“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

ACIT 25(1), Mumbai vs. Bharat Gajani, Mumbai

In the result, the appeal of the Revenue is dismissed

ITA 5171/MUM/2014[2007-08]Status: DisposedITAT Mumbai08 May 2017AY 2007-08

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

For Appellant: Shri Suman Kumar, DRFor Respondent: Shri Sanjay Kapadia, AR

Section 133ASection 147

erred in deleting the addition of Rs. 56,87,118/- made by the A.O. on account of bogus purchases. ii. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in relying upon judgements in the case of CIT vs. Nikunj Exim ... existent parties from A.Y. 2007-08 onwards. The break-up of the same is as follows: Sr. No. Assessment Year Amount of Bogus Purchases 1. 2008-09 Rs. 1,54,80,417/- 2. 2009-10 Rs. 7,12,32,813/- 3. 2010-11 Rs. 1,40,17,638/- The fact

ITO, Ward 33(1), Kolkata vs. Saraf Jewels & Co., Kolkata

In the result, the appeal of the Revenue as well as the Cross

ITA 1581/KOL/2016[2007-08]Status: DisposedITAT Kolkata05 May 2017AY 2007-08

Bench: Shri P.M. Jagtap

Section 143(1)Section 143(3)Section 148

grounds raised therein is that the ld. CIT(Appeals) has erred in deleting the addition of Rs.37,90,732/- made on account of alleged bogus purchases by relying on the additional evidence filed by the assessee in violation of Rule 46A(3) of the Income Tax Rules ... material available on record, the ld. CIT(Appeals) deleted the addition of Rs.37,90,732/- made by the Assessing Officer on account of alleged bogus purchases for the following reasons given in paragraph no. 4.2 of his impugned order:- “4.2 In ground no. 3 to 5 the assessee has disputed

Manish Mahiptarai Shah, Bhiwandi vs. ITO 1(2), Kalyan

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

ITA 539/MUM/2017[2010-11]Status: DisposedITAT Mumbai05 May 2017AY 2010-11

Bench: Shri B.R. Baskaran (Am) I.T.A. No. 539/Mum/2017 (Assessment Year 2010-11)

assessee has filed this appeal challenging the order dated 24.11.2016 passed by Ld CIT(A) in partially confirming the addition relating to alleged bogus purchases made in AY 2010-11. 2. I heard the parties and perused the record. The assessee is a wholesale trader in Steel bars, rods ... they provided only accommodation bills without actually supplying the material. Hence the AO treated the above said amount of Rs.11,61,471/- as bogus purchases and disallowed the same. The Ld CIT(A) sustained the addition to the extent of Rs.3,91,493/- by considering the net profit rate/GP rate

Geolife Organics, Mumbai vs. Asst CIT 23(2), Mumbai

In the result, the appeals of all the assessees are allowed in part

ITA 3699/MUM/2016[2009-10]Status: DisposedITAT Mumbai05 May 2017AY 2009-10

Bench: Shri R.C.Sharma, Am & Shri Sandeep Gosain, Jm M/S. Geolife Organics Vs. Acit – 23(2), Mumbai- 301, Marathon Max, 400051 L.B.S.Marg, Opp. Nirmal Lifestyle, Mulund(W), Mumbai – 400 080 Pan/Gir No. Aahfg7722N Appellant) .. Respondent) Shri Vikram N. Chandan, Vs. Ito – 19(3)(5), Mumbai- Shop No.756/54, Nanubhai 400 007 Desai Road, Mumbai – 400 004 Pan/Gir No. Acypc2583N Appellant) .. Respondent) Shri Jabarsingh B Daiya, Vs. Ito – 19(2)(1), Mumbai – R.No.16, 1St Floor, Mulji 400 007 Madhavji Building, 160, C.P.Tank Road, Mumbai – 400 064 Pan/Gir No. Ahypd4454E Appellant) .. Respondent) Shri Rajendra Nemichandji Vs. Ito – 19(3)(1), Mumbai – Chandan, 38, Ground Floor, 400 007 Alankar Building, 245/247, Khetwadi Lane, S.V.P. Road, Mumbai – 400 004 Pan/Gir No. Aeypc6575L Appellant) .. Respondent) M/S. Geolife Organics, Mumbai & Others

