TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1170
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.... of Rs. 39,00,60,232/- made by the Ld. AO. 3. The Ld. CIT(A) has erred in law and on facts of the case in invoking Section 69C of the Act when the Ld. AO has merely made a disallowance of business expenditure being alleged bogus purchases without any application of Section 115BBE of the Act as evident from the computation sheet issued along with the assessment order. 4. Alternatively and without prejudice, the Ld. CIT(A) has erred in law and on facts of the case in upholding the disallowance of alleged bogus purchases u/s. 69C of the Act. S.69C has no application in the present case as the purchases are recorded in the books of accounts, thus not being unexplained. 5. The Ld. CIT(A) has erred in law and on facts of the case in upholding the action of the Ld. AO in j disallowing the alleged bogus purchases without disturbing the sales made by the appellant. 6. The Ld. CIT(A) has erred in law and on facts of the case in making addition of the alleged bogus purchases without providing the information relied upon and opportunity of cross examination. 7. Alternatively and without prejudice, the disallowance of alleged bogus purchases shall be restricted to the element of profi....
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....supplier entities were involved in paper-based transactions - meaning they only created fake purchase sale records without any genuine supply of goods. According to information received from the GST Department, these suppliers were well-known for issuing accommodation entries (i.e., bogus purchase bills) and the assessee was identified as one of the beneficiaries of such entries. Despite being issued a Show Cause Notice on 03.03.2023, the assessee did not provide any further explanation or documents. This lack of response further supported the conclusion that the transactions were not genuine. Based on the findings of the DVU and the Investigation Wing, the Assessing Officer held that the amount of Rs. 39,00,60,232/- claimed as purchases from these four parties was bogus. Accordingly, this amount was disallowed and added back to the total income of the assessee. 4. In appeal before CIT(Appeals), the assessee argued that the purchases were genuine, and furnished documents including purchase bills, GSTIN details, GST-2A returns, and bank statements showing payments. The assessee also contended that E-way bills were not mandatory during the financial years in question (2017-18 and 20....
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.... been furnished by the assessee have been fabricated. In the alternative, the Counsel for the assessee submitted that it is normal practice that where purchases are actually made from unregistered dealers or other suppliers, who did not issue any bills and hence, to regularize such bills accommodation bills may be obtained. Such accommodation bills, though may not be from the parties who actually supplied the goods, but that by itself would not render the entire purchases as bogus. The Counsel for the assessee placed reliance on various judicial precedents which have held that in such a scenario, addition could be confirmed, based on a reasonable estimate. 7. In response, Ld. DR placed reliance on the observations made by the Assessing Officer and Ld. CIT(A), in their respective orders. The Ld. DR submitted that the assessee has not submitted any permit of transportation and while the assessee has submitted substantial documentary / paper evidence, but no evidence has been furnished by the assessee to demonstrate actual movement of goods in question from these parties. This is further coupled with the fact that admittedly these parties were engaged in providing bogus accommodation....
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....er cent of purchase cost as probable profit of assessee. The Tribunal however, sustained addition to extent of 12.5 per cent of bogus purchases. In further appeal, the Gujarat High Court held that since purchases were not entirely bogus but were made from parties other than those mentioned in books of account, only profit element embedded in such purchases could be added to assessee's income. Hence, order of Tribunal needed no interference. 11. In the case of Principal Commissioner of Income-tax vs. Surya Impex [2023] 148 taxmann.com 154 (Gujarat) / [2023] 291 Taxman 591 (Gujarat) / [2023] 451 ITR 395 (Gujarat), the Gujarat High Court held that where AO received report from Investigation Wing that assessee-firm received accommodation entries in form of bogus purchases from one J group and made 100 per cent addition with respect to said purchases, however while dealing with case of J group and other parties involved in providing such entries AO chose to make addition at rate of 3 per cent to 5 per cent, Tribunal was justified in limiting the addition in hands of assessee at rate of 6 per cent of impugned purchases. 12. In the case of Principal Commissioner of Income-tax vs. Ji....
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....t of 12.5% of such bogus sales. 15. In the case of PCIT Vs. Pankaj Choudhary, TA 617 of 2022 (Gujarat), the Hon'ble Gujarat High Court held that in respect of bogus purchases, restricted the disallowance to 6% of the cost of such purchases in this year. 16. In the case of PCIT Vs. Jigisha Satishkumar Mehta, [2023] 155 taxman.com 273 (Gujarat), the Hon'ble Gujarat High Court upheld the decision of the ITAT affirming that the appellate authority have arrived at the concurrent findings of fact by holding that factum of said dealer already being engaged in bogus billing was not ruled out and therefore, sustained the addition by estimating 5% of alleged bogus proceedings. 17. In the case of PCIT Vs. Keshri Exports, [2024] 168 Taxmann.com 528 (Gujarat), the Hon'ble Gujarat High Court reaffirmed the decision in the case of PCIT Vs. M/s. Surya Impex restricted the disallowance in respect of bogus purchases to 6% of the cost of such purchases in this year. 18. In the case of PCIT Vs. R.K. Jain [2023] 156 Taxmann.com 52 (Gujarat), the Hon'ble Gujarat High Court reaffirmed the decision of the ITAT and held that the view taken and the conclusion arrived at by the Tribunal are based on mate....