“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

DCIT 14.1.1, Mumbai vs. Aadi Industries Ltd, Mumbai

In the result, the appeal filed by the revenue is dismissed

ITA 3215/MUM/2024[2010-11]Status: DisposedITAT Mumbai13 Aug 2024AY 2010-11

Bench: Shri Pavan Kumar Gadale & Shri Girish Agrawaldcit – 14(1)(1), Vs. M/S.Aadi Industries Ltd 320/7, Siddhivinayak Room No. 432, 4Th Floor Housing Society, Aayakar Bhavan, Hingwals Lane, M.K.Road, Ghatkopar (East), Mumbai -400020. Mumbai – 400075. Pan/Gir No. Aaacj8256G (अपीलाथ"/Appellant) (""यथ"/Respondent) Appellant By Shri Manoj Kumar Sinha, Sr. Dr Respondent By None सुनवाई क" तार"ख/Date Of Hearing 07.08.2024 घोषणा क" तार"ख/Date Of Pronouncement 12.08.2024 Order Per Pavan Kumar Gadale, Jm: “ The Appeal Is Filed By The Revenue Against The Order Of National Faceless Appeal Centre(Nfac), Delhi / Cit(A) Passed U/Sec143(3) R.W.S263 U/Sec 250 Of The Act. The Revenue Has Raised The Following Grounds Of Appeal:

Section 143(3)

Therefore, this is within the internal procedures laid down by 19. With regard to initiation of revision proceedings on the wrong finding that the bogus purchases were issued by the assessee in reality assessee has only sold. In this regard, Ld. DR submitted that Ld. Pr.CIT has only given

DCIT, Central Cirlce-28, New Delhi vs. Hazoorilal Jewellers Pvt. Ltd., New Delhi

In the result, the appeal of the revenue is dismissed

ITA 432/DEL/2021[2017-18]Status: DisposedITAT Delhi13 Aug 2024AY 2017-18

Bench: Shri M. Balaganesh & Shri Vimal Kumarhazoorilal Jewellers Pvt Ltd, Vs. Acit, M-44, M-Block, Greater Kailash- Central Circle-28, 1, New Delhi New Delhi (Appellant) (Respondent) Pan:Aadch3922L Dcit, Vs. Hazoorilal Jewellers Pvt Ltd, Central Circle-28, M-44, M-Block, Greater New Delhi Kailash-1, New Delhi (Appellant) (Respondent) Pan:Aadch3922L Assessee By : Shri K. Sampath, Adv Shri Varun Kholi, Ca Revenue By: Ms. Anu Krishna Aggarwal, Cit Dr Date Of Hearing 16/05/2024 Date Of Pronouncement 13/08/2024

For Appellant: Shri K. Sampath, AdvFor Respondent: Ms. Anu Krishna Aggarwal, CIT DR

Section 115BSection 127Section 132Section 139(1)Section 139(5)Section 142(1)Section 143(3)Section 153A

complete stock details in its accounting software. The said books of accounts are audited by the tax auditor. No evidence of bogus sales or bogus purchases or non existing cash in the books of accounts was found during the course of search. Merely because the cash holding

Hazoorilal Jewellers Pvt. Ltd., New Delhi vs. ACIT, Central Cirlce-28, New Delhi

In the result, the appeal of the revenue is dismissed

ITA 195/DEL/2021[2017-18]Status: DisposedITAT Delhi13 Aug 2024AY 2017-18

For Appellant: Shri K. Sampath, AdvFor Respondent: Ms. Anu Krishna Aggarwal, CIT DR

Section 115BSection 127Section 132Section 139(1)Section 139(5)Section 142(1)Section 143(3)Section 153A

Assistant Commissioner of Income Tax - 4(2)(1), Mumbai vs. Gehna Jewellers Private Limited, Mumbai

In the result, the appeal of Revenue is dismissed

ITA 1155/MUM/2024[2013-14]Status: HeardITAT Mumbai12 Aug 2024AY 2013-14

Bench: Shri Prashant Maharishi, Am & Shri Rahul Chaudhary, Jm A.Y.2013-14 Acit-4(2)(1), Gehna Jewellers Pvt. Ltd., Mumbai Mumbai

