“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

Deputy Commissioner of Income Tax, Delhi vs. Malhotra Cables Pvt Ltd, Delhi

In the result, all the appeals of the assessee as well as the revenue

ITA 1321/DEL/2025[2020-21]Status: DisposedITAT Delhi11 Mar 2026AY 2020-21

Bench: Shri Challa Nagendra Prasad & Shri M. Balaganesh

For Appellant: Shri Gaurav Jain, AdvFor Respondent: Shri Tarun Chanana, Adv

Section 143(3)Section 148Section 149(1)(b)

Rs.3,35,88,000/- received in the bank account of Sh. Rajiv Malhotra and Smt. Aditi Malhotra, treating it as payment against the alleged bogus purchase made by the appellant company resulting in shortfall of copper consumption, without any incriminating material/evidence. 4.4.2 In respect of these grounds, I have perused ... Rs.4.90 crores received in bank account by Sh. Rajiv Malhotra and Smt. Aditi Malhotra respectively during the A.Y. 2016-17, cannot be treated as bogus purchases made by the appellant company. 4.4.6 Based on the submission as well as documents available on record, it is further observed that during

Deputy Commissioner of Income Tax, Delhi vs. Malhotra Cables Pvt Ltd, Delhi

In the result, all the appeals of the assessee as well as the revenue are partly allowed

ITA 1320/DEL/2025[2019-20]Status: DisposedITAT Delhi11 Mar 2026AY 2019-20

Bench: Shri Challa Nagendra Prasad & Shri M. Balaganesh

For Appellant: Shri Gaurav Jain, AdvFor Respondent: Smt Kranti, CIT (DR)

Section 143(3)Section 148Section 149(1)(b)

received in the bank account of Sh. Rajiv Malhotra and Smt. Aditi Malhotra, treating it as payment against the alleged bogus purchase made by the appellant company resulting in shortfall of copper consumption, without any incriminating material/evidence. 4.4.2 In respect of these grounds, I have perused the assessment order ... crores received in bank account by Sh. Rajiv Malhotra and Smt. Aditi Malhotra respectively during the A.Y. 2016-17, cannot be treated as bogus purchases made by the appellant company. 4.4.6 Based on the submission as well as documents available on record, it is further observed that during

Deputy Commissioner of Income Tax, Delhi vs. Malhotra Cables Pvt Ltd, Delhi

In the result, all the appeals of the assessee as well as the revenue are partly allowed

ITA 1319/DEL/2025[2018-19]Status: DisposedITAT Delhi11 Mar 2026AY 2018-19

Bench: Shri Challa Nagendra Prasad & Shri M. Balaganesh

For Appellant: Shri Gaurav Jain, AdvFor Respondent: Smt Kranti, CIT (DR)

Section 143(3)Section 148Section 149(1)(b)

Deputy Commissioner of Income Tax, Delhi vs. Malhotra Cables Pvt Ltd, Delhi

In the result, all the appeals of the assessee as well as the revenue are partly allowed

ITA 1318/DEL/2025[2017-18]Status: DisposedITAT Delhi11 Mar 2026AY 2017-18

Bench: Shri Challa Nagendra Prasad & Shri M. Balaganesh

For Appellant: Shri Gaurav Jain, AdvFor Respondent: Smt Kranti, CIT (DR)

Section 143(3)Section 148Section 149(1)(b)

Deputy Commissioner of Income Tax, Delhi vs. Malhotra Cables Pvt Ltd, Delhi

In the result, all the appeals of the assessee as well as the revenue are partly allowed

ITA 1317/DEL/2025[2016-17]Status: DisposedITAT Delhi11 Mar 2026AY 2016-17

Bench: Shri Challa Nagendra Prasad & Shri M. Balaganesh

For Appellant: Shri Gaurav Jain, AdvFor Respondent: Smt Kranti, CIT (DR)

Section 143(3)Section 148Section 149(1)(b)

Malhotra Cables Private Limited, New Delhi vs. DCIT, Centra Circle - 7, New Delhi

In the result, all the appeals of the assessee as well as the revenue are partly allowed

ITA 1108/DEL/2025[2019-20]Status: DisposedITAT Delhi11 Mar 2026AY 2019-20

Bench: Shri Challa Nagendra Prasad & Shri M. Balaganesh

For Appellant: Shri Gaurav Jain, AdvFor Respondent: Smt Kranti, CIT (DR)

Section 143(3)Section 148Section 149(1)(b)

Malhotra Cables Private Limited, New Delhi vs. DCIT, Central Circle -7, New Delhi

In the result, all the appeals of the assessee as well as the revenue are partly allowed

ITA 1107/DEL/2025[2020-21]Status: DisposedITAT Delhi11 Mar 2026AY 2020-21

Bench: Shri Challa Nagendra Prasad & Shri M. Balaganesh

For Appellant: Shri Gaurav Jain, AdvFor Respondent: Smt Kranti, CIT (DR)

