Kapil Raj Anand Vs DCIT (ITAT Delhi)
Bogus Purchase Disallowance Restricted to 6%—Lump-Sum Estimation Upheld in Section 153C Assessments
The Delhi ITAT (E Bench) partly allowed the appeals of Kapil Raj Anand for AYs 2020-21 and 2021-22, arising from section 153C assessments, and restricted the disallowance on alleged bogus purchases to 6% of the purchase value.
The Tribunal held that:
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The assessee, engaged in the construction business, had purchases from the Sanjay Jain Group treated as bogus and disallowed in full under section 69C by the AO, which was upheld by the CIT(A).
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The assessee’s sales and overall business activity were not disputed, and it was acknowledged that some cash turnover in construction cannot be ruled out.
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Judicial precedents show divergent approaches on bogus purchases; hence, a balanced estimation was warranted.
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Considering the peculiar facts, a lump-sum disallowance at 6% of the alleged bogus purchases would meet the ends of justice, with a clear caveat that the estimation shall not operate as a precedent.
Outcome:
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Disallowance restricted to 6% of purchases:
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AY 2020-21: 6% of ₹3.40 crore
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AY 2021-22: 6% of ₹23.80 lakh
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Appeals partly allowed; computations to follow as per law.
FULL TEXT OF THE ORDER OF ITAT DELHI