Section 142(1)Section 143(3)Section 144Section 144BSection 147Section 148Section 69C

from the above party. The learned Assessing Officer found that above purchases are bogus and therefore, made an addition of 12.4% of such bogus purchases amounting to Rs. 6,91,801/- under Section 69C of the Act. The Assessing Officer further found that the assessee has further made purchases ... from M/s Seven Star Jewellers, which is also a paper company. He further made addition of 12.5% of the above bogus purchase at Rs. 10,70,032/- Accordingly, the Assessment order under Section 147 was passed on 11.03.2022 resulting into total income

Utkarsh Rai, Kolkata vs. ITO, Ward-43(1), Kol, Kolkata

ITA 1277/KOL/2023[2020-21]Status: DisposedITAT Kolkata09 Aug 2024AY 2020-21

Bench: Shri Sanjay Garg & Shri Rakesh Mishrai.T.A. No.1277/Kol/2023 Assessment Years: 2020-21 Utkarsh Rai……………………………....................…...……………....Appellant C/O S.N. Ghosh & Associates, Advocates 2, Garstin Place, 2Nd Floor, Suite No.203, Off Hare Street, Kol-1. [Pan:Altpr9779F] Vs. Ito, Ward-43(1), Kolkata…….……………............................…..…..... Respondent Appearances By: Shri Somnath Ghosh, Ar & Abhay K. Fulfagar, Fca, Appeared On Behalf Of The Assessee. Shri Abhijit Kundu, Cit-Dr, Appeared On Behalf Of The Revenue. Date Of Concluding The Hearing : August 08, 2024 Date Of Pronouncing The Order : August 09, 2024 आदेश / Order संजय गग", "या"यक सद"य "वारा / Per Sanjay Garg: The Present Appeal Has Been Preferred By The Assessee Against The Order Dated 29.09.2023 Of The National Faceless Appeal Centre [Hereinafter Referred To As ‘Cit(A)’] Passed U/S 250 Of The Income Tax Act (Hereinafter Referred To As The ‘Act’). 2. The Assessee In This Appeal Has Agitated Against The Confirmation Of Addition By The Ld. Cit(A) Of Rs.85,13,92,096/-, Which Has Been Made By The Assessing Officer U/S 69C Of The Act On Account Of Bogus Purchases. 3. The Brief Facts Of The Case Are That The Assessee Is An Individual & Is Engaged In The Business Of Dealing In Bullion Through Its Proprietorship Concern Namely M/S Shewpujan Rai Indrasen Rai & Grandsons. During The Assessment Proceedings, The Assessing Officer Observed That The Assessee Had Shown Purchase Of Bullion Of

Section 250Section 69C

Rs.85,13,92,096/-, which has been made by the Assessing Officer u/s 69C of the Act on account of bogus purchases. 3. The brief facts of the case are that the assessee is an individual and is engaged in the business of dealing in bullion through its proprietorship concern

Naresh Brothers, Mumbai vs. ITO-17(2)(4), Mumbai

In the result, the appeal of the assessee is dismissed

ITA 948/MUM/2024[2012-13]Status: DisposedITAT Mumbai07 Aug 2024AY 2012-13

Bench: Shri Prashant Maharishi, Am & Shri Raj Kumar Chauhan, Jm A.Y.2012-13 Naresh Brothers The Income Tax Officer 407, 4Th Floor, Dhiraj Ward 17 (2) (4) Heritage, Near Bus Depot, Mumbai Vs. Sv Road, Santacruz (W), Mumbai 400054

Section 133(6)Section 142(1)Section 143(3)Section 147Section 148Section 151Section 69C

date of hearing.” 03. The learned Commissioner of Income Tax (A) erred in upholding the addition of Rs. 11,76,965/- being 12.5% of bogus purchases of Rs. 94,15,726/-. 04. Briefly stated the facts of the case that the assessee is a partnership firm who filed its return ... Income Tax (Investigation), Indore on 27.3.2019 that assessee has taken accommodation entries from M/s Indore Impex whose proprietor is Mr. Ajay Maheshwari of bogus purchases. The reasons were recorded, an approval was obtained under section 151 and notice under section 151 and notice under section

