“bogus purchases”

DisallowancesSection 69CSection 69C9,532 judgments

The decision most relied on for bogus purchases is CIT v. Bholanath Poly Fab. Pvt. Ltd. (355 ITR 290), cited in 712 judgments on BharatTax.

Leading authorities on 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.

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.

CIT v. Simit P. Seth

38 Taxmann.com 385 · 2013 · High Court

278

citing judgments

When an assessee obtains accommodation bills for purchases but the corresponding sales are genuine, the addition to income is limited to the gross profit margin embedded in such purchases. This principle acknowledges that the underlying sales were real, but profit was suppressed through bogus invoices.

CIT v. Vijay M. Mistry Construction Ltd.

355 ITR 498 · 2013 · High Court

252

citing judgments

In cases of alleged bogus or hawala purchases where the existence of transactions is not entirely denied, only the profit element embedded in such purchases, and not the entire purchase price, can be added to the assessee's income. The focus is on determining a reasonable profit percentage for such additions.

Judgments citing bogus purchases

Bysani Adinarayaguptha Srinath, Bengaluru vs. Joint Commissioner of Income Tax (OSD), Central Circle-1(3), Bengaluru

In the result, the appeals of the assessee for Assessment Years

ITA 402/BANG/2025[2016-17]Status: DisposedITAT Bangalore09 Oct 2025AY 2016-17

Bench: Shri Waseem Ahmed & Shri Keshav Dubey

For Appellant: Shri Bharadwaj Sheshadri, CA &For Respondent: Shri Shivanad Kalakeri, CIT (DR)

Section 131Section 132Section 132(4)Section 153A

without corroboration has no evidentiary value. 5.4 The learned AR further pointed out that the AO himself adopted inconsistent stands—sometimes stating that alleged bogus purchases resulted in jewellery investments, and at other times alleging that they were used for cash loans. No such jewellery or loans were identified ... other part is impermissible. Reliance was placed on Conor Granito 159 taxmann.com 1209 (ITAT Rajkot), which held that even in fixing a percentage for bogus purchases, there must be a rational basis, and it cannot be arbitrary. 5.7 Finally, the AR submitted that at the highest, if there were doubts

Bysani Adinarayaguptha Srinath, Bengaluru vs. Joint Commissioner of Income Tax (OSD), Central Circle-1(3), Bengaluru

ITA 401/BANG/2025[2015-16]Status: DisposedITAT Bangalore09 Oct 2025AY 2015-16

Bench: Shri Waseem Ahmed & Shri Keshav Dubey

Section 131Section 132Section 132(4)Section 153A

Bysani Adinarayaguptha Srinath, Bengaluru vs. Joint Commissioner of Income Tax(OSD), Central Circle 1(3), Bengaluru

ITA 400/BANG/2025[2014-15]Status: DisposedITAT Bangalore09 Oct 2025AY 2014-15

Bench: Shri Waseem Ahmed & Shri Keshav Dubey

For Appellant: Shri Bharadwaj Sheshadri, CA &For Respondent: Shri Shivanad Kalakeri, CIT (DR)

Section 131Section 132Section 132(4)Section 153A

Bysani Adinarayaguptha Srinath, Bengaluru vs. Joint Commissioner of Income Tax(OSD), Central Circle-1(3), Bengaluru

ITA 399/BANG/2025[2013-14]Status: DisposedITAT Bangalore09 Oct 2025AY 2013-14

Bench: Shri Waseem Ahmed & Shri Keshav Dubey

For Appellant: Shri Bharadwaj Sheshadri, CA &For Respondent: Shri Shivanad Kalakeri, CIT (DR)

Section 131Section 132Section 132(4)Section 153A

Hanumanthappa Pathrera Laxmana, Shivamogga vs. Income Tax Officer, Ward-(1) & Tps, Shimogga

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

ITA 247/BANG/2025[2020-21]Status: DisposedITAT Bangalore09 Oct 2025AY 2020-21

Bench: Shri Narender Kumar Chodhry & Shri Waseem Ahmedassessment Year: 2020-21

For Appellant: Shri Atul K Alur, AdvocateFor Respondent: Shri Shivanand H Kalakeri, JCIT (DR)