Section 14Section 143(3)Section 145(3)Section 234BSection 271(1)(c)

facts and in law in confirming the disallowance made by the Asst. Commissioner of Income tax – 29(1), Mumbai on account of alleged bogus purchases to the extent of Rs.19,51,175/- i.e., 12.50% of total alleged bogus purchases amounting to Rs.1,56,09,397/-. 2. The appellant prays that ... disallowance on account of alleged bogus purchases confirmed by the Hon’ble CIT(A) to the extent of Rs.19,51,175/- may be deleted. 1. (a) On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in upholding the action

Rajen Nanalal Shanghvi, Mumbai vs. ITO - 25(3)(3), Mumbai

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

ITA 703/MUM/2017[2009-10]Status: DisposedITAT Mumbai04 May 2017AY 2009-10

Bench: Shri B.R. Baskaran (Am) I.T.A. No. 703/Mum/2017 (Assessment Year 2009-10)

assessee is aggrieved by the decision of Ld CIT(A) in confirming the addition of Rs.5,39,915/- relating to profit estimated on alleged bogus purchases. 2. The assessee company is engaged in the business of trading in gift articles. The revenue received the information from Sales tax department that

Raju Amarlal Vaswani, Thane vs. ITO WD 2(3), Kalyan

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

ITA 288/MUM/2017[2010-11]Status: DisposedITAT Mumbai04 May 2017AY 2010-11

Bench: Shri B.R. Baskaran (Am)

assessment year 2010-11. The assessee is aggrieved by the decision of Ld CIT(A) in partially confirming the addition made on account of bogus purchases. 2. The assessee is engaged in the business of trading in iron & steel. The revenue got information from the Sales tax department that certain

Sai Sarnam Engineers, Mumbai vs. ITO 2(4), Kalyan

In the result, the appeals filed by the assessee are partly allowed

ITA 285/MUM/2017[2010-11]Status: DisposedITAT Mumbai04 May 2017AY 2010-11

Bench: Shri B.R. Baskaran (Am)

assessee is aggrieved by the decision of Ld CIT(A) in partially confirming the addition made on account of bogus purchases in both the years. 2. The assessee is engaged in the business of manufacturing engineering goods. The revenue got information from the Sales tax department that certain dealers

Deepak Chunilal Bajaj, Mumbai vs. ITO 2(1), Kalyan

In the result, both the appeals filed by the assessee are partly allowed

ITA 284/MUM/2017[2011-12]Status: DisposedITAT Mumbai04 May 2017AY 2011-12

Bench: Shri B.R. Baskaran (Am)

Section 133(6)

assessee is aggrieved by the decision of Ld CIT(A) in partially confirming the addition relating to alleged bogus purchases in both the years. 2. The assessee is engaged in the business of trading in Lubricating oil and greases in his proprietary concern named M/s DNR Corporation. The revenue received ... both the years and direct the AO to sustain the addition to the extent of 12.5% of the alleged bogus purchases. I order accordingly. 6. In the result, both the appeals filed by the assessee are partly allowed. Order has been pronounced in the Court on 4.5.2017. (B.R.BASKARAN) ACCOUNTANT MEMBER

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

In the result, the appeal of the assessee is dismissed

ITA 7003/MUM/2016[2009-10]Status: DisposedITAT Mumbai04 May 2017AY 2009-10

Bench: Shri B.R. Baskaran (Am) I.T.A. No. 7003/Mum/2016 (Assessment Year 2009-10)