ITO-42(1)(1), Mumbai, Income Tax vs. Ashwin Moolchand Madhani, Mumbai

In the result, the appeal by the Revenue is dismissed

ITA 2273/MUM/2024[2009-10]Status: DisposedITAT Mumbai06 Aug 2024AY 2009-10

Bench: Shri Sandeep Singh Karhail & Smt. Renu Jauhri

For Appellant: Shri R.U.JainFor Respondent: Shri R. R. Makwana, Sr. DR

Section 142(1)Section 143(2)Section 143(3)Section 147Section 148Section 250

facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in restricting the addition to 12.5% of the bogus purchases as reduced by the gross profit rate already declared by the assessee on these transactions. 1 | P a g e 2. On the facts ... ground which may be necessary.” 3. The only grievance of the Revenue, in the present appeal, is against restricting the disallowance on account of bogus purchases to the gross profit rate declared by the assessee. 4. The brief facts of the case pertaining to this issue, as emanating from

Income Tax Officer, Mumbai vs. Sameer Mahesh Sachde, Mumbai

In the result, the appeal filed by the Revenue is dismissed and the Cross

ITA 2630/MUM/2024[2011-12]Status: DisposedITAT Mumbai02 Aug 2024AY 2011-12

Bench: Shri B.R. Baskaran & Shri Anikesh Banerjee

For Appellant: Shri Pravin ChavanFor Respondent: Shri Vimal Punmiya

Section 148

Both the parties are aggrieved with the decision of the learned CIT(A) with regard to the income estimated by him on alleged bogus purchases. 2. The facts relating to the issue are stated in brief. The assessee is the proprietor of M/s. Nova Steel Corporation, which is engaged ... rods, wires, etc. The Assessing Officer received information from the DGIT (Inv.), Mumbai that the assessee has availed accommodation entries in the form of bogus purchases from hawala operators. Accordingly, the Assessing Officer reopened the assessment for the year under consideration by issuing notice under section 148 of the Income

Suvidha Buildtech Pvt Ltd, Delhi vs. ACIT Central Circle-13, Delhi

In the result, both the appeals of the assessee are dismissed

ITA 1366/DEL/2023[2013-14]Status: DisposedITAT Delhi02 Aug 2024AY 2013-14

Bench: Shri M. Balaganesh & Shri Anubhav Sharma

For Appellant: NoneFor Respondent: Shri N. K. Bansal, Sr. DR

Section 153CSection 153D

accommodation entries on substantive basis @2% of amount of share capital, share premium, loans and advances and investments and b. commission income @1% on bogus purchases and sales is being made in the hands of Shri Mukesh Kumar. c. protective addition of the same amount is made in the hands ... commission has been computed @2% on the entry provided in the form of share capital, share premium, loans & advances, investments and @1% on bogus purchases and sales.80% of such commission has been considered as income in the hands of Sh. Mukesh Kumar on substantive basis and on protective basis

Suvidha Buildtech Pvt Ltd, Delhi vs. ACIT Central Circle-13, Delhi

In the result, both the appeals of the assessee are dismissed

ITA 1365/DEL/2023[2012-13]Status: DisposedITAT Delhi02 Aug 2024AY 2012-13

Bench: Shri M. Balaganesh & Shri Anubhav Sharma

For Appellant: NoneFor Respondent: Shri N. K. Bansal, Sr. DR

Section 153CSection 153D

Govindam Export, Jaipur, Rajasthan vs. DCIT, Circle-1, Jaipur, Rajasthan

ITA 433/JPR/2024[2003-2004]Status: DisposedITAT Jaipur01 Aug 2024AY 2003-2004

For Appellant: Sh. Vijay Agarwal, CA &For Respondent: Sh. Arvind Kumar, CIT-DR

Section 145(3)Section 153DSection 260ASection 80H

then assessing officer held the assessee has declared purchases from the persons who were simply issuing bogus purchases vouchers and there were no export sales by assessee and only laundering of unaccounted money was made for claiming deduction u/s 80HHC by bringing the foreign remittance in India through Hawala