Section 143(3)Section 148Section 149(1)(b)

Malhotra Cables Private Limited, New Delhi vs. DCIT, Central Circle -7, New Delhi

In the result, all the appeals of the assessee as well as the revenue are partly allowed

ITA 1102/DEL/2025[2023-24]Status: DisposedITAT Delhi11 Mar 2026AY 2023-24

Bench: Shri Challa Nagendra Prasad & Shri M. Balaganesh

For Appellant: Shri Gaurav Jain, AdvFor Respondent: Smt Kranti, CIT (DR)

Section 143(3)Section 148Section 149(1)(b)

Malhotra Cables Private Limited, New Delhi vs. DCIT, Central Circle - 7, New Delhi

In the result, all the appeals of the assessee as well as the revenue are partly allowed

ITA 1097/DEL/2025[2021-22]Status: DisposedITAT Delhi11 Mar 2026AY 2021-22

Bench: Shri Challa Nagendra Prasad & Shri M. Balaganesh

For Appellant: Shri Gaurav Jain, AdvFor Respondent: Smt Kranti, CIT (DR)

Section 143(3)Section 148Section 149(1)(b)

JCIT, (OSD), Circle 1(1), Raipur vs. Mahendra Kumar Gupta HUF, Raipur

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

ITA 131/RPR/2026[2011-12]Status: DisposedITAT Raipur10 Mar 2026AY 2011-12

Bench: Shri Partha Sarathi Chaudhuryआयकर अपील सं./Ita No.131/Rpr/2026 "नधा"रण वष" /Assessment Year : 2011-12 The Joint Commissioner Of Income Tax (Osd), Circle-1(1), Raipur (C.G.)

For Appellant: NoneFor Respondent: Dr. Priyanka Patel, Sr. DR

Section 133(6)Section 147

provided to the Ld. CIT(Appeals)/NFAC so that the remand report can be submitted by the A.O since this issue of bogus purchases and accommodation entries involving shell companies has huge impact on the financial economy of the country. 5. I find force in the contention raised ... examination of the facts of the case pertaining to the assessee and since in this case, the issue is with regard to the bogus purchases operated through brokers, intermediaries shell companies which creates a vacuum so far as the legitimate collection of tax is concerned, therefore, it is of utmost

Siddheshwar Gems, Surat vs. ITO, Ward-3(3)(1), Surat

In the result, the appeal of the assessee stands allowed

ITA 860/SRT/2025[2018-19]Status: DisposedITAT Surat09 Mar 2026AY 2018-19

Bench: Shri Sanjay Garg & Shri Narendra Prasad Sinhaआयकर अपील सं /Ita No.860/Srt/2025 िनधा"रण वष" /Assessment Year : 2018-19 Siddheshwar Gems The Ito बनाम Plot No.263 Ward-3(3)(1) / First Floor Surat – 395 001 V/S. Gayatrinagar Housing Society Nr. Rachna Soc. L.H. Road Kapodra, Surat – 395 006 "थायी लेखा सं./Pan: Actfs 1753 M (अपीलाथ(/ Appellant) (!) यथ(/ Respondent) Assessee By : Shri P.M. Jagasheth, Ca Revenue By : Shri Ajay Uke, Sr.Dr सुनवाई की तारीख/Date Of Hearing : 10/12/2025 घोषणा की तारीख /Date Of Pronouncement: 09/03/2026 आदेश/O R D E R Per Sanjay Garg: The Present Appeal Has Been Preferred By The Assessee Against The Order Of The Learned Commissioner Of Income Tax (Appeals), National Faceless Appeal Centre (Nfac), Delhi [Hereinafter Referred To As ‘Cit(A)’] Dated 20/06/2025 Passed U/S.250 Of The Income Tax Act, 1961 (Hereinafter Referred To As ‘The Act’) For The Assessment Years (Ays) 2018-19. 2. The Assessee, In This Appeal, Has Raised The Following Grounds Of Appeal: Siddheshwar Gems Vs. Ito Asst. Year : 2018-19

For Appellant: Shri P.M. Jagasheth, CAFor Respondent: Shri Ajay Uke, Sr.DR

Section 147Section 148Section 250Section 271ASection 68

case, the AO had made the impugned additions merely on the basis of submissions without verifying the records observing that the assessee had made bogus purchases from M/s.Namo Diamonds Pvt. Ltd. He has further demonstrated that, in fact, the assessee did not make the alleged purchases. The assessee, in fact ... without correlating the information on Insight Portal with the Income-tax return of the assessee. The AO had made the addition on account of bogus purchases, whereas, the assessee, in fact, had not made any such purchases. The profit element earned on the sales has already been offered for taxation