Section 145(3)Section 69C

Revenue is in appeal in ITA No. 1066/Bang/2025 against the deletion of the addition of the purchases to the extent of 90% of alleged bogus purchases. 6. Before us, the ld. AR for the assessee filed a paper book having 361 pages and argued that once sales are accepted ... unexplained. The ld. CIT(A) rightly deleted the addition of ₹8.62 crores. We uphold his decision. 8.4 Accordingly, the assessee’s ground on bogus purchases is partly allowed whereas the ground relating to sundry creditors is allowed, and the Revenue’s ground challenging deletion of bogus purchases is dismissed

Income Tax Officer, Ward-1 & Tps, Shivamogga vs. Hanumanthappa Pathrera Laxmana, Shivamogga

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

ITA 1066/BANG/2025[2020-21]Status: DisposedITAT Bangalore09 Oct 2025AY 2020-21

Bench: Shri Narender Kumar Chodhry & Shri Waseem Ahmedassessment Year: 2020-21

For Appellant: Shri Atul K Alur, AdvocateFor Respondent: Shri Shivanand H Kalakeri, JCIT (DR)

Section 145(3)Section 69C

M/S Manikaran Power Ltd, Ranchi vs. ACIT, Circle-2, Ranchi

In the result, the appeal of the assessee in ITA No

ITA 471/RAN/2024[2022-23]Status: DisposedITAT Ranchi08 Oct 2025AY 2022-23

Bench: Shri George Mathan & Shri Ratnesh Nandan Sahayit(Ss)A No. 01/Ran/2025 (Assessment Year: 2022-23) A.C.I.T., Manikaran Power Limited, Central Circle-2, Manikaran Tower, Kilburn Colony, Vs. Ranchi. P.O. Hinoo, Ranchi-834002 (Jharkhand) J.C.I.T. (In Situ), Pan No. Aaecm 4555 F Ranchi. Revenue/ Appellant Respondent/ Assessee Manikaran Power Limited, A.C.I.T., Manikaran Tower, Kilburn Colony, Central Circle-2, Vs. P.O. Hinoo, Ranchi-834002 Ranchi. (Jharkhand) Pan No. Aaecm 4555 F Revenue/ Appellant Respondent/ Assessee

extent of ₹ P a g e 4 | 10 IT(SS)A 01/Ran/2025 & ITA 471/Ran/2025 JCIT Vs. Manikaran Power Ltd. 35,77,52,226/- as bogus purchases. It was a submission that the Assessing Officer had also made the disallowance by invoking the provisions of Section 68 of the Income ... submissions that on appeal, the ld. CIT(A) held that in respect of the issue of bogus purchases, the same could not be considered under Section 68 of the Act and the same was liable to be considered under Section 37(1) of the Act. It was a submission that

Sharmanji Yarns Private Limited, Ludhiana vs. Principal Commissioner of Income Tax-1, Ludhiana

The appeal stand allowed in terms of our above order

ITA 706/CHANDI/2025[2020-21]Status: DisposedITAT Chandigarh08 Oct 2025AY 2020-21

Bench: SHRI LALIET KUMAR (Judicial Member), SHRI MANOJ KUMAR AGGARWAL (Accountant Member)

For Appellant: Shri Ashwani Kumar (CA) -Ld. ARFor Respondent: Smt. Tarundeep Kaur(CIT) – Ld. DR

Section 142(1)Section 143(3)Section 263

closing stock of previous year. However, Ld. AO alleged that the assessee purchased raw material from various parties which were alleged to be bogus purchases. Accordingly, after rejecting assessee’s submissions, Ld. AO disallowed bogus purchases for Rs.88.07 Crores and framed the assessment. 4. Subsequently, Ld. Pr. CIT, upon perusal ... After due consideration thereof, Ld. AO felt satisfied and chose not to make any additions in all these respects except for addition of alleged bogus purchases. 9. Thereafter, again in response to revisionary show-cause notice dated 15-02-2025, the assessee furnished reply on 24-02-2025 (Page

ACIT Central Circle 7 (1), Mumbai vs. Elecmec Engineering & Projects Private Limited, Mumbai

In the result, appeals of the revenue and cross-objections by the assessee are dismissed