Govindam Export, Jaipur, Rajasthan vs. DCIT, Circle-1, Jpr, Jaipur, Rajasthan

In the results all the appeals filed by the assessee ITA Nos

ITA 429/JPR/2024[1998-99]Status: DisposedITAT Jaipur01 Aug 2024AY 1998-99

Bench: DR. S. SEETHALAKSHMI (Judicial Member)

For Appellant: Sh. Vijay Agarwal, CA &For Respondent: Sh. Arvind Kumar, CIT-DR

Section 145(3)Section 153DSection 260ASection 80H

then assessing officer held the assessee has declared purchases from the persons who were simply issuing bogus purchases vouchers and Govindam Export vs. DCIT there were no export sales by assessee and only laundering of unaccounted money was made for claiming deduction u/s 80HHC by bringing the foreign remittance ... search operations over the assessee and has not discovered any incriminating material in possession of the assessee, to support that it had made bogus purchase bills or inflated export profit or export profit of the assessee is not genuine. He submitted that return of income filed by the assessee

K L Tambi and Co, Jaipur vs. Deputy Commissioner of Income-Tax, Central Circle-2, Jaipur

27. As a result, the appeal is partly allowed, and addition of 20% of bogus or purchases from unverifiable persons or entities is upheld as regards AY 2005-06

ITA 104/JPR/2024[2005-06]Status: DisposedITAT Jaipur01 Aug 2024AY 2005-06

Bench: This Appellate Tribunal

For Appellant: Sh. S. R. Sharma, CA &For Respondent: Sh. A. S. Nehra (Addl.CIT)

Section 143(3)Section 145(3)Section 271(1)(c)

assessment order qua, the assessee company was passed by the Assessing Officer, relating to the A.Y 2005-06. The AO disallowed 25% of bogus purchase, which came to Rs. 15,13,844/-, added the same to the income of the assessee, and calculated the total income ... Gujarat High Court, on 9 December, 2014, the question that arose for consideration was: “whether the entire amount of the said bogus purchases and freight payments made in relation thereto should have been disallowed or the assessee should have been held to be eligible for grant of deduction

Allied Engineers and Elastomers, Mumbai vs. Income Tax Officer 18(1)(1), Mumbai

In the result, the appeals of the assessee is allowed

ITA 1687/MUM/2024[2009-10]Status: DisposedITAT Mumbai01 Aug 2024AY 2009-10

Bench: Ms Padmavathy S, Am & Shri Rahul Chaudhary, Jm

For Appellant: Dr. K. Shivaram a/w Shri Rahul KFor Respondent: Shri R.R. Makwana, Sr. DR

Section 143(1)Section 143(3)Section 147Section 148Section 234ASection 69C

processed under section 143(1) of the Income Tax Act, 1961 (the Act). Subsequently, based on information received from Sales Tax Department regarding alleged bogus purchases, the assessment was re-opened and a notice under section 148 of the Act was issued. The assessee made various submissions before ... r.w.s. section 147 was completed wherein the AO made addition of Rs. 9,35,988/- under section 69C of the Act towards bogus purchase from three parties made on peak credit basis. On further appeal, the CIT(A) restricted the addition to 12.5% of the alleged bogus purchases

