“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

Nehal Hasmukh Shah, Mumbai vs. ITO 24(2)(1), Mumbai

In the result, the appeals are partly allowed

ITA 3520/MUM/2016[2009-10]Status: DisposedITAT Mumbai11 Oct 2017AY 2009-10

Bench: Shri Mahavir Singh () & Shri N.K. Pradhan () Assessment Year: 2009-10 & Assessment Year: 2010-11 & Assessment Year: 2011-12

For Appellant: NoneFor Respondent: Mr. Jayant Kumar &

Section 133(6)Section 143(1)Section 143(3)Section 148Section 69C

ground raised by the assessee in this appeal is that the Ld. CIT(A) erred in sustaining the addition on account of alleged bogus purchases to the extent of 25% of the purchases; he ought to have confined the addition by taking the average gross profit of last ... processed u/s 143(1). The Assessing Officer (AO) received information from the Director General of Income Tax (Inv.) that the assessee had made bogus purchases of Rs.2,25,72,581/- in AY 2009-10, Rs.2,43,30,038/- in AY 2010-11 and Rs.2

Chandrika Himmatlal Shah, Mumbai vs. ITO 32(1)(2), Mumbai

In the result, the appeal is partly allowed

ITA 2833/MUM/2016[2011-12]Status: DisposedITAT Mumbai11 Oct 2017AY 2011-12

Bench: Shri Mahavir Singh () & Shri N.K. Pradhan () Assessment Year: 2011-12 Smt. Chandrika Himmatlal Ito-32(1)(2) Shah,202, Samarpan 2Nd Floor, C-11, Vs. Building, Rokadia Cross Pratyaskar Bhavan, Bkc, Lane, Borivali West, Bandra (E), Mumbai-400092. Mumbai-400051. Pan No. Bppps0023A Appellant Respondent Assessee By : Shri Virag H. Shah, Ar Revenue By : Shri V. Jenardhenan, Dr Date Of Hearing : 01/08/2017 Date Of Pronouncement : 11/10/2017

For Appellant: Shri Virag H. Shah, ARFor Respondent: Shri V. Jenardhenan, DR

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

accounts of these parties were treated as assessee’s income on protective basis. On appeal, the ITAT restricted the addition on account of alleged bogus purchases at 25% i.e. Rs.73,23,322/- of the total purchases amounting to Rs.2,92,93,288/-. On further appeal, the Hon’ble High Court ... modified the order of the Tribunal and directed for addition of entire bogus purchases. After hearing the counsels, the Hon’ble Supreme Court dismissed the SLP filed by the assessee and confirmed 5 the decision of the High Court for addition of entire income on account of bogus purchases

ITO Ward - 1(1), Kalyan vs. Abdul Kayyum Khan, Bhiwandi

In the result, the appeal is dismissed

ITA 2729/MUM/2016[2009-10]Status: DisposedITAT Mumbai11 Oct 2017AY 2009-10

Bench: Shri Mahavir Singh () & Shri N.K. Pradhan () Assessment Year: 2009-10 Ito-1(1), Shri Abdul Kayyum Khan 1St Floor, Mohan Plaza, Vs. M/S Anjur Steel Traders Wayale Nagar, Khadakpada 1105/2-3, Dharni Arcade, Kalyan. Opp. Octroi Naka, Bhiwandi-421302. Pan No. Angpk6700L Appellant Respondent Revenue By : Shri V. Jenardhenan, Dr Assessee By : None Date Of Hearing : 01/08/2017 Date Of Pronouncement : 11/10/2017

For Appellant: NoneFor Respondent: Shri V. Jenardhenan, DR

Section 143(2)Section 144Section 148

facts and in the circumstances of the case, the Ld. CIT(A) has erred in giving relief to the assessee out of total bogus purchases even though- Shri Abdul Kayyum Khan 2 i. The assessee could not produce primary evidences like Octroi Receipts, Delivery Challan etc. evidence to prove ... order of ITAT, Pune in ITA No. 1411-1415 dated 20.02.2015 in the case of M/s Kolte Patil Developers Ltd. wherein 100% addition of bogus purchases was confirmed. 3. The order of the Ld. CIT(A) may be vacated and that of the Assessing Officer may be restored. 3. Briefly