ITA 3057/MUM/2025[2017-18]Status: DisposedITAT Mumbai08 Oct 2025AY 2017-18

Bench: Shri Saktijit Dey, Hon’Ble & Shri Narendra Kumar Billaiya, Hon’Ble

For Appellant: Shri Vijay Mehta, A/RFor Respondent: Shri Ritesh Misra, CIT, D/R

Section 153C

well as accommodation bills and misusing LC funding facility. Thereafter, at a total turnover of Rs. 1,54,76,35,288/- and the total bogus purchase with the searched entities as Rs. 1,51,00,14,956/-, as the estimated income of the assessee and made the addition ... further disallowed the administrative expenses since he had already decided that the assessee was engaged in the practice of booking bogus sales and bogus purchase entries from various parties and, therefore, there is not proof for the indirect expenses of Rs. 4,91,355/-. 5.1. The assessee strongly agitated

ACIT Central Circle 7 1, Mumbai vs. Elecmec Engineering & Projects Private Limited, Mumbai

In the result, appeals of the revenue and cross-objections by the

ITA 3056/MUM/2025[2018-19]Status: DisposedITAT Mumbai08 Oct 2025AY 2018-19

Bench: Shri Saktijit Dey, Hon'Ble & Shri Narendra Kumar Billaiya, Hon'Ble

For Appellant: Shri Vijay Mehta, A/RFor Respondent: Shri Ritesh Misra, CIT, D/R

Section 153C

well as accommodation bills and misusing LC funding facility. Thereafter, at a total turnover of Rs.1,54,76,35,288/- and the total bogus purchase with the searched entities as Rs.1,51,00,14,956/-, as the estimated income of the assessee and made the addition of Rs.7 ... further disallowed the administrative expenses since he had already decided that the assessee was engaged in the practice of booking bogus sales and bogus purchase entries from various parties and, therefore, there is not proof for the indirect expenses of Rs.4,91,355/-. 5. 1. The assessee strongly agitated

ACIT Central Circle 7 (1), Mumbai vs. Elecmec Engineering & Projects Private Limited, Mumbai

In the result, appeals of the revenue and cross-objections by the

ITA 3055/MUM/2025[2016-17]Status: DisposedITAT Mumbai08 Oct 2025AY 2016-17

Bench: Shri Saktijit Dey, Hon'Ble & Shri Narendra Kumar Billaiya, Hon'Ble

For Appellant: Shri Vijay Mehta, A/RFor Respondent: Shri Ritesh Misra, CIT, D/R

Section 153C

well as accommodation bills and misusing LC funding facility. Thereafter, at a total turnover of Rs.1,54,76,35,288/- and the total bogus purchase with the searched entities as Rs.1,51,00,14,956/-, as the estimated income of the assessee and made the addition of Rs.7 ... further disallowed the administrative expenses since he had already decided that the assessee was engaged in the practice of booking bogus sales and bogus purchase entries from various parties and, therefore, there is not proof for the indirect expenses of Rs.4,91,355/-. 5. 1. The assessee strongly agitated

Subhash Badriprasad Shahu, Nagpur vs. ITO Ward 4(3), Nagpur

In the result, the appeal filed by the assesee is partly allowed

ITA 421/NAG/2024[2018-19]Status: DisposedITAT Nagpur07 Oct 2025AY 2018-19

Bench: Shri Pavan Kumar Gadalesubhash Badriprasad Shahu, Plot No.84, Near Annapurna Dall Mill, Bagad Ganj, Small Factory Area ……………. Appellant Nagpur 440 008. Maharashtra. Pan – Agqps9660N V/S Income Tax Officer ……………. Respondent Ward–4(3), Nagpur Assessee By :Shri. Abhay Agrawal.A.R. Revenue By :Shri Surjit Kumar Saha.Sr.Dr

For Appellant: Shri. Abhay Agrawal.A.RFor Respondent: Shri Surjit Kumar Saha.Sr.DR

Section 147Section 148Section 250Section 69C

erred in sustaining the addition made by the learned AO of Rs.32,02,225/-towards alleged bogus purchases under section 69C of the Act. 4. Whether on the facts and in law, the learned AO erred in making the disallowance based on suspicions and surmises without considering the documentary evidences ... disclosing a total income of Rs.8,17,450/-. The Assessing Officer has received information from GST authorities that the assessee has obtained accommodation entries/ bogus purchases from M/s. Sanket Steel Enterprises for the F.Y. 2017–18 aggregating to Rs.32,02,255/- which is a nonexistent entity. The Assessing Officer

