by the assessee and the appeal filed by the

ITA 5063/MUM/2015[2009-10]Status: DisposedITAT Mumbai22 Nov 2017AY 2009-10

Bench: Shri Saktijit Dey() & Shri G Manjunatha ()

Section 139(1)Section 143(2)Section 147Section 148

bills issued by hawala operators as per the list of Sales-tax department. It was further observed that the assessee is the beneficiary of bogus purchases from M/s Siddhi Vinayaka Steels to the extent of Rs.19,06,352. Therefore, the AO opined that income chargeable to tax had been escaped ... done for chilling plant and the same was sold to Voltas Ltd. Therefore, the purchases from M/s Siddhi Vinayaka Steels cannot be considered as bogus purchases. The AO, after considering relevant submissions of the assessee and 4 M/s Omkar Heavy Engineering Ltd also taking into account the information received from

Karia Developers & Builders, Mumbai vs. ACIT Cir 29(2), Mumbai

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

ITA 2590/MUM/2015[2010-11]Status: DisposedITAT Mumbai22 Nov 2017AY 2010-11

Bench: Shri Saktijit Dey & Shri G. Manjunatha

For Appellant: Shri Rahul HakaniFor Respondent: Shri Ram Tiwari

Section 133(6)Section 251(2)

Appeals), the assessee is in appeal before us. 4. Grounds no.1 to 5 are challenging the addition of ` 95,69,047, on account of bogus purchases. Grounds no.6 to 9 are challenging the addition of ` 14,96,899, towards unverifiable purchases and ground no.10 to 12 are on the addition ... heard rival contentions and perused the material available on record in the light of the decisions relied upon. As far as the issue of bogus purchases from alleged hawala dealers as identified by the Sales Tax Department, it is to be noted that the Assessing Officer has made addition

Angad Exports, New Delhi vs. ACIT, New Delhi

In the result, the appeal of the assessee is allowed

ITA 1461/DEL/2014[2007-08]Status: DisposedITAT Delhi22 Nov 2017AY 2007-08

Bench: Shri N. K. Saini & Ms Suchitra Kambleangad Exports Vs Acit A-14, Central Circle-10 Westend New Delhi New Delhi Aaefa8954D (Respondent) (Appellant)

Section 132Section 132(1)Section 142(1)Section 143(2)Section 143(3)Section 153A

circumstances of the case and in law, the addition of Rs. 46,19,000/- made by the Assessing Officer on account of alleged bogus purchase is beyond the jurisdiction of provisions of Section 153A of Income Tax Act, 1961 and Commissioner of Income Tax (Appeals) erred in not holding ... Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs.46,19,000/- made by the Assessing Officer on account of alleged bogus purchases.” 3. The assessee firm is engaged in the business of manufacturing and export of artificial jewellery. Although the assessee’s registered address is ¾ South Industrial

Manohar P. Kanungo, Mumbai vs. ACIT 19(2), Mumbai

In the result, appeal is allowed in part

ITA 3345/MUM/2017[2009-10]Status: DisposedITAT Mumbai21 Nov 2017AY 2009-10

Bench: Shri R.C.Sharma, Am Shri Manohar P. Kanungo Vs. Acit – 19(2) 297, Tardeo Road Matru Mandir Wille Mansion, 1St Floor Tardeo Road Opp. Bank Of India Mumbai -400 007 Mana Chowk Mumbai – 400 007 Pan/Gir No. Aampk1529K Appellant) Respondent) ..

Section 133(6)Section 143(1)Section 143(3)Section 145(3)Section 148Section 271(1)(c)

availed by assessees to inflate their purchases or expenses and thereby reducing their tax liabilities. As per the information, the assessee also indulged in bogus purchases from two parties, to the tune of Rs.70,92,914/-. Assessment was reopened by issuing notice ... with regard to the purchases and also established co-relation between the corresponding sales. The assessee has declared GP of 11.33% on the alleged bogus purchases. Keeping in view the totality of facts and circumstances of the case, I direct the AO to restrict the addition to the extent

Ashok Kumar G. Arnaiya, Mumbai vs. ITO 19(1)(2), Mumbai

In the result, appeal is allowed in part for statistical purposes

ITA 1606/MUM/2017[2007-08]Status: DisposedITAT Mumbai21 Nov 2017AY 2007-08

Bench: Shri R.C.Sharma, Am Ashok Kumar G. Arnaiya Vs. Ito 19 (1)(2), Mumbai 32/34, 2Nd Floor Keshav Bhavan 1St Carpenter Street Mumbai- 400 004 Pan/Gir No.Adfpa0906R Appellant) Respondent) ..

