Ankur Kumar Goel Vs ITO (ITAT Delhi)
Sales Accepted, Purchases Disbelieved? Tribunal Applies Reality Check- 100% Bogus Purchase Disallowance Cut to Just ₹3.5L –
Tribunal Balances Justice: Lump Sum Disallowance Allowed, Penalty Cancelled
This matter involved two appeals – one against the quantum addition & the other against the penalty u/s 271(1)(c).
Quantum Appeal – Bogus Purchases
Assessee was engaged in regular business & had declared sales which were fully accepted by both AO & CIT(A). However, the entire purchases of ₹34,54,339 were disallowed as bogus, as Assessee failed to produce proper evidence to prove their genuineness.
ITAT noted two crucial facts:
- Sales were accepted (hence purchases must have been made in some form)
- Assessee could not fully prove purchases as genuine
Therefore, instead of disallowing 100% of purchases, ITAT applied a reasonable estimation approach (following numerous precedents in bogus purchase cases). It held that a lump-sum disallowance of ₹3.5 lakhs would meet the ends of justice, without setting a precedent.
Result: Quantum addition restricted to ₹3,50,000. Assessee’s quantum appeal partly allowed.
Penalty Appeal – Section 271(1)(c)
The only basis of penalty was the addition on account of bogus purchases. ITAT observed:
- The issue was one of estimation, not concealment.
- Both sides agreed that the quantum issue needed appreciation of evidence.
- The Supreme Court in CIT v. Reliance Petroproducts Pvt. Ltd. (322 ITR 158) held that making an unsustainable or incorrect claim does NOT amount to concealment or furnishing of inaccurate particulars.
- Hence, no penalty can be levied on estimated or debatable additions.
Result: Penalty of ₹10,17,970 deleted in full. Penalty appeal allowed.
