Anupama Gupta Vs ACIT (ITAT Delhi)
Bogus Purchases: Delhi ITAT Reduces ₹50.95 Lakh Disallowance to ₹50,950
The Delhi Bench of the Income Tax Appellate Tribunal has substantially reduced a purchase-related disallowance in the case of Anupama Gupta, restricting it to ₹50,950 against the original addition of ₹50,95,033.
The Tribunal considered that the assessee traded in finished fabrics, the corresponding sales had not been disputed, and purchases from unregistered dealers could not be ruled out. On these particular facts, it directed a 1% gross-profit disallowance on the disputed purchase amount, to be treated under Section 37, without applying Section 115BBE.
The decision was rendered by Judicial Member Satbeer Singh Godara and Accountant Member Sanjay Awasthi in ITA No.2969/Del/2026, concerning Assessment Year 2022-23.
Background of the Dispute
The assessee challenged the order dated 23 December 2025 passed by the CIT(A)-30, New Delhi, arising from an assessment completed under Section 144 read with Section 144B of the Income-tax Act, 1961.
The assessment order, dated 30 March 2024, disallowed ₹50,95,033, representing 20% of total purchases of ₹2,54,75,168.
The disputed purchases were treated as non-genuine or bogus, involving entities allegedly engaged in providing accommodation entries.
The CIT(A) sustained the assessment treatment. The assessee consequently approached the Tribunal and pressed the substantive ground challenging the purchase disallowance.
Both sides reiterated their respective positions concerning the correctness of the addition.
Undisputed Sales Were a Material Consideration
The Tribunal noted that the assessee was engaged in the business of trading in finished fabrics.
Significantly, the corresponding sales had not been questioned in either the assessment proceedings or the first appeal.
This factual position was relevant when determining how much of the purchase claim should remain disallowed. The Tribunal considered the purchase dispute alongside the accepted trading activity, rather than examining the alleged deficiencies in isolation.
The order did not conclude that every disputed purchase had been conclusively established as genuine. Instead, it adopted an estimated adjustment in light of the business circumstances and the treatment already accorded to the transactions.
Purchases From Unregistered Dealers Could Not Be Ruled Out
The Bench observed that the possibility of the assessee sourcing goods from unregistered dealers could not altogether be excluded.
This observation formed part of its assessment of the appropriate purchase-related adjustment. It acknowledged that the source reflected in the disputed documentation might not fully establish how goods used in the accepted trading activity had actually been procured.
The Tribunal also noted that the lower authorities had accepted a substantial portion of the purchases in principle.
Taken together, the accepted sales, the nature of the business and the possibility of alternative sourcing led the Bench to reconsider the extent of the sustained disallowance.
Tribunal Considered Divergent Judicial Approaches
The order referred to several recent decisions addressing alleged bogus purchases, including Ravjibhai Becharbhai Dhamelia v. ACIT, PCIT v. Hitesh Mody (HUF) and PCIT v. Forum Sales (P) Ltd.
It also cited PCIT v. Kanak Impex (India) Ltd., DCIT v. Kohinoor Foods Ltd. and DCIT v. Tirupati Matsup (P.) Ltd.
The Bench acknowledged that these authorities reflected divergent views on purchase-related additions.
It therefore framed its conclusion around the peculiar facts of the present case. The order does not prescribe a uniform percentage that must be applied whenever purchases are disputed, nor does it hold that accepted sales automatically eliminate every purchase-related adjustment.
Disallowance Restricted to 1% of the Disputed Amount
The Tribunal considered a lump-sum gross-profit disallowance of 1% appropriate in the interests of justice.
The calculation was applied to the ₹50,95,033 disputed amount, producing the sustained disallowance of approximately ₹50,950.
This distinction matters: the Tribunal did not direct a 1% disallowance on the entire purchase claim of ₹2,54,75,168.
As a result, the sustained addition fell substantially below the original assessment adjustment. The assessee received relief of approximately ₹50.44 lakh, subject to the consequential computation directed by the Tribunal.
The Bench also stated that the book entries stood rejected only to the corresponding extent.
Section 115BBE Treatment Excluded
The operative direction expressly placed the sustained disallowance under Section 37 and excluded treatment under Section 115BBE.
Accordingly, the Assessing Officer must give effect to the relief using the characterisation specified by the Tribunal.
The ruling is therefore relevant both to the amount retained as disallowance and to its treatment in the consequential tax computation.
The Bench did not direct a fresh inquiry or remand the purchase dispute for another round of adjudication. It determined the adjustment to be retained on the record before it.
Appeal Partly Allowed
The Tribunal partly allowed the assessee’s appeal, restricting the purchase-related disallowance to ₹50,950. No other ground or argument was pressed.