Section 14A

assessee is aggrieved by the decision of Ld CIT(A) in confirming the addition of Rs.28,58,433/- relating to profit estimated on alleged bogus purchases. 2. The assessee company is engaged in the business of trading in tubes and fittings. The revenue received the information from Sales tax department ... heard the parties and perused the record. I notice that the assessee has agreed for the addition of 12.5% of the alleged bogus purchases. At the time of hearing, the Ld A.R placed reliance on various case laws to contend that the addition could not have been made

Shubh M L Shah & Sons Steel P.Ltd, Raigad vs. DCIT 10(3), Mumbai

Appeal stands partly allowed

ITA 4457/MUM/2015[2011-12]Status: DisposedITAT Mumbai04 May 2017AY 2011-12

Bench: Shri Mahavir Singh, Jm & Shri Manoj Kumar Aggarwal, Am आयकर अपील सं./I.T.A. No. 4456 & 4457/Mum/2015 (िनधा"रण वष" / Assessment Years: 2009-10 & 2011-12) Shubh M.L. Shah & Sons Steel Deputy Commissioner Of Private Limited Income Tax 10(3) Plot No. 873 Mumbai – 400 020 बनाम/ Nr. Buva Ware House Vs. Service Road Kalamboli Raigad – 400 218 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. Aacck-5531-B (अपीलाथ" /Appellant) (""थ" / Respondent) :

For Appellant: Devendra Jain, Ld. ARFor Respondent: Naveen Gupta, Ld. DR

Section 143(3)Section 147Section 44A

common order of Ld. Commissioner of Income tax (Appeals)-24 [CIT(A)], Mumbai dated 29/05/2015 qua confirmation of certain additions with respect to bogus purchases. Since, common issue is involved in both the appeals and the same spring out of common order of Ld. CIT(A), we proceed to decide ... impugned AY vide Assessing Officer [AO] order dated 26/11/2013 wherein the total income was assessed at Rs.1,56,64,400/- after addition of certain bogus purchases of Rs.39,18,195/-. The original return of income was filed on 28/09/2009 at Rs.1,06,63,715/- which was assessed

Shubh M L Shah & Sons Steel P.Ltd, Raigad vs. DCIT 10(3), Mumbai

Appeal stands partly allowed

ITA 4456/MUM/2015[2009-10]Status: DisposedITAT Mumbai04 May 2017AY 2009-10

For Appellant: Devendra Jain, Ld. ARFor Respondent: Naveen Gupta, Ld. DR

Section 143(3)Section 147Section 44A

DCIT 25(1), Mumbai vs. Shraddha Developers, Mumbai

ITA 5244/MUM/2013[2010-11]Status: DisposedITAT Mumbai04 May 2017AY 2010-11

Bench: Shri Mahavir Singh, Jm & Shri Manoj Kumar Aggarwal, Am आयकर अपील सं./I.T.A. No. 5244/Mum/2013 (िनधा"रण वष" / Assessment Year: 2010-11) Deputy Commissioner Of Shraddha Developers Income Tax 25(1) B-101/102 Pratyakshkar Bhavan Chamunda Apartments बनाम/ Room No. 202, 2Nd Floor Raval Pada Flyover Vs. Bandra Kurla Complex Dashisar (E) Bandra (E) Mumbai-400 068 Mumbai – 400 051 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. Abgfs-8708-Q (अपीलाथ" /Appellant) (""थ" / Respondent) :

For Appellant: V.G. Ginde, Ld. ARFor Respondent: Vishwas Mundhe, Ld. DR

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

Mumbai dated 10/05/2013 qua deletion of addition of Rs.96,26,712/- made by Ld. Assessing Officer [AO] u/s 69C on account of bogus purchases. 2. Facts leading to the dispute are that the assessee, being resident firm, was assessed u/s 143(3) at Rs.3,62,78,100/- for impugned ... vide Assessing Officer [AO] order dated 08/02/2013 after addition u/s 69C qua bogus purchases for Rs.96,26,712/- as against returned income of Rs.2,66,51,387/- e-filed by the assessee on 14/10/2010. The assessee was engaged as builders & developers. During assessment proceedings, the assessee was found to have