ITO 26(3)(5), Mumbai vs. Yogesh C. Kuruba, Mumbai

In the result, the appeal is allowed for statistical purposes

ITA 2706/MUM/2016[2011-12]Status: DisposedITAT Mumbai11 Oct 2017AY 2011-12

Bench: Shri Mahavir Singh () & Shri N.K. Pradhan () Assessment Year: 2011-12 Ito-26(3)(5) Shri Yogesh C. Kuruba Room No. 504, C-11, 5Th Vs. B/4, Tower No. 1, Kurla Floor, Pratyakshakar Kamgar Chsl, Kurla (E) Bhavan, Bkc, Bandra (E) Mumbai-400024. Mumbai-400051. Pan No. Agepk8433D Appellant Respondent Revenue By : Shri V. Jenardhenan, Dr Assessee By : Shri Rajesh B. Gupte, Ar Date Of Hearing : 01/08/2017 Date Of Pronouncement : 11/10/2017

For Appellant: Shri Rajesh B. Gupte, ARFor Respondent: Shri V. Jenardhenan, DR

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

this appeal is that the Ld. CIT(A) erred in deleting the addition of Rs.43,40,426/- made by the AO on account of bogus purchases. The 2nd ground of appeal is that the Ld. CIT(A) erred in not considering that the assessee failed to establish the genuineness ... case are that the Assessing Officer (AO) received information from the Sales Tax Department, Government of Maharashtra that the assessee had made bogus purchases during the impugned assessment year from the following parties: S. Name of the Party VAT TIN Amount No. (Rs.) 1. Maruti Corporation 27200629853V

DCIT 10(1)(1), Mumbai vs. Haldyn Glass Ltd, Mumbai

In the result, appeal of the Revenue is dismissed

ITA 2043/MUM/2015[2010-11]Status: DisposedITAT Mumbai11 Oct 2017AY 2010-11

Bench: Shri G.S. Pannu, Hon'Ble & Shri C.N. Prasad, Hon'Ble

For Appellant: Shri Piyush ChaturvediFor Respondent: Shri Ram Tiwari

Section 143(3)Section 28Section 37(1)Section 41(1)

erred in deleting the addition of 2 ITA.No.2043/MUM/2015 (A.Y: 2010-11) M/s. Haldyan Glass Ltd., ₹.1,08,80,401/- on account of bogus purchases by holding that the loss on account of embezzlement is an allowable loss without appreciation that the said loss was not wholly and exclusively incurred ... expenditure being the purchases made by the assessee from four parties referred to in Page No.6 of the Assessment Order and treated them as bogus purchases. Further, Assessing Officer disallowed travelling expenses of ₹.15,32,573/- incurred by CFO of the company 3 ITA.No.2043/MUM/2015 (A.Y: 2010-11) M/s. Haldyan

Galaxy Surfactants Ltd, Navi Mumbai vs. DCIT Cir 10(3), Mumbai

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

ITA 1986/MUM/2015[2009-10]Status: DisposedITAT Mumbai11 Oct 2017AY 2009-10

Bench: S/Shri B.R. Baskaran (Am) & Amarjit Singh (Jm)

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

assessee is aggrieved by the decision of the learned CIT(A) in confirming the addition of ` 7.37 lakhs relating to alleged bogus purchases. 2. We heard the parties and perused the record. The assessee is engaged in the business of manufacture and sale of fertilizers, chemicals and paints. The original

