Entire Bogus Purchase Addition Unsustainable When Sales Accepted: Calcutta HC

PCIT Vs Utkarsh Rai (Calcutta High Court)

Sales Accepted, Entire Purchases Cannot Be Bogus: Calcutta HC Upholds 0.15% Profit Addition in Bullion Trade

Revenue’s Appeal Against Relief Granted by ITAT

In Principal Commissioner of Income Tax v. Utkarsh Rai, ITAT No. 174 of 2026, judgment dated 22.09.2026, the Calcutta High Court dismissed the Revenue’s appeal against the order of the Kolkata Bench of the Income Tax Appellate Tribunal restricting the addition relating to disputed bullion purchases to a gross-profit rate of 0.15%. The High Court held that the findings recorded by the Tribunal were based upon appreciation of documentary evidence and the peculiar commercial features of the bullion trade. Since the Revenue could not establish perversity or disregard of any material evidence, no substantial question of law arose under section 260A.

The assessee was an individual carrying on the business of dealing in bullion through his proprietorship concern, M/s Shewpujan Rai Indrasen Rai and Grandsons. During the assessment proceedings for AY 2020-21, the Assessing Officer treated purchases aggregating to ₹85,13,92,096 as bogus and made an addition under section 69C of the Income-tax Act.

Non-Filing of Returns and GST Cancellation Relied Upon by AO

The Assessing Officer doubted the purchases on the grounds that the concerned vendors had not filed their income-tax returns, their stated business activities were allegedly unrelated to the business carried on by the assessee, notices issued under section 133(6) remained uncomplied with, and certain discrepancies were noticed in the documents and banking transactions. The Assessing Officer also alleged that some of the business particulars, GST records and delivery-related documents furnished in support of the purchases were unreliable or fabricated.