Section 143(3)Section 145(3)Section 147Section 148Section 151

Mumbai has erred in sustaining addition of Rs. 29,75,571/- being 12.5% of Rs. 2,38,04,569/- i.e. alleged bogus purchases, merely on surmises and conjectures. 2. Rival contentions have been heard and record perused. 3. Facts in brief are that the assessee is an individual. The assessee ... merit of the addition, I found that both AO and CIT(A) has given cogent reasons for estimating profit at 12.5% of the bogus purchases. However, with regard to the legal ground for reopening, I found that assessee has not supplied reasons for reopening the assessment. I also found that

Hemant R. Sanghavi, Mumbai vs. Asst CIT 16(2), Mumbai

In the result the assessee appeal is dismissed

ITA 178/MUM/2016[2009-10]Status: DisposedITAT Mumbai20 Nov 2017AY 2009-10

Bench: Shri R.C.Sharma, Am & Shri Ram Lal Negi, Jm Shri Hemant R. Sanghavi Vs. Asst. Cit 16(2) R.No.210, 2Nd Floor D-502, Kukreja Palace Vallabh Baug Lane Matru Mandir, Extension-Ghatkopar (E) Tardeo Road Mumbai – 400 075 Mumbai – 400 007 Pan/Gir No.Aagps4816C Appellant) .. Respondent) Asst. Cit 19(1) Vs. Shri Hemant R. Sanghavi 2Nd Floor, Matru Mandir 411, Arihant Building, 4Th Floor, Ahmedabad Street Tardeo Road, Mumbai – 400 007 Carnac Bunder, Mumbai – 400 009 Pan/Gir No. Aagps4816C Appellant) .. Respondent)

Section 143(3)Section 148

Shri Hemant R. Sanghavi 2. In the appeals so filed by assessee and revenue are relating to addition on account of bogus purchases. The AO has made an addition of 100% bogus purchases whereas CIT(A) has reduced it to the extent of 7.5%. 3. We have considered rival contentions ... Assessment was reopened u/s 148 of the Act on the basis of the information received that the assessee was involved in making bogus purchases through hawala dealers and on enquiry the address of the parties were incorrect and also such parties were not traceable. The Assessment was completed

Rinki Petrochem Pvt. Ltd., Vadodara vs. The CIT(A)-2, Baroda

Appeal is partly allowed

ITA 861/AHD/2016[1995-96]Status: DisposedITAT Ahmedabad17 Nov 2017AY 1995-96

Bench: Shri N.K. Billaiya & Shri S. S. Godara)

For Appellant: Shri J.P. Shah, ARFor Respondent: Shri Antony Pariath, Sr. D.R

Section 143(3)

consolidated order has disposed the appeal and the relevant findings read as under:- 13. So far as issue relates to addition on account of bogus purchases involved in ground no. 2 is concerned, the CIT(Appeals) confirmed the action of the Assessing Officer, whereby an addition ... Assessing Officer.” 14. In view of the agreement arrived between the parties (supra), we restrict the addition to the extent of 25% of such bogus purchases and, therefore, assessee’s ground of appeal is partly allowed. 11. Since in all the previous years, the dispute related to the bogus purchases

Rajendra Amratlal Choksi, Mumbai vs. ITO WD 17(3)(1), Mumbai

In the result, the appeal of the assessee is dismissed

ITA 3615/MUM/2017[2009-10]Status: DisposedITAT Mumbai17 Nov 2017AY 2009-10

Bench: Shri D.T.Garasia, Jm & Shri Rajesh Kumar, Am

For Appellant: Shri Rajesh MundraFor Respondent: Shri Purushottam Kumar

Section 143(3)Section 147Section 148

Rs.7,33,67,528/- were non-genuine and sustaining the addition to the tune of Rs.25,67,863/- being 3.5% of the bogus purchases. 3. Facts of the case are that the case of the assessee was assessed u/s 143(3) of the Act vide order dated 30.11.2011 assessing ... reply of the assessee did not find favour with the AO and he ultimately applied GP at the rate of 5% of the bogus purchases by treating the same as non-genuine thereby making the addition of Rs.36

DCIT Cen CC 7(2), Mumbai vs. D.S.Gupta Construction P.Ltd, Mumbai

In the result, the appeal of the assessee is partly allowed and that of revenue stands dismissed