ITO 19(2)(5), Mumbai vs. Pushpak Metal Industries, Mumbai

In the result, this appeal filed by the Revenue stands dismissed

ITA 2508/MUM/2017[2011-12]Status: DisposedITAT Mumbai10 Oct 2017AY 2011-12

Bench: Shri Shamim Yahyaआयकर अपील सं./I.T.A. No. 2508/Mum/2017 ("नधा"रण वष" / Assessment Year: 2011-12) Ito-19(2)(5), M/S. Pushpak Metal Industries बनाम/ 2Nd Floor, Matru Mandir, Office No. 13, 2Nd Floor, 16 Khatri Bldg., 2Nd Carpenter Tardeo Road, Mumbai-400 007 Vs. Street Cp Tank, Mumbai-400 004 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. Aalfp 8826 F (अपीलाथ" /Appellant) (""यथ" / Respondent) : अपीलाथ" क" ओर से / Appellant By : Shri/Smt. N. Hemlatha ""यथ" क" ओर से/Respondent By : None सुनवाई क" तार"ख / : 09.10.2017 Date Of Hearing घोषणा क" तार"ख / : 10.10.2017 Date Of Pronouncement आदेश / O R D E R Per Shamim Yahya, A. M.: This Is An Appeal By The Revenue Directed Against The Order By The Commissioner Of Income Tax (Appeals)-29, Mumbai (‘Cit(A)’ For Short) Dated 19.01.2017, Pertaining To The Assessment Year (A.Y.) 2011-12. 2. In This Appeal, The Revenue Is Aggrieved That The Ld. Cit(A) Has Not Sustained 100% Disallowance On Account Of Bogus Purchases. The Grounds Of Appeal Read As Under:-

For Appellant: Shri/Smt. N. HemlathaFor Respondent: None

Section 132Section 133(6)Section 143(1)Section 147

this appeal, the Revenue is aggrieved that the ld. CIT(A) has not sustained 100% disallowance on account of bogus purchases. The grounds of appeal read as under:- 2 ITO vs. M/s. Pushpak Metal Industries 1. "On the facts and circumstances of the case and in law, whether ... time and / or before the hearing of the appeal. 3. The Assessing Officer (A.O.) in this case has made 100% addition on account of bogus purchase amounting to Rs.43,88,326/- from 7 parties. 4. Brief facts of the case are as under: The assessee firm filed its return

Mafatsingh Mansingh Parmar, Thane vs. ACIT Cir 1, Kalyan

In the result, both the appeals filed by the Revenue and appeal filed by the assessee for A

ITA 59/MUM/2017[2009-10]Status: DisposedITAT Mumbai09 Oct 2017AY 2009-10

Bench: S/Shri D.T. Garasia (Jm) & B.R. Baskaran (Am)

Section 154

order passed u/s. 154 of the Act on 5.10.2016. These appeals relate to A.Ys. 2009-10 & 2010-11. Addition relating to bogus purchases made in these two years, having been partially confirmed by the learned CIT(A), both the parties have filed these appeals. 2. We heard the parties ... books of account of both the years and computed suppressed profit by adopting gross profit ratio of 20.98% on the value of alleged bogus purchases. The same worked out to ` 10.53 lakhs and ` 32.80 lakhs in A.Y. 2009-10 & 2010-11 respectively. The learned CIT(A) also applied another criteria

Rajendra Tubes & Fittings, Mumbai vs. ITO WD 19(3)(1), Mumbai

In the result, appeal of assessee is allowed in part

ITA 3431/MUM/2017[2010-11]Status: DisposedITAT Mumbai09 Oct 2017AY 2010-11

Bench: Shri R.C.Sharma, Am M/S. Rajendra Tubes & Fittings Vs. Ito Wd 19(3)(1) 160/162, 3Rd Kumbharwada Matru Mandir Building Mumbai – 400 004 Tardeo, Mumbai – 400 007 Pan/Gir No.Aaffr3990K Appellant) .. Respondent)

Section 133(6)Section 143(3)

action of CIT(A) for deleting the reopening of assessment as well as confirming the addition by estimating profit at 8% of bogus purchases. 3. Rival contentions have been heard and record perused. The AO had information that the assessee had made purchases from the parties to the tune ... year and as well as during the earlier two years, I deem it proper to restrict addition to the extent of 6% of the bogus purchases. I direct accordingly. 3 M/s. Rajendra Tubes & Fittings 6. In the result, appeal of assessee is allowed in part. Order pronounced in the open

Bright Steel Centre, Mumbai vs. ITO 19(1)(2), Mumbai

In the result, appeal of the assessee is dismissed

ITA 3005/MUM/2017[2009-10]Status: DisposedITAT Mumbai09 Oct 2017AY 2009-10

Bench: Shri R.C.Sharma, Am M/S. Bright Steel Centre Vs. Ito 19(1)(2) 72, Cp Tank Road Mumbai 1St Floor, Mumbai – 400 004 Pan/Gir No.Aadf89916F Appellant) .. Respondent)

