Case Law Details
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.
FULL TEXT OF THE ORDER OF ITAT DELHI
These assessee’s twin appeals ITA Nos. 2725 & 2726/Del/2025 for A.Y. 2012-13, arise against the CIT(A)/NFAC, Delhi’s as many DINs & Order Nos. ITBA/NFAC/S/250/2024-25/1067146872(1) & ITBA/NFAC/S/250/2024-25/1067145147(1), both dated 30.07.2024, in proceedings u/s 143(3) r.w.s. 147 & 271(1)(c) of the Income-tax Act, 1961, hereinafter referred to as the ‘Act’, respectively.
Heard both the parties. Case file perused.
2. Coming to the assessee’s former appeal ITA No. 2725/Del/2025, it transpires during the course of hearing that both the learned lower authorities have disallowed his entire purchases of Rs. 34,54,339/- as bogus, in assessment framed on 29.11.2019, as upheld in the lower appellate proceedings. The Revenue could hardly dispute that the assessee’s sales figure in his books of account in regular business activity have been duly reflected and accepted in both the lower proceedings. The fact also remains that the assessee also could not plead and prove the impugned purchases as genuine all along in the lower proceedings. It is thus deemed appropriate in the larger interest of justice that a lump sum disallowance of bogus purchases of Rs. 3.5 lakhs only would be just and proper with a rider that the same shall not be treated as a precedent. Necessary computation shall follow as per law. The assessee’s instant former appeal ITA 2725/Del/2025 is partly allowed.
3. Next comes the asessee’s penalty appeal ITA No. 2726/Del/2025 in AY 2012-13. There is no dispute between the parties that the impugned penalty of Rs. 10,17,970/- involves quantum issue of bogus purchases which requires supportive appreciation of the entire supporting evidence in quantum proceedings. That being the case, I hereby quote CIT v. Reliance Petroproducts P. Ltd. (2010) 322 ITR 158 (SC) that such an issue would hardly result in an instance of concealment of income or furnishing of inaccurate particulars thereof to delete the impugned penalty levied by both the learned lower authorities. The assessee’s instant latter appeal ITA No. 2726/Del/2025 succeeds therefore.
No other ground or arguments have been raised.
4. To sum up, this assessee’s former appeal ITA No. 2725/Del/2025 is partly allowed and his latter appeal ITA No. 2726/Del/2025 is allowed, in above terms. A copy of this common order be placed in the respective case files.
Order pronounced in open court on 06.10.2025.
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