ITA 4734/MUM/2015[2010-11]Status: DisposedITAT Mumbai17 Nov 2017AY 2010-11

Bench: Shri D.T.Garasia, Jm & Shri Rajesh Kumar, Am आमकय अऩीर सं./ I.T.A. No.4618/Mum/2015 (निर्धारण वषा / Assessment Years :2010-11) M/S D.S.Gupta Construction Pvt Ltd, Dy.Commissioner Of Income (Presently Known As M/S Dsg Tax-8(1), Corporation Pvt.Ltd) Mumbai फनाभ/ 306/307- A – Wing, Oberoi Chambers, Vs. New Link Road, Opp Sab Tv, Andheri (W), Mumbai-400053 (अऩीराथी /Appellant) (प्रत्मथी / Respondent) आमकय अऩीर सं./ I.T.A. No.4734/Mum/2015 (निर्धारण वषा / Assessment Years : 2010-11) Dy.Commissioner Of Income Tax- M/S D.S.Gupta Construction Pvt Ltd, Central Circle 7(2), (Presently Known As M/S Dsg R.No.655, Aayakar Bhavan, Corporation Pvt.Ltd) M.K.Road, फनाभ/ 306/307- A – Wing, Mumbai-400020 Vs. Oberoi Chambers, New Link Road, Opp Sab Tv, Andheri (W), Mumbai-400053 (अऩीराथी /Appellant) (प्रत्मथी / Respondent) Pan: Aaacd5064G अऩीराथी की ओय से / Revenue By : Shri V Vidhyadhar प्रत्मथी की ओय से/Assessee By : Shri Mani Jain

For Appellant: Shri Mani JainFor Respondent: Shri V Vidhyadhar

Section 133ASection 40A(3)

appeal No. 2 to 5 is in respect of part confirmation by the CIT(A) of addition to the tune of 12.5% of the bogus purchases by the ld. CIT(A) as against the disallowance of Rs, 6,85,73,276/- the entire bogus purchases ... came up before this Tribunal in assessee’s other group cases and the Tribunal sustained the addition to the tune of 6% of the bogus purchases. Therefore, the ld.AR prayed that the similar direction be given in this case also. The ld. DR did not place any material to controvert

D.S. Gupta Construction P. Ltd, Mumbai vs. DCIT 8(1), Mumbai

In the result, the appeal of the assessee is partly allowed and that of revenue stands dismissed

ITA 4618/MUM/2015[2010-11]Status: DisposedITAT Mumbai17 Nov 2017AY 2010-11

For Appellant: Shri Mani JainFor Respondent: Shri V Vidhyadhar

Section 133ASection 40A(3)

DCIT Cen Cir 8(4), Mumbai vs. Aarti Jewellers P.Ltd, Mumbai

In the result, the appeal of assessee partly allowed and that of 10

ITA 4651/MUM/2017[2007-08]Status: DisposedITAT Mumbai16 Nov 2017AY 2007-08

Bench: Sri Mahavir Singh, Jm & Sri N.K. Pradhan, Am Aarti Jewellers Pvt. Ltd. The Deputy Commissioner 3Rd Floor, Hormuz Mansion, Of Income Tax, Central Above Symroza Art Gallery, Circle-8(3),Aaykar Bhavan Vs. 72, B.D. Road, Mumbai Mumbai-400 026 Appellant .. Respondent Pan No.Aaaca4468M The Deputy Commissioner Aarti Jewellers Pvt. Ltd. Of Income Tax, Central 3Rd Floor, Hormuz Mansion, Circle-8(4), Aaykar Bhavan, Above Symroza Art Gallery, Maharshi Karve Road, 72, B.D. Road, Mumbai -400 020, Mumbai-400 026 Maharashtra Appellant .. Respondent Assessee By : Rakesh Joshi, Ar Revenue By : Arju Garwlia, Dr

For Appellant: Rakesh Joshi, ARFor Respondent: Arju Garwlia, DR

Section 132(4)Section 143(3)Section 148Section 40A(3)

regards to the order of CIT(A), restricting the addition at ₹ 2,96,65,590/- by applying peak credit to the alleged bogus purchase of ₹ 7,10,73,950/-, which was added by the AO by adopting the peak credit at ₹ 5,46,03,927/-. For this assessee has raised ... well as in law, the learned CIT(A) has erred in confirming the addition of ₹ 2,96,65,590/- on account of alleged bogus purchase, on the basis of peak theory considering 45 days credit period, without considering the facts and circumstances of the case. 2. On the facts

Aarti Jewellers P.Ltd, Mumbai vs. DCIT Cen Cir 8(3), Mumbai

In the result, the appeal of assessee partly allowed and that of 10

ITA 3752/MUM/2017[2007-08]Status: DisposedITAT Mumbai16 Nov 2017AY 2007-08

For Appellant: Rakesh Joshi, ARFor Respondent: Arju Garwlia, DR

Section 132(4)Section 143(3)Section 148Section 40A(3)