Tarun Printing Works P.Ltd, Mumbai vs. ITO 8(3)(1), Mumbai

In the result, the appeal of the assessee is partly allowed

ITA 6961/MUM/2016[2011-12]Status: DisposedITAT Mumbai03 May 2017AY 2011-12

Bench: Shri B.R. Baskaran (Am) I.T.A. No. 6961/Mum/2016 (Assessment Year 2011-12)

Section 133(6)

assessee is aggrieved by the decision of Ld CIT(A) in confirming the addition of Rs.23,95,088/- relating to alleged bogus purchases. 2. The assessee company is engaged in the business of undertaking garment on job work basis. The revenue received the information from Sales tax department that certain ... also failed to show that the assessee could have carried out the job printing works, without consuming the materials covered by the alleged bogus purchases. There is no evidence to show that the payment made to the assessee by way of cheques have flown back to the assessee

Nirav Harshad Sheth, Mumbai vs. ITO 32(3)(4), Mumbai

In the result, the Revenue’s appeal in ITA No

ITA 4878/MUM/2016[2009-10]Status: DisposedITAT Mumbai03 May 2017AY 2009-10

Bench: Sri Mahavir Singh, Jm & Sri Ramit Kochar, Am

Section 143(3)Section 147

sides that in ITA No. 4877 and 4878/Mum/2016 there is no Revenue’s appeal) and one by Revenue is as regards to the bogus purchases whereby application of gross profit rate is challenged. In ITA No. 4877 and 4878/Mum/2016, the assessee have raised the issues that the CIT(A) erred ... confirming the addition made by AO on gross profit rate of 12.5% of the bogus purchases. For this assessee in ITA No. 4877/Mum/2016 raised following ground: - “1. On the facts and in the circumstances of the case and in law, the learned CIT (A) grossly erred in upholding the addition

Harshad V. Sheth, Mumbai vs. ITO 32(1)(5), Mumbai

In the result, the Revenue’s appeal in ITA No

ITA 4877/MUM/2016[2009-10]Status: DisposedITAT Mumbai03 May 2017AY 2009-10

Bench: Sri Mahavir Singh, Jm & Sri Ramit Kochar, Am

Section 143(3)Section 147

ITO 20(3)(5), Mumbai vs. Zahid Abbas Mankad, Mumbai

ITA 4580/MUM/2015[2010-11]Status: DisposedITAT Mumbai03 May 2017AY 2010-11

For Appellant: NoneFor Respondent: Ms.Anupama Singala-DR

Section 133ASection 143Section 143(3)Section 148Section 254(1)

business premise of the assessee,that the AO had made addition of Rs. 91.30 lakhs to the income of the assessee on account of bogus purchases,that the AO had not doubted the genuineness of the sales made by the assessee, that the FAA had partly allowed the appeal filed

Asst CIT 19(3), Mumbai vs. S.V. Jiwani, Mumbai

In the result, departmental appeal is dismissed

ITA 4549/MUM/2015[2009-10]Status: DisposedITAT Mumbai03 May 2017AY 2009-10

Bench: Shri Saktijit Dey, Jm & Shri Manoj Kumar Aggarwal, Am Assessment Year 2009-10 Acit 19(3), M/S. S V Jiwani, 25, 2Nd Khetwani Lane, Mumbai Vs. 2Nd Floor, Narayan Niwas, C P Tank, Goldeval Mumbai- 400 004