Section 133(6)Section 143(1)Section 143(3)Section 147Section 148

order passed u/s.143(3) r.w.s. 147 of the IT Act. 2. In this appeal, the assessee is aggrieved for upholding addition of 6.5% of bogus purchases. 3. Rival contentions have been heard and record perused. Facts in brief are that the assessee is a firm, engaged in the business ... Sheth, the reasoning given by the Hon'ble Tribunal, which is confirmed by the High Court, it is stated that 'the malpractice of bogus purchase is mainly to save 10% sales tax etc., It has also been informed that in this industry about 2.5% is the profit margin. Therefore, respectfully

DCIT Cen Cir 2(3), Mumbai vs. Hellios Tubealloys P. Ltd, Mumbai

In the result appeal of the revenue is dismissed whereas Cross

ITA 2791/MUM/2017[2010-11]Status: DisposedITAT Mumbai09 Oct 2017AY 2010-11

Bench: Shri R.C.Sharma, Am Co 146/Mum/2017 (Arising Out Of Ita No.2791/Mum/2017) (Assessment Year :2010-11) Dcit Cen Cir 2(3) Vs. M/S. Hellios Tubealloys R.No.804, 8Th Floor, Pvt. Ltd., Old Cgo Building Formerly Known As M/S. M.K. Road, Sls Tubes Pvt. Ltd.,)Sls Mumbai – 400 020 House,43 1St Carpenter Street, Cp Tank, Mumbai – 400 004 Pan/Gir No. Aalcs1837M Appellant) .. Respondent)

Section 133(6)Section 143(2)Section 143(3)Section 145(3)

matter of order passed u/s.143(3) of the IT Act. 2. In this appeal, revenue is aggrieved for upholding addition of 12.5% on the bogus purchases which was made by the AO at 100% of the bogus purchase. 3. Rival contentions have been heard and record perused. Briefly stated ... applying G.P. rate on entire sales turnover or only on suspected purchases. But, finally he added only the entire amount of suspected bogus purchases of Rs. 59,82,246/-. Thus, the assessment was 3 CO No.146/Mum/2017 M/s. Hellios Tubealloys Pvt. Ltd., completed on an income

Shashi Kumar S. Nair, Thane vs. ITO 19(3)(4)

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

ITA 6811/MUM/2016[2010-11]Status: DisposedITAT Mumbai09 Oct 2017AY 2010-11

Bench: Shri R.C.Sharma, Am Shri Shashi Kumar S. Nair Vs. Ito 19(3)(4) Office 55, Ground Floor Mumbai Wonder Complex Kapurwadi Thane (W) – 400607 Pan/Gir No. Abupn9393G Appellant) Respondent) ..

Section 143(3)

Income-Tax Act, 1961. 2. In this appeal, assessee is aggrieved for upholding addition to the extent of 100% of the bogus purchases. 3. Rival contentions have been heard and record perused. Facts in brief are that information was received by AO from the Maharashtra Sales Tax Department regarding fictitious ... rate already declared by the assessee, I uphold the 4 Shri Shashi Kumar S Nair addition to the extent of 12.5% on such bogus purchases. I direct accordingly. 11. AO has also disallowed on adhoc basis 20% of general expenses and 10% of telephone, motor car and vehicle maintenance expenses

Bhoomi Elegant, Mumbai vs. DCIT 15(3), Mumbai

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

ITA 5563/MUM/2016[2010-11]Status: DisposedITAT Mumbai09 Oct 2017AY 2010-11

Bench: Shri P K Bansal & Shri Pawan Singhassessment Year : 2010-11 Bhoomi Elegant Dcit 15(3) 8Th Floor, Sahara Road,Kaledone, Mumbai Vs. Coldongri, Andheri (E) Mumbai – 400 069