Income Tax Officer-19(1)(5), Mumbai vs. Hitesh Khimchand Jain, Mumbai

In the result, appeal filed by the Revenue is allowed

ITA 8731/MUM/2025[2011-12]Status: DisposedITAT Mumbai09 Mar 2026AY 2011-12

Bench: Hon’Ble Shri Sandeep Gosain & Hon’Ble Shri Prabash Shankarincome Tax Officer-19(1)(5), Vs. Hitesh Khimchand Jain Room No. 502, 5Th Floor, 123 East, 1St Flr, Piramal Chambers , Shanti Bhawan, V.P. Lalbaug, Parel, Road Mumbai - 400012 Mumbai - 400004 Pan/Gir No. Afxpb7780C (Applicant) (Respondent) Assessee By None Revenue By Shri Brajendra Kumar (Sr. Dr.) Date Of Hearing 12.02.2026 Date Of Pronouncement 09.03.2026 आदेश / Order Per Sandeep Gosain, Jm: The Present Appeal Has Been Filed By The Revenue Challenging The Impugned Order 06.10.2025 Passed U/S 250 Of The Income Tax Act, 1961 (‘The Act’), By The National Faceless Appeal Centre, Delhi (Nfac) For The Assessment Year 2011-12. The Following Grounds Are Reproduced Below: “1. Whether On The Facts & Circumstances Of The Case & In Law, The Citia) Arred In Restricting Addition On The Alleged Bogus Purchases Without Appreciating The Fact That Ao Made Addition On The Basis Information Was Received From The Sales Department Tax That The Assesses Was Beneficiary Of Hawala Bilis Or Accommodation Entries

Section 250Section 69C

reproduced below: “1. Whether on the facts and circumstances of the case and in law, the CITIA) arred in restricting addition on the alleged bogus purchases without appreciating the fact that AO made addition on the basis information was received from the Sales Department Tax that the assesses was beneficiary ... case and in law, the Ld. CIT(A), erred in restricting the GP rate to the extent of 5%, by estimating the income of bogus Purchases on the basis of comparing of bogus purchases with the purchases in the regular books of accounts ignoring that the fort of procuring bogus

Subhash Murarka, Raipur vs. ITO-1(1), Raipur

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

ITA 525/RPR/2025[2016-17]Status: DisposedITAT Raipur06 Mar 2026AY 2016-17

Bench: Shri Partha Sarathi Chaudhury & Shri Avdhesh Kumar Mishraआयकर अपील सं. / Ita No.525/Rpr/2025 "नधा"रण वष" / Assessment Year : 2016-17 Subhash Murarka C-1/85/186-R7, Swarnabhoomi, Raipur-492 001 (C.G.) Pan: Aeqpm4578P

For Appellant: None (petition filed)For Respondent: Dr. Priyanka Patel, Sr. DR

Section 133A

issue involved in the present appeal is no more “Res-Integra” for the fact that it involves the issue of rice miller and bogus purchases which are sub-judice before the Hon’ble Jurisdictional High Court. She had submitted a list of the cases which are pending before ... miller and that as alleged by the 4 Subhash Murarka Vs. ITO, Ward-1(1), Raipur (C.G.) Department he had obtained the benefit of bogus purchase bills from various agents and hence, the bogus purchase amount @ Rs.25% was added to the total income of the assessee. In this regard

Income Tax Officer, Ward-3(1), Kolkata vs. A J Cast Alloys Private Limited, Howrah

ITA 1685/KOL/2024[2011-12]Status: DisposedITAT Kolkata06 Mar 2026AY 2011-12

Section 132(1)Section 133(6)Section 143(1)Section 147Section 148Section 250Section 69C

deleting the addition to the tune of Rs. 84,83,860/- as made by the AO of Rs. 89,30,379/- on account of bogus purchases. The assessee has also filed petition under Rule 27 of the Income Tax Appellate Tribunal Rules, 1963 challenging the reopening of assessment ... Sanjiw Kumar Singh a well known entry operator which revealed that the assessee is beneficiary accommodation entries in the form of bogus purchases. Accordingly, reasons were recorded that income has escaped assessment to the tune of Rs. 89,30,379/- on account of bogus purchases made from five parties

M/S Jai Shankar Food and Wood Pvt. Ltd., Raipur vs. Income Tax Officer-1(1), Raipur

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

ITA 68/RPR/2026[2016-17]Status: HeardITAT Raipur05 Mar 2026AY 2016-17

Bench: Shri Partha Sarathi Chaudhuryआयकर अपील सं./Ita No.68/Rpr/2026 "नधा"रण वष" /Assessment Year : 2016-17 M/S. Jai Shankar Food & Wood Pvt. Ltd. 1, Chhanta Road, Nawapara, Rajim, Raipur-493 881 (C.G.) Pan: Aabcj5236F

