ITO Vs Anil Jairam Goel (ITAT Pune)
In these appeals, Revenue challenged the order of CIT(A)/NFAC restricting addition on bogus purchases to 12.5% instead of sustaining 100% disallowance made by AO. Assessee, an individual, had originally filed return declaring income of ₹4,76,993/- for AY 2011-12. Based on Sales Tax Department information, it was found that Assessee had obtained bogus purchase bills of ₹2,53,72,426/- from five hawala parties. After reopening u/s 148, AO issued multiple notices u/s 142(1) & 133(6). Assessee failed to respond & remained absent. All notices issued to the alleged suppliers were returned unserved marked “Left / Not Known”. Consequently, the AO added the entire amount of ₹2,53,72,426/- as bogus purchases & completed assessment u/s 144 r.w.s. 147.
In appeal, Assessee again did not appear before the CIT(A). However, CIT(A) relied on various judicial precedents (including N.K. Industries) & held that only the profit element embedded in such purchases should be taxed. He estimated profit at 12.5% & restricted addition to ₹29.37 lakhs, deleting the balance ₹2.24 crores. Revenue came before Tribunal & argued that when purchases are held bogus, 100% disallowance is warranted, relying on Supreme Court in N.K. Proteins Ltd. v. DCIT & recent Bombay High Court in Pr. CIT v. Kanak Impex (India) Ltd. (2025) which upheld 100% addition in similar facts. Revenue contended that CIT(A) erred in estimating profit percentage without any justification & acted contrary to sections 68 & 69C.