Rikin Kirit Shah, Mumbai vs. DCIT Central Circle 1(1), Mumbai

In the result, appeal of the assessee is partly allowed

ITA 2495/MUM/2025[2012-13]Status: DisposedITAT Mumbai06 Oct 2025AY 2012-13

Bench: Shri Pawan Singh & Shri Prabhash Shankarrikin Kirit Shah V/S. Deputy Commissioner Of C/O Ca, Himanshu Gandhi, बनाम Income Tax, Central Circle– 16Th Floor, D Wing, Trade 1(1), Room No. 903, 9Th Floor, World Towers, Kamala Pratishtha Bhavan, Old Cgo Mills Compound, Lower Annexe, Maharishi Karve Parel, Mumbai – 400013, Road, Mumbai–400020, Maharashtra Maharashtra स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aljps1842E Appellant/अपीलार्थी .. Respondent/प्रतिवादी

For Appellant: Mr. Himanshu Gandhi, CAFor Respondent: Shri Annavaran Kasuri (Sr.AR)

Section 132Section 143(3)Section 145(3)

declared by it. The ld.CIT(A) observed further that that in this case information was received from Investigation wing Mumbai that appellant had made bogus purchases from various parties P a g e | 5 A.Y. 2012-13 Rikin Kirit Shah, Mumbai amounting ... Jain. Detailed enquiries had been conducted by the Investigation wing that the said group through their entities was indulging in providing accommodation entries on bogus purchases. The Hon’ble ITAT, B Bench, Mumbai, in the combined order dated 06.08.2021 (ITA No. 98-104, 108-114, 2669, 3509/M/2018) in the case

Late Shri Jitendra Nagar Through His L/R Smt. Deepika Nagar, Baran vs. Income Tax Officer Ward Baran, Baran

In the result, appeal of the assessee is allowed

ITA 1382/JPR/2024[2016-2017]Status: DisposedITAT Jaipur01 Oct 2025AY 2016-2017

Bench: The Date Of Hearing.”

For Appellant: Shri Sidharth Ranka, AdvFor Respondent: Shri. Gautam Singh Choudhary, JCIT a

Section 133(6)Section 142(1)Section 144Section 147Section 148Section 148ASection 151Section 250Section 69A

order dated 17.02.2025after considering theaforesaid judgment of Hon’ble Supreme Court in Rajeev Bansal (supra) has held: Reopening of assessment - Period of limitation - Bogus purchases - HELD THAT:- Admittedly, as per facts of the case, dates of the notices issued and the decision in the case of Kachrulal Jitendra Kuma

Income Tax Officer Ward-22(1)(1), Mumbai vs. Gopal Ramchand Kanjani, Mumbaifh

ITA 733/MUM/2025[2012]Status: DisposedITAT Mumbai30 Sept 2025

Bench: Justice (Retd.) C V Bhadang & Ms Padmavathy S, Am

For Appellant: Shri M. Subramaniam, AR

Section 143(1)Section 147Section 148Section 250Section 69C

under:- 4(a). In the grounds, the assessee mainly contested the addition of Rs. 28,21,851/- made by the AO on account of bogus purchase. 4(b). I have considered the facts & circumstances of the case. I have also considered the assessee’s submissions. As per facts ... circumstances, in the interests of revenue and to meet to ends of justice, I hereby treat 10 % of GP as additional income on alleged bogus purchases of Rs. 28,21,851/- which comes to Rs. 2,82,185/-. Accordingly, the assessee’s grounds are hereby partly allowed

Income Tax Officer, Mumbai vs. Pellucid Securities Private Limited, Mumbai

In the result, appeal by the Revenue is dismissed

ITA 2975/MUM/2025[2012-13]Status: DisposedITAT Mumbai30 Sept 2025AY 2012-13

Bench: Shri Amit Shukla & Shri Girish Agrawalassessment Year: 2012-13

For Appellant: Shri Vimal Punamiya, CAFor Respondent: Shri Virabhadra S. Mahajan, Sr. DR

Section 10(38)Section 143(3)Section 147Section 148

under: 1 Whether on the facts and in the circumstances of the case, the Ld. CIT(A) erred in restricting the disallowance of bogus purchases to 12.5% instead of sustaining the full addition of 18.5% made by the Assessing Officer, despite the assessee's failure to substantiate the genuineness