For Appellant: Shri Anant PaiFor Respondent: Dr. A K Nayak

Section 143(3)Section 147

department in the present appeal is confined to the decision of the CIT(A) in restricting the addition made on account of alleged bogus purchases to 12.5% of such purchases. 3. Briefly, the facts are assessee - a partnership firm, is engaged in the business of civil construction. For the assessment ... Maharashtra, the AO found that purchases made by the assessee to the tune of `.4,50,08,383/- from twenty three parties are bogus purchases, since such parties, as per the investigation carried out by the Sales Tax Department were found to be hawala dealers providing accommodation entries. Accordingly

Asst CIT 18(1), Mumbai vs. Chetan Pravin Chitalia, Mumbai

In the result, the appeal of Revenue is dismissed

ITA 4524/MUM/2015[2011-12]Status: DisposedITAT Mumbai03 May 2017AY 2011-12

Bench: Sri Mahavir Singh, Jm & Sri Ramit Kochar, Am

Section 143(3)Section 69C

hereinafter ‘the Act’). 2. The only issue in this appeal of Revenue is against the order of CIT(A) restricting the disallowance of bogus purchase by applying profits rate at 12.5%. For this Revenue has raised following four grounds: - “1. On the facts and in the circumstances of the case ... well as on fact by not sustaining addition u/s 69C of Rs 4421 139/- on account of gross value of transaction of bogus Purchases, after having accepted the finding in principle that the purchases were made from undisclosed/ unverifiable/ d Chetan Pravin Chitalia; AY: 11-12 unidentifiable parties

ITO 32(1)(5), Mumbai vs. Harshad V. Sheth HUF, Mumbai

In the result, the Revenue’s appeal in ITA No

ITA 3656/MUM/2015[2010-11]Status: DisposedITAT Mumbai03 May 2017AY 2010-11

Bench: Sri Mahavir Singh, Jm & Sri Ramit Kochar, Am

Section 143(3)Section 147

Satnam Steel Traders, Thane vs. DCIT Cir 1, Mumbai

In the result, appeal of the Revenue is dismissed where the appeal of the assessee is allowed in part

ITA 3555/MUM/2015[2009-10]Status: DisposedITAT Mumbai03 May 2017AY 2009-10

Bench: Shri R.C. Sharma, Am & Shri Ravish Sood, Jm आयकर अपीऱ सुं./I.T.A. No.3555/M/2015 (नििाारण वर्ा / Assessment Year: 2009-2010) फनाभ/ Satnam Steel Traders, Dcit, Circle-1, 1St Floor, Mohan Plaza, Wayle Near Kota Stone, Vs. Kalyan-Bhiwandi Road, Nagar, Khadakpara, Village Rajnoli, Bhiwandi, Kalyan (W) – 421301. Thane – 421302. स्थामी रेखा सं./ Pan : Aagfs8329C (अऩीराथी /Appellant) .. (प्रत्मथी / Respondent) आयकर अपीऱ सुं./I.T.A. No.3618/M/2015 (नििाारण वर्ा / Assessment Year: 2009-2010) Dcit, Circle-1, फनाभ/ Satnam Steel Traders, 1St Floor, Mohan Plaza, Wayle Near Kota Stone, Vs. Nagar, Khadakpara, Kalyan-Bhiwandi Road, Kalyan (W) – 421301. Village Rajnoli, Bhiwandi, Thane – 421302. स्थामी रेखा सं./ Pan : Aagfs8329C (अऩीराथी /Appellant) (प्रत्मथी / Respondent) ..

For Appellant: Shri V.G. GindeFor Respondent: Vinita J Menon, DR

Section 143(3)Section 147

r.w.s 147 of the Income Tax Act, 1961. 2. Both the assessee and the Revenue are aggrieved for addition made on account of bogus purchases. 3. Rival contentions have been heard and record perused. 4. During the course of assessment u/s 143(3) read with section ... amount of purchases in the income of the assessee. By the impugned order, CIT (A) gave relief of 60% and upheld 40% of such bogus purchases. Against this order of the CIT (A), both the assessee and the Revenue are in appeal before us. 5. We have heard the rival