The decision illustrates the importance of examining disputed purchases in the context of accepted sales and the actual business activity, while keeping the estimation tied to the individual facts.
Editorial note: The order records pronouncement on 31 August 2026, while its concluding date line states 11 November 2026.
Cases Discussed
- Ravjibhai Becharbhai Dhamelia v. ACIT — (2025) 173 taxmann.com 592 (Gujarat High Court); cited among divergent authorities on disputed purchases. Link leads to a TaxGuru article discussing the decision, not a verified dedicated judgment page.
- PCIT v. Hitesh Mody (HUF) — (2024) 160 taxmann.com 110 (Bombay High Court); cited among divergent authorities on disputed purchases. Link leads to a TaxGuru article discussing the decision, not a verified dedicated judgment page.
- PCIT v. Forum Sales (P) Ltd. — (2024) 160 taxmann.com 93 (Delhi High Court); cited among divergent authorities on disputed purchases. Link leads to a TaxGuru article discussing the decision, not a verified dedicated judgment page.
- PCIT v. Kanak Impex (India) Ltd. — (2025) 172 taxmann.com 283 (Bombay High Court); cited among divergent authorities on disputed purchases. Link leads to a TaxGuru article discussing the decision, not a verified dedicated judgment page.
- DCIT v. Kohinoor Foods Ltd. — (2025) 178 taxmann.com 424 (ITAT Delhi); cited among divergent authorities on disputed purchases. Link leads to a TaxGuru article discussing the decision, not a verified dedicated judgment page.
- DCIT v. Tirupati Matsup (P.) Ltd. — (2025) 177 taxmann.com 836 (ITAT Delhi); cited among divergent authorities on disputed purchases. Link leads to a TaxGuru article discussing the decision, not a verified dedicated judgment page.
FULL TEXT OF THE ORDER OF ITAT DELHI
This assessee’s appeal for assessment year 2022-23, arises against the Commissioner of Income Tax (Appeals)-30 [in short, the “CIT(A)”], New Delhi’s DIN and order no ITBA/APL/M/250/2025-26/1084009238(1) dated 23.12.2025 involving proceedings under section 144 r.w.s. 144B of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).
Heard both the parties. Case file perused.
2. It emerges during the course of hearing that the assessee presses for his sole substantive ground on merits challenging both the learned lower authorities’ action treating his purchases of Rs. 50,95,033/- from different entities, treated as non-genuine/bogus ones as merely in the nature of providing accommodation entries. The assessment was completed u/s 144 r.w.s. 144B of the Act vide order dated 30.03.2024 whereby a disallowance/ addition of Rs. 50,95,033/- (20% of the total purchase claim of Rs. 2,54,75,168/-) was made and treated the said amount as bogus. Learned CIT(A)/NFAC has thereafter dismissed assessee’s lower impugned order under challenge.
3. That being the case, both the parties vehemently reiterate their respective stands against and in support of the impugned bogus purchases disallowance. We wish to make it clear that there is no dispute in principle that the assessee is engaged in the business of trading in finished fabrics wherein possibility of assessee sourcing its purchases from unregistered dealers per se could not be altogether ruled out as well. And that his corresponding sales have nowhere been questioned in both the lower proceedings. This is further coupled with the fact that the learned lower authorities have accepted hi very purchase @ 75% in principle as well. Various recent judicial precedents (2025) 173 taxmann.com 592 (Guj.) Ravjibhai Becharbhai Dhamelia vs. ACIT; (2024) 160 taxmann.com 110 (Bom) PCIT Vs. Hitesh Mody (HUF), (2024) 160 taxmann.com 93 (Del) PCIT Vs. Forum Sales (P) Ltd.; (2025) 172 taxmann.com 283 (Bom) PCIT Vs. Kanak Impex (India) Ltd; (2025) 178 taxmann.com 424 (Del. – Trib.) DCIT Vs. Kohinoor Foods Ltd.; and (2025) 177 taxmann.com 836 (Delhi-trib.) DCIT Vs. Tirupati Matsup (P.) Ltd. have recently decided the instant issue of bogus purchases with divergent views as well.
4. Faced with these peculiar facts, it is deemed appropriate in the larger interest of justice that a lumpsum GP disallowance @ 1% of the assessee’s alleged bogus purchases amounting to Rs. 50,950/- u/s 37 and not u/s 115BBE of the Act, would be just and proper. The assessee’s book entries are hereby rejected to the very extent. Necessary computation shall follow as per law.
No other ground or argument has been pressed.
5.. This assessee’s appeal is partly allowed in above terms.
Order pronounced in the open court on 31.08.2026.