For Appellant: Shri Mahaveer JainFor Respondent: Shri V Vidhyadhar

Section 133(6)Section 41(1)

circumstances of the case, the learned Commissioner of Income Tax (A) erred in directing the Assessing Officer to make disallowance on account of bogus purchase at the rate 12.5% amounting to ` 33,10,253/-” 2. Brief facts of the case are that the assessee filed its return of income ... from whom assessee made purchases to the tune of ` 3,97,800/-. The Assessing Officer treated the sum of ` 2,20,56,872/- as bogus purchases and added it to the income of the assessee. The Assessing Officer also noted sundry creditors outstanding as on 31.03.2010 were M/s. Agni control

ITO WD 3(1), Kalyan vs. Bharat R Valia, Dombivali

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

ITA 5357/MUM/2015[2009-10]Status: DisposedITAT Mumbai09 Oct 2017AY 2009-10

Bench: S/Shri D.T. Garasia (Jm) & B.R. Baskaran (Am)

Section 133(6)Section 145(3)Section 148

Revenue is aggrieved by the decision of the learned CIT(A) in not fully 2 Shri Bharat R. Valia sustaining addition relating to bogus purchases and sales promotion expenses made by the Assessing Officer in all the years under consideration. 5. The assessee is engaged in the business of trading ... being complete and correct, added the amount of Rs. 50,09,091/- to the appellant's income by treating all such purchases as bogus purchases. 6. The appellant in response to this addition submitted that complete name and address of the parties had been supplied to the AO. The copies

Ashtvinayaka Construction, Navi Mumbai vs. JCIT Cir 22(3), Mumbai

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

ITA 3883/MUM/2015[2011-12]Status: DisposedITAT Mumbai09 Oct 2017AY 2011-12

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

For Appellant: Shri Bhadresh DoshiFor Respondent: Shri T A Khan

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

been taken: “1. The Ld. CIT(A) has erred in confirming the action of A.O of adding Rs.39,88,535/- on account of alleged bogus purchases. The said addition of Rs.39,88,535/- may please be deleted. 2. The Ld. CIT(A) has erred in restricting the claim ... no.1 is against the confirmation of the addition of Rs.39,88,535/- by the ld.CIT(A) as made by the AO on account of bogus purchases. During the course of assessment proceedings, the AO found that the assessee has purchased material from three parties viz (a) EMCO Industries,(b) Mercury

DCIT Cir 28(1), Navi Mumbai vs. Ashtavinayaka Construction, Navi Mumbai

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

ITA 3821/MUM/2015[2011-12]Status: DisposedITAT Mumbai09 Oct 2017AY 2011-12

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

For Appellant: Shri Bhadresh DoshiFor Respondent: Shri T A Khan

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

M/S. Tinna Overseas Ltd., New Delhi vs. DCIT, New Delhi

In the result, the ITA No

ITA 5389/DEL/2014[2009-10]Status: DisposedITAT Delhi09 Oct 2017AY 2009-10

Bench: Shri G.D. Agrawal, Hon’Ble & Shri K.N. Chary

Section 132Section 139Section 143(3)Section 153C

addition of Rs. 39,48,963/- on account of disallowance of transportation expenses and a sum of Rs. 30 lacs on account of bogus purchases. On this aspect the facts are that at the time of search a criminal complaint dated 18.12.2008 by one Bhupinder Kumar Sekhri addressed

M/S. Tinna Overseas Ltd., New Delhi vs. DCIT, New Delhi

In the result, the ITA No

ITA 5388/DEL/2014[2008-09]Status: DisposedITAT Delhi09 Oct 2017AY 2008-09

Bench: Shri G.D. Agrawal, Hon’Ble & Shri K.N. Chary

Section 132Section 139Section 143(3)Section 153C

M/S. Tinna Overseas Ltd., New Delhi vs. DCIT, New Delhi

In the result, the ITA No

ITA 5387/DEL/2014[2007-08]Status: DisposedITAT Delhi09 Oct 2017AY 2007-08

Bench: Shri G.D. Agrawal, Hon’Ble & Shri K.N. Chary

Section 132Section 139Section 143(3)Section 153C

M/S. Tinna Overseas Ltd., New Delhi vs. DCIT, New Delhi

In the result, the ITA No

ITA 5386/DEL/2014[2006-07]Status: DisposedITAT Delhi09 Oct 2017AY 2006-07

Bench: Shri G.D. Agrawal, Hon’Ble & Shri K.N. Chary

Section 132Section 139Section 143(3)Section 153C