Shreem Electric Limited, Kolhapur vs. ACIT Central Circle, Kolhapur

In the result, appeal of the assessee is allowed

ITA 898/PUN/2024[2017-18]Status: DisposedITAT Pune31 Jul 2024AY 2017-18

Bench: Shri Satbeer Singh Godara & Dr.Dipak P. Ripoteआयकर अपील सं. / Ita No.898/Pun/2024 िनधा"रण वष" / Assessment Year:2017-18 Shreem Electric Limited, V The Assistant Plot No.43 To 46, S Commissioner Of Income L.K.Akiwate Industrial Tax, Estate, Jaysingpur, Shirol, Central Circle, Kolhapur. Kolhapur – 416144. Pan: Aaccs4893C Appellant / Assessee Respondent / Revenue Assessee By None Revenue By Shri Sourabh Nayak -Addl.Cit(Dr) Date Of Hearing 31/07/2024 Date Of Pronouncement 31/07/2024 आदेश/ Order Per Dr. Dipak P. Ripote, Am: This Is An Appeal Filed By Assessee Against The Order Of Ld.Commissioner Of Income Tax(Appeal), Pune-11Passed Under Section 250 Of The Income Tax Act, Dated 31.01.2024 For The A.Y.2017-18. The Assessee Has Raised The Following Grounds Of Appeal : “1. The Learned Cit(A) Erred In Confirming Penalty Under Section 270A Of Rs.3,01,124/-. Shreem Electric Limited, Kolhapur[A] 2. The Learned Cit(A) Failed To Appreciate That, Since The Addition Is Made On Adhoc Basis, No Penalty Can Be Levied. 3. The Penalty Levied May Please Be Delete. 4. The Appellant Craves Leave To Add, Alter, Amend Or Delete Any Of The Above Grounds Of Appeal.” 2. There Is A Delay Of Two Months Of Filing Appeal Before This Tribunal. Considering The Reasons Mentioned In The Affidavit, We Are Convinced With The Reasons For Delay & In The Larger Interest Of Justice, We Condone The Delay.

Section 250Section 270ASection 270A(6)

Thus, AO has merely made an ad-hoc disallowance of depreciation. Though in the penalty order, it is alleged that there were bogus purchases, however, in the assessment order, Assessee has not disallowed the so-called bogus purchases.In this case, books of accounts has not been rejected by the Assessing

Litura Electrical Technologies Pvt. Ltd., Mumbai vs. JCIT (OSD), Circle-10(2)(1), Mumbai

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

ITA 1804/MUM/2024[2009-2010]Status: DisposedITAT Mumbai31 Jul 2024AY 2009-2010

Bench: Shri Narender Kumar Choudhry & Shri Omkareshwar Chidaraassessment Year: 2009-10

For Appellant: Ms. Dinkle Hariya, A.RFor Respondent: Shri Manoj Kumar Sinha, Sr. DR

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

dated 27.10.2014 u/s 143(3) r.w.s. 147 of the Act ultimately made the additions of Rs.1,44,31,006/- on account of disallowance qua bogus purchases treated as unexplained u/s 69C of the Act, the addition of Rs.5,77,240/- @ 4% of the said alleged bogus purchases ... Rs.1,44,31,006/- and the addition/disallowance of Rs.1,44,310/- on account of disallowance of commission paid estimated at 1% of the bogus purchases u/s 69C of the Act. The AO also recorded the satisfaction for initiation of penalty proceedings u/s 271(1)(c) of the Act for concealment

Ashish Enterprises, Mumbai vs. Commissioner of Income-Tax (Appeals), Delhi

In the result, the appeal filed by the assessee, stands allowed for statistical purposes

ITA 1630/MUM/2024[2011-2012]Status: DisposedITAT Mumbai31 Jul 2024AY 2011-2012

Bench: Shri Narender Kumar Choudhry & Shri Omkareshwar Chidaraassessment Year: 2011-12

For Appellant: Shri Sameer Dalal, A.R. &For Respondent: Shri Manoj Kumar Sinha, Sr. DR

Section 133(6)Section 142(2)Section 143(1)Section 250

Assessee, however, not found the same as acceptable and therefore 3 M/s. Ashish Enterprises treated the alleged purchases of Rs.1,41,18,907/- as bogus purchases by holding as under: “4.1.4. The submissions put forth by the assessee have been carefully considered. However, the assessee's contention that the purchases ... respectively on 27.02.2020 & 28.02.2020 submitted the relevant documents along with attachments, which goes to show that the said parties tried to justify the alleged bogus purchases. Whereas the Ld. Commissioner in the impugned order except acknowledging “written submissions of the Assessee” has not mentioned anything about the same and also