Arham Iron Ltd. Vs ITO (ITAT Delhi)
Delhi ITAT Restricts Bogus Purchase Addition to 6% Where Sales Were Accepted
The Delhi ITAT partly allowed the assessee’s appeal by restricting the addition on account of alleged bogus purchases to 6% of the purchase value instead of sustaining the entire disallowance under section 69C. The dispute related to purchases of ₹75.53 lakh from M/s Siddhi Ganesh Industries, which the Assessing Officer had treated as non-genuine.
The Tribunal observed that the assessee was engaged in the wholesale trading of iron and steel, and the Revenue had not disputed the corresponding sales. It further held that the possibility of the assessee procuring goods from unregistered dealers could not be completely ruled out. Taking note of recent judicial precedents adopting varying approaches in bogus purchase cases, the Tribunal concluded that only the profit element embedded in such purchases warranted disallowance.
Accordingly, the Tribunal directed that a lump-sum disallowance of 6% of the alleged bogus purchases would meet the ends of justice, while clarifying that the decision was rendered on the peculiar facts of the case and shall not be treated as a precedent. The assessee’s appeal was partly allowed.
Cases Discussed
- DCIT Vs. Kohinoor Foods Ltd. (Delhi ITAT), (2025) 178 taxmann.com 424 (Del. – Trib.)
- DCIT Vs. Tirupati Matsup (P.) Ltd. (Delhi ITAT), (2025) 177 taxmann.com 836 (Delhi-trib.)
- Ravjibhai Becharbhai Dhamelia vs. ACIT (Gujarat HC), (2025) 173 taxmann.com 592 (Guj.)
- PCIT Vs. Kanak Impex (India) Ltd. (Bombay HC), (2025) 172 taxmann.com 283 (Bom)
- PCIT Vs. Hitesh Mody (HUF) (Bombay HC), (2024) 160 taxmann.com 110 (Bom)
- PCIT Vs. Forum Sales (P.) Ltd. (Delhi HC), (2024) 160 taxmann.com 93 (Del)
FULL TEXT OF THE ORDER OF ITAT DELHI
