Bhansali Udyog Pvt. Ltd Vs ITO (ITAT Delhi)
Bogus Purchase Disallowance Moderated: Delhi ITAT Caps Addition at 10% Where Sales Are Undisputed
The Delhi Bench of the ITAT partly allowed the appeal of Bhansali Udyog Pvt. Ltd. (AY 2018-19) by moderating the addition made on account of alleged bogus purchases of ₹53.48 lakh. While the Assessing Officer had treated the entire purchases as unexplained under section 69C, the CIT(A)/NFAC restricted the disallowance to 12.5%.
The Tribunal observed that the assessee was engaged in the manufacture of electrical wires and cables, and that corresponding sales were never doubted by the Department. Acknowledging that procurement from unregistered dealers in such businesses cannot be ruled out and noting divergent judicial views on bogus purchase cases, the ITAT held that complete disallowance was unwarranted.
In the interest of justice, the ITAT further restricted the disallowance to a lumpsum 10% of the alleged bogus purchases, confirming rejection of books only to that limited extent and clarifying that the estimation shall not be treated as a precedent. Accordingly, the appeal was partly allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
This assessee’s appeal for assessment year 2018-19, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2024-25/1072279511 (1), dated 17.01.2025 involving proceedings under section 147 r.w.s. 144 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’).
