100% Disallowance of Bogus Purchases Mandated when source not explained: Bombay HC

PCIT Vs Kanak Impex (India) Ltd. (Bombay High Court) In the case of PCIT vs. Kanak Impex (India) Ltd., the Bombay High Court ruled on the disallowance of Rs. 20.06 crore claimed as bogus purchases by the assessee. The court held that the assessee failed to substantiate the purchases during reassessment proceedings, despite multiple notices from the Assessing Officer (AO). The appellate authorities—CIT(A) and Tribunal—restricted the disallowance to 12.5% of the claimed purchases, citing estimated profit margins. However, the High Court criticized this approach, stating it contradicted Secti...