Novelty Power & Infratec Limited, Mumbai vs. DCIT-7(1)(1), Mumbai

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

ITA 2108/MUM/2025[2009-10]Status: DisposedITAT Mumbai30 Sept 2025AY 2009-10

Bench: Shri Narender Kumar Choudhry&

For Appellant: Shri Prateek Jain, Ld. A.RFor Respondent: Shri Leyaqat Ali Aafaqui, Ld. Sr.D.R

Section 144Section 250Section 251Section 251(1)(a)Section 69C

r.w.s. 147 of the Act, has made the additions of Rs. 10,26,000/- and Rs. 7,52,53,265/- on account of bogus purchases u/sec. 69C of the Act. 3. The Assessee, being aggrieved, challenged the said additions by filing first appeal before the Ld. Commissioner, however, despite

DCIT, Circle- 1(2), New Delhi vs. Adventure Resorts and Cruises Pvt. Ltd., New Delhi

In the result, the revenue’s appeal as well Assessee’s cross objection both are dismissed in the aforesaid manner

ITA 5877/DEL/2017[2014-15]Status: DisposedITAT Delhi30 Sept 2025AY 2014-15

Bench: Shri Mahavir Singh & Shri Brajesh Kumar Singhdcit, Circle 1(2), Vs.Adventure Resorts Room No. 368, C.R. Building & Cruises Pvt. Ltd. I.P. Estate, New Delhi 611, Surya Kiran Building, Kg Marg, Connaught Place, New Delhi – 110 001 (Pan:Aaacf6111G) (Appellant) (Respondent) C.O. No.198/Del/2022 (Asstt. Year : 2014-15) Adventure Resorts Vs. Dcit, Circle 1(2) & Cruises Pvt. Ltd. New Delhi 611, Surya Kiran Building, Kg Marg, Connaught Place, New Delhi – 110 001 (Pan: Aaacf6111G) (Appellant) (Respondent Appellant By : None Respondent By :Ms. Harpreet Kaur Hansra, Sr. Dr Date Of Hearing 22.09.2025 Date Of Pronouncement 30.09.2025

For Appellant: NoneFor Respondent: Ms. Harpreet Kaur Hansra, Sr. DR

Section 133(6)Section 139(1)Section 143(2)Section 143(3)

Appeal of the Revenue is as regards the order of the Ld. CIT(A) deleting the addition made by the AO on account of bogus purchases of textile commodities amounting to Rs. 3,82,66,575/-. 3. Brief facts of the case are that assessee is engaged in the business ... unexplained purchases. For this, the AO also recorded that the entire purchases declared by the assessee is fictitious and this bogus purchase is generated to set off against the receipts of the assessee from tourism activities and to reduce the high profit generated from tourism activity. The assessee has adopted

Champa Lal Mehta, Sanchore vs. ITO Ward-2 Jalore, Jalore

In the result, the appeal of the assessee in ITA No

ITA 599/JODH/2024[2010-11]Status: DisposedITAT Jodhpur29 Sept 2025AY 2010-11

Bench: Dr. Mitha Lal Meena, Hon'Ble & Shri Narinder Kumar, Hon'Ble

Section 271(1)Section 271(1)(C)Section 271(1)(c)

ward 19(2)(5) Mumbai, ITA No. 1953/mum/2022 where it was held that - "We find the A.O has made ad hoc disallowance of bogus purchases and has accepted the sales in the books ofaccounts. On appeal, the CIT(A) has restricted the addition considering the profit element ... furnishing inaccurate particulars ofincome under the provisions ofSection 271(1) (c) ofthe Act. The A.O. has not doubted the sales and made disallowance of bogus purchases, and we rely on the ratio of the Honorable Jurisdictional High Court in the case of M/s Nikunj Eximp Enterprises Vs CIT (W.P.No

Champa Lal Mehta, Sanchore vs. ITO Ward-2, Jalore

In the result, the appeal of the assessee in ITA No

ITA 598/JODH/2024[2009-10]Status: DisposedITAT Jodhpur29 Sept 2025AY 2009-10

Bench: Dr. Mitha Lal Meena, Hon'Ble & Shri Narinder Kumar, Hon'Ble

Section 271(1)Section 271(1)(C)Section 271(1)(c)