For Appellant: NoneFor Respondent: Dr. Priyanka Patel, Sr. DR

Section 147Section 148Section 69C

brief facts in this case are that as per the information available with the Department, the assessee had received accommodation entries in guise of bogus purchases of Rs.45,79,000/-. Therefore, proceedings u/s. 147 of the Income Tax Act, 1961 (for short ‘the Act’) were initiated and notice ... issue involved in the present appeal is no more “Res-Integra” for the fact that it involves the issue of rice miller and bogus purchases which are sub-judice before the Hon’ble Jurisdictional High Court. She had submitted a list of the cases which are pending before

Asst. Commissioner of Income Tax, Central Circle-1, Mangalore vs. Raj Diamonds, Mumbai

In the result the appeal of the Revenue is dismissed &

ITA 1361/BANG/2025[2018-19]Status: DisposedITAT Bangalore05 Mar 2026AY 2018-19

Bench: Shri Prashant Maharishi & Shri Keshav Dubeyassessment Year : 2018-19

For Appellant: Sri V. Srinivasan, A.RFor Respondent: Sri Subramanian, D.R

Section 132Section 143(1)Section 143(2)Section 144(3)Section 148Section 153CSection 250

given below:- PAN Name Aggregated Transaction Value (Rs.) AAJFM7227J M/s. Raj Diamonds 1,29,19,964 The assessee M/s. Raj Diamonds, reportedly had bogus purchases to the tune of Rs.1,29,19,964/- from the entity M/s. Tanman Jewels Pvt Ltd. Moreover, there was another information available with Income ... case of assessee is not justified. 6.2 The ld. CIT(A) by relying upon the various judicial precedents held that in the case of bogus purchases where sales are accepted, the addition can be made only to the extent of difference between the GP declared by the assessee on normal

Jorss Bullion Pvt Ltd, Mumbai vs. Dy Commissioner of Income Tax -Central Circle 7(1), Mumbai

ITA 4758/MUM/2025[2017-18]Status: DisposedITAT Mumbai04 Mar 2026AY 2017-18

Bench: Hon’Ble Shri Sandeep Gosain& Shri Omkareswar Chidara

Section 69C

erred in deleting the additions made u/s 69C of the Act on account of unexplained expenditure in the form of bogus purchases / operative expenses. It was further submitted that although the AO had recorded clear finding that the purchases were not genuine and had been made through shell entities merely ... addition of Rs. 39,36,03,084/- u/s 69C r.w.s 115BBE of the Act were made thereby treating the said amount as ‘unexplained expenditure / bogus purchases' however the AO had committed “fundamental factual error” by treating the recorded sales as “unexplained purchases”, whereas in fact as per the records

DCIT, Central Circle 7(1), Mumbai vs. Jorss Bullion Private Limited, Mumbai

ITA 4004/MUM/2025[2017-18]Status: DisposedITAT Mumbai04 Mar 2026AY 2017-18

Bench: Hon’Ble Shri Sandeep Gosain& Shri Omkareswar Chidara

Section 69C

Bhairav Tube (India), Mumbai vs. Income Tax Officer Ward 19(1)(2), Mumbai

ITA 5494/MUM/2025[2009-10]Status: DisposedITAT Mumbai02 Mar 2026AY 2009-10

Bench: Hon’Ble Justice (Retd.) C.V. Bhadang & Shri Arun Khodpia, Am

Section 271(1)(c)Section 275(1)(a)

3929/Mum/2018, and the estimated addition of 15% sustained by the ld. CIT(A) has been directed to scaled down at 5% of the bogus purchases. It was the submission that as per settled principle of law, no penalty can be levied when the addition is made on estimation /adhoc basis

Ravindrakumar Amratlal Jain, Mumbai vs. Income Tax Officer Ward-19(3)(1), Mumbai

In the result Assessee’s Appeal, is partly allowed

ITA 3453/MUM/2025[2011-12]Status: DisposedITAT Mumbai02 Mar 2026AY 2011-12

Bench: Shri Narender Kumar Choudhryshri Jagadish

For Appellant: Mr. Dhaval Shah, Ld. ARFor Respondent: Shri Annavaram Kosuri (Sr

Section 143(2)Section 147Section 148Section 250

appeal of the Assessee and distinguishing the judgment in the case of Kanak impex (supra), ultimately restricted the addition @ 5% of the alleged bogus purchases, by observing and holding as under:- “3. The Assessee has claimed that it deals in ferrous and nonferrous metals and during the year under consideration ... Commissioner. The Ld. Commissioner though affirmed the reopening proceedings u/s 147 of the Act, but restricted the addition from 12.5% to 4% of the bogus purchases by taking into consideration the judgment passed by the Hon’ble Tribunal in the case of Kamlesh Bhasali v. ITO [IT Appeal No.591