“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

Parth Buildcon, Gandhinagar vs. NFAC, Delhi, Juris. AO-the ACIT, Circle-Gandhinagar, Gandhinagar

In the result, the appeal of the assessee is allowed for statistical purposes

ITA 1062/AHD/2025[2018-19]Status: DisposedITAT Ahmedabad17 Mar 2026AY 2018-19

Bench: Dr. B.R.R. Kumar, Vice-Shri Tr Senthil Kumar

For Appellant: Shri Karan Shah, ARFor Respondent: Shri Rignesh Das, CIT. DR

Section 133(6)

element, if any, in such transactions. The Hon'ble jurisdictional High Court and various other Courts have consistently held that in cases involving alleged bogus purchases, the entire purchase amount cannot be disallowed. Instead, only the profit element embedded in the alleged inflated purchases is to be brought

ACIT, Circle -20(1), Mumbai vs. Utkarsha Vivek Parkar, Mumbai

In the result appeal filed by the Revenue is dismissed

ITA 6513/MUM/2025[2011-12]Status: DisposedITAT Mumbai16 Mar 2026AY 2011-12

Bench: Shri Saktijit Dey & Shri Makarand Vasant Mahadeokaracit Circle-20(1), Utkarsha Vivek Mumbai Parkar, Room No. 305, 3Rd Vs. 108, A-Wing, Byculla Floor, Piramal Service Industrial Chambers, Parel, Estate, D. K. Cross Mumbai – 400 012. Road, Byculla, Mumbai-400 027 Pan/Gir No. Agjpp4377J (Applicant) (Respondent) Revenue By Shri Nayanjyoti Nath, Ld. Dr Assessee By Ms. Dinkle Hariya, Ld. Ar Date Of Hearing 11.03.2026 Date Of Pronouncement 16.03.2026

Section 133(6)Section 143(1)Section 143(3)Section 147Section 148Section 250Section 271(1)(c)Section 69C

Mumbai based on inputs from the Sales Tax Department, Government of Maharashtra, alleging that the assessee had obtained accommodation entries in the form of bogus purchase bills from certain hawala dealers during the relevant previous year. The information indicated that the assessee had allegedly made purchases aggregating ... entries used to inflate expenditure and suppress profits. The Assessing Officer therefore concluded that the assessee had obtained accommodation entries in the form of bogus purchase bills and treated the entire amount of Rs. 28,28,113/- as unexplained expenditure under section 69C of the Act. The said amount

Nisha Rani, C/O Sahay Enterprises vs. The Income Tax Officer, Ward -1(2), Aayakar Bhawan

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

ITA 434/GTY/2025[2020-2021]Status: DisposedITAT Guwahati13 Mar 2026AY 2020-2021

Bench: Shri Duvvuru Rl Reddy & Shri Rajesh Kumarnisha Rani, I.T.O., Bedi Market, At Road, Ward-1(2), Vs. Guwahati-781001 (Assam) Guwahati. (Appellant) (Respondent) Pan No. Afjpr 7852 P Assessee By : Shri Vishesh Surana, Fca. Revenue By : Shri Santosh Kumar Karnani, Addl. Cit Date Of Hearing: 09/03/2026 Date Of Pronouncement: 13/03/2026 O R D E R

For Appellant: Shri Vishesh Surana, FCAFor Respondent: Shri Santosh Kumar Karnani, Addl

Section 142(1)Section 145(3)Section 147Section 148Section 148ASection 69C

made by the Assessing Officer under Section 69C of the Income Tax Act, 1961 (in short, the Act) on account of bogus purchases by the assessee. 2 Nisha Rani Vs ITO 3. The facts of the case, in brief, are that the assessee filed return of income declaring total income ... dated 30/12/2024. 4. In the appellate proceedings, the ld. CIT(A) affirmed the order of the Assessing Officer by holding that the addition of bogus purchases was rightly 3 Nisha Rani Vs ITO made as unexplained expenditure under Section 69C as the Assessing Officer has concrete information in his possession

Rbz Jewellers Limited, Ahmedabad vs. The Dy.CIT, Circle-3(1)(1), Ahmedabad

In the result, the appeal of the assessee is allowed for statistical purposes

ITA 61/AHD/2026[2023-24]Status: DisposedITAT Ahmedabad13 Mar 2026AY 2023-24

Bench: Shri Siddhartha Nautiyal & Shri Narendra Prasad Sinha

For Appellant: Respondent by: Shri C Dharani Nath, Sr. DRFor Respondent: Shri C Dharani Nath, Sr. DR

Section 132Section 133(6)Section 142(1)Section 143(2)

erred in restricting the disallowance at Rs. 2,25,900/- being 5% of Rs, 45,18,019/- being alleged bogus purchase even when the Ld. CIT(A) had accepted that appellant has submitted necessary evidence to substantiate such purchase and addition made in the assessment order was based upon incorrect ... verifiable. Accordingly, the Assessing Officer treated the purchases as non-genuine and made an addition of Rs.17,25,295/- being 12.5% of the alleged bogus purchases. 5. Aggrieved by the assessment order, the assessee preferred an appeal before the learned Commissioner of Income Tax (Appeals). The assessee challenged the validity

Pbg International Private Limited, New Delhi vs. Income Tax Officer, Delhi

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

ITA 2890/DEL/2024[2016-17]Status: DisposedITAT Delhi13 Mar 2026AY 2016-17

Bench: Shri S. Rifaur Rahman & Shri Vimal Kumarpbg International Private Income Tax Officer, Limited, Ward-19(1), C.R. Building, Cb-4B, Dda Flats, Vs. Delhi-110002. Munirka, Delhi-110067. Pan-Aabcp8752E (Appellant) (Respondent) Assessee By Shri Anil Goyal, Ca Ms. Harpreet Kaur Hansra Sr. Dr Department By 20.01.2026 Date Of Hearing Date Of Pronouncement 13.03.2026 O R D E R Per Vimal Kumar, Jm: This Appeal Filed By The Assessee Is Against Order Dated 29.04.2024 Of The Learned Commissioner Of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (Hereinafter Referred To As 'The Ld. Cit(A)'] Passed U/S 250 Of The Income Tax Act, 1961, [Hereinafter Referred To As 'The Act'] Arising Out Of Assessment Order Dated 25.03.2022 Of The Ld. Assessing Officer U/S 147 R.W.S 144B Of The Act For Assessment Year 2016-17. 2. Brief Facts Of The Case Are That The Assessee Filed His Original Return Of Income On 14.10.2016 Declaring Total Income Of Rs.4,42,670/- Along With Computation Of Income, Auditors' Report & Audited Accounts Of The Assessee. Ld. Ao On Basis Of Incriminating & Tangible Information & After Following Due Process, Re-Opened Pbg International Pvt. Ltd. Vs. Ito

Section 142(1)Section 147Section 148Section 151Section 250Section 68Section 690

deserves to be quashed. 4. Learned CIT(A) has erred in confirming addition of Rs.1,38,32,272/- made u/s 690 for alleged bogus purchases and Rs. 1,47,20,000/- made u/s 68 for alleged bogus sales made PBG International Pvt. Ltd. vs. ITO by the assessee in spite ... bank account of the assessee. 5. Alternatively, the learned AO has erred in passing a high pitched assessment order by adding 100% of alleged bogus purchase and sales without appreciating that alleged bogus purchases Rs. 1.38,32.272 and alleged bogus sales Rs. 1,47,20,000 were set off against