ITO 19(3)(1), Mumbai vs. Ramesh J Shah, Mumbai

In the result, the appeal of Revenue is dismissed and the same

ITA 2529/MUM/2017[2009-10]Status: DisposedITAT Mumbai16 Nov 2017AY 2009-10

Bench: Sri Mahavir Singh, Jm & Sri N.K. Pradhan, Am Income Tax Officer-19(3)(1) Shri Ramesh J Shah Matru Mandir, Tardeo Road, Shop No.1, Hira Building, Vs. Mumbai-400 007 1St Parsiwada, Khetwadi Main Rd. Mumbai-400 004 Appellant .. Respondent Pan No. Aaeps7117E Shri Ramesh J Shah Income Tax Officer- (Prop. Jay Steel Corporation) 19(3)(1) Shop No.1, Hira Building, 1 St Matru Mandir, Tardeo Road, Vs. Parsiwada, Khetwadi Main Rd. Mumbai-400 007 Mumbai-400 004 Appellant .. Respondent

For Appellant: Rajesh Chamaria, ARFor Respondent: Aarju Garodia, DR

Section 143(3)

assessee and of Revenue, is as regards to the order of CIT(A) restricting the addition at the rate of 12.5% of the bogus purchases of ₹ 4,62,32,005/- as against profit rate estimated by the AO at 25%. For this assessee has raised following ground ... aforesaid purchases and accordingly, disallowed a sum of ₹ 1,15,58,001/- being 25% of the total of ₹ 4,62,32,005/- of bogus purchases. Aggrieved, assessee preferred the appeal before CIT(A). 5. The CIT(A) after considering the submissions of the assessee held the purchases as bogus

Ramesh J. Shah, Mumbai vs. ITO WD 19(3)(1), Mumbai

In the result, the appeal of Revenue is dismissed and the same

ITA 1509/MUM/2017[2009-10]Status: DisposedITAT Mumbai16 Nov 2017AY 2009-10

For Appellant: Rajesh Chamaria, ARFor Respondent: Aarju Garodia, DR

Section 143(3)

Parag Anil Phirke, Thane vs. ITO WD 2(3), Kalyan

In the result appeals are allowed in part

ITA 4045/MUM/2017[2011-12]Status: DisposedITAT Mumbai15 Nov 2017AY 2011-12

Bench: Shri R.C.Sharma, Am Ita No.4046/Mum/2017 (Assessment Year :2010-11) M/S. Parag Anil Phirke Vs. Ito Wd 2(3) Prop. Of M.S. Metabed Industries Kalyan Plot No. 244, Neelkamal Sarvodaya Nr. Amp. Gate Ambernath Thane (W)-421501 Pan/Gir No.Ajjp7085N Appellant) .. Respondent)

Section 133(6)Section 143(3)

erred in facts and in law by disallowing a sum of Rs. 2,18,185/-, being 25% of the alleged bogus purchases (of Rs. 8,72,7407-), as inflated purchases made from unverifiable parties, which is without any basis as such. b. The Ld. CIT (A) has erred in ignoring ... produce the parties for cross examination. Therefore, the AO added back purchases of Rs,8,72,740/- to the income of the assessee as bogus purchases. 5. By the impugned order, CIT(A) confirmed the disallowance to the extent of 25% of the alleged bogus purchases, against which assessee

ACIT 24(3), Mumbai vs. Ramesh Ramswarupdas Jindal, Mumbai

In the result, the appeals filed by the Revenue are dismissed

ITA 3096/MUM/2017[2013-14]Status: DisposedITAT Mumbai15 Nov 2017AY 2013-14

Bench: Shri C.N. Prasad, Hon'Ble & Shri N.K. Pradhan, Hon'Ble

For Appellant: Shri Haridas BhattFor Respondent: Shri Saurabh Kumar Rai

Section 132(4)Section 143(3)

Assessing Officer has relied on the information received from DGIT(Inv), Mumbai regarding the details of accommodation entries provided in the nature of bogus purchases/ sale bills and unsecured loans by Shri Pravin Kumar Jain Group. Further the Assessing Officer has stated in the order that DGIT(Inv) has carried

ACIT 24(3), Mumbai vs. Ramesh Ramswarupdas Jindal, Mumbai

In the result, the appeals filed by the Revenue are dismissed

ITA 3094/MUM/2017[2011-12]Status: DisposedITAT Mumbai15 Nov 2017AY 2011-12

Bench: Shri C.N. Prasad, Hon'Ble & Shri N.K. Pradhan, Hon'Ble

For Appellant: Shri Haridas BhattFor Respondent: Shri Saurabh Kumar Rai

Section 132(4)Section 143(3)