Disallowance of whole of Purchases based on some bogus purchases

[Karna Thaker]

Can AO disallow the whole of purchases based on the fact that some bills have found to be bogus.Also when the same has been purchased through a broker of the assessee and relevant brokerage paid. Please also provide with relevant case laws if Any

[Surender Gupta]

Where the question is of fact, it is the factual position which would help to determine the issue. Apparently, where only some of bill are found as bogus, AO should make addition only in that respect. Expenditure supported by genuine bills can not be ignored.

AI Summary

Disallowance of purchases: treat only identified bogus bills as disallowable, preserve genuine expenditure. Whether an assessing officer may disallow the entire purchases when some purchase bills are found to be bogus is a question of fact and limited to the defective elements. Where certain purchase invoices are established as bogus, the appropriate course is targeted disallowance limited to those specific transactions rather than blanket rejection of all purchases; expenditure supported by genuine bills should remain admissible.