CHIRAG PRAFUL PUNATAR ,MUMBAI V. ITO WARD 42(1)(4), MUMBAI

ITA 8824/MUM/2025

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The case involves Chirag Praful Punatar, who appealed against the order of the Commissioner of Income-Tax (Appeals) confirming the addition of Rs.24,42,955/- under section 69C r.w.s. 115BBE of the Income Tax Act, 1961, for alleged bogus purchases. The ITAT found that while some purchases were from non-genuine sources, the entire amount of these purchases could not be disallowed as corresponding sales were not disputed. The Tribunal directed a partial relief by allowing a reduction in the addition based on the gross profit declared by the assessee.

• Duration Of Justice: 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Mumbai
• Assessment Year: 2009-2010
• Appeal Filed On: 19-12-2025
• Other Referred Cases: Tagaram Ganeshram Prajapati in ITA No.1006/Mum/2026 dated 25.03.2026
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BHAGIRATH RAMAWAT
• Assessee Lawyers: ANIL THAKRAR VIRTUALLY PRESENT
• Keywords: Set aside; Bogus purchase; Rectification of order; Bogus
• Section: 147; 148; 144; 69C

Judgement Text

"1 IN THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI “K (SMC)” BENCH, MUMBAI BEFORE SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA No. 8824/MUM/2025(AY:2009-10) Chirag Praful Punatar, B-901, Aaradhaya One, Pastom Sagar Road No.1, Chembur West, Mumbai- 400089. vs. ITO Ward 42(1)(4), Kautilya Bhawan, Mumbai-400020. PAN/GIR No: AGPPP9386B (Appellant) (Respondent) Appellant by Shri Anil Thakrar (Virtually Present) Respondent by Shri Bhagirath Ramawat (SR DR) Date of Hearing 19.02.2026 Date of Pronouncement 27.03.2026 O R D E R PER BIJYANANDA PRUSETH, AM: This appeal filed by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘Act’) by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre [in short, ‘CIT(A)’], dated 10.11.2025 for the assessment year (AY) 2009-10. 2. The grounds of appeal raised by the assessee are as under: “1. The Ld. CIT(A) is erred in confirming a sum of Rs.24,42,955/-under section 69C r.w.s. 115BBE of the IT Act 1961 for Bogus Purchases in spite of the fact that all the details such as copies of invoices, Bank payments made to creditors, sales bills, etc. were submitted. 2. The Ld. CIT(A) is also erred in non-considering the details documents submitted by the Appellant which is evident from the Ld. CIT(A) order for which separate rectification of mistake is being submitted. Printed from counselvise.com ITA No.8824/MUM/2025/AY 2009-10 Chirag Praful Punatar 2 3. The Ld. CIT(A) is erred in confirming the said addition because all these OLD notices issued under section 142(1)/133(6) were non-complied (OLD 1ST ROUND of ASSESSMENT PROCEDINGS) 4. The appellant request to delete the addition confirmed by the CIT (A). 5. The appellant craves to add, alter or omit any or all of the above grounds of appeal before or at the time of hearing of the appeal.” 3. Facts of the case in brief are that the assessee filed his return of income for the AY 2009-10 on 30.09.2009 declaring total income of Rs.5,00,200/-. Based on the information from the Investigation Wing that the assessee had taken accommodation bill for purchases, the case was reopened u/s 147 and notice u/s 148 of the Act was issued on 10.03.2014. The assessment u/s 144 r.w.s 147 was passed on 27.02.2015 by adding the entire bogus purchase of Rs.24,42,955/-. Aggrieved by the order of AO, the assessee filed appeal before the CIT(A), who dismissed the appeal. Further aggrieved, the assessee filed the appeal before the ITAT, which set aside the order of CIT(A) and the impugned issue was restored to the file of AO for fresh examination. In the second round of assessment, the AO issued various notices which were not properly replied to by the assessee. Hence, the AO again added the entire purchases of Rs.24,42,955/- u/s 69C of the Act. The CIT(A) has extracted the relevant portion of the assessment order and submission of the assessee. However, the appellant again did not provide any details and submissions on merits nor any documentary evidences were provided in respect of purchase bills, sales bills and bank statement, reconciliation statement etc. The CIT(A) observed that the assessee is negligent and is not Printed from counselvise.com ITA No.8824/MUM/2025/AY 2009-10 Chirag Praful Punatar 3 interested in pursuing the appeal and is deliberately ignoring the appellate proceedings. The appellant has also not been able to submit any evidence to show or controvert the information available or the findings of the AO. The onus was on the assessee to prove the transactions and the facts of its case. The CIT(A) relied on various decisions and finally upheld the addition of Rs.24,42,995/- u/s 69C r.w.s 115BBE of the Act. 4. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The Ld. AR has filed a paper book giving details of purchases along with name, address of the parties. He submitted that the details and evidences were filed before the AO and CIT(A), but these were not considered in the orders passed by them. He also submitted that the purchases are genuine and hence, the addition made by the AO u/s 69C may be deleted. 5. On the other hand, the Ld. Sr. DR of the revenue has supported the orders of lower authorities. He submitted that the bench may decide the issue as it thinks fit. 6. We have heard both parties and perused the materials on record. The only issue pertains to addition of Rs.24,42,995/- u/s 69C of the Act. The AO passed an ex parte order and added the entire purchase of Rs.24,42,995/-, being 100% of the total purchases from the alleged non-genuine parties, which was confirmed by the CIT(A). The Ld. AR has filed a paper book containing the details submitted Printed from counselvise.com ITA No.8824/MUM/2025/AY 2009-10 Chirag Praful Punatar 4 before the lower authorities and submitted that both lower authorities had ignored the details filed by the appellant. He submitted that the entire purchases cannot be added. We find from the details filed by the Ld. AR that he had given the details of 5 parties namely, (i) M/s VM Udyog (Rs.5,20,800/-), (ii) Sona Tools Trades (Rs.10,68,547/-), (iii) Shreeji Enterprises (Rs.92,000/-), (iv) Shree Ganesh Corporation (Rs.1,46,408/-) and (v) A G Corporation (Rs.4,20,940/-). Therefore, the appellant did not file any details regarding the purchase made from the 6th party i.e., M/s Nimesh Trading Co. of Rs.1,94,220/- before the AO or CIT(A) or the Tribunal at any stage. Hence, addition towards bogus purchase of Rs.1,94,220/- out of Rs.24,42,955/- is sustained. 6.1 Regarding the remaining purchases of Rs.22,48,735/- [Rs.24,42,955/- (-) Rs.1,94,220/-], the appellant had given some details, but could not conclusively prove the purchases from the same parties. We are, therefore, of the considered view that the appellant had not made purchase from the above parties but from some other sources in the grey market. However, corresponding sales have not been disputed by the AO. Therefore, the entire purchase of Rs.22,48,735/- cannot be disallowed and only the profit element needs to be added. There are large number of decisions on similar line in cases of alleged bogus purchase where the books are not rejected and sales has been accepted. It would be relevant to reproduced the decision in case of Tagaram Ganeshram Prajapati in ITA No.1006/Mum/2026 dated 25.03.2026, where the addition was restricted to 12.5% of the bogus purchase and set off of the gross profit offered by the Printed from counselvise.com ITA No.8824/MUM/2025/AY 2009-10 Chirag Praful Punatar 5 appellant was allowed. For ready reference, the relevant part of the order is reproduced below: 11. As regards the merits, upon careful consideration 1 find that the assessee has provided the documentary evidence for the purchase. Adverse inference has been drawn due to the inability of the assessee to produce the suppliers. I find that in this case the sales have not been doubted. It is settled law that when sales are not doubted, hundred percent disallowance for bogus purchase cannot be done. The rationale being no sales is possible without actual purchases. This proposition is supported from Hon'ble jurisdictional High Court decision in the case of Nikunj Eximp Enterprises (in Writ Petition no 2860, order dt. 18.6.2014). In this case the Hon'ble High Court has upheld 100% allowance for the purchases said to be bogus when sales are not doubted. However in that case all the supplies were to government agency. In the present case, the facts of the case indicate that assessee has made purchase from the grey market. Making purchases through the grey market gives the assessee savings on account of non-payment of tax and others at the expense of the exchequer. In such situation, in my considered opinion, on the facts and circumstances of the case, 12.5% disallowance out of the bogus purchases meets the end of justice. However, in this regard learned counsel of the assessee has prayed that when only the profits earned by the assessee on these bogus purchase transaction is to be taxed the gross profit already shown by the assessee and offered to tax should be reduced from the standard 12.5% being directed to be disallowed on account of bogus purchase. 12. Upon careful consideration I find considerable cogency in the submission of the learned Counsel of assessee as otherwise it will be double jeopardy to the assessee. Accordingly, I modify the order of the Id. CIT(A) and direct that the disallowance in this of assessee case be restricted to 12.5% of the bogus purchases as reduced by the gross profit rate already declared by the assessee on these transactions. The Ld. Counsel of the assessee fairly accepted this proposition.” 7. The facts of the instant appeal are similar to the facts of the case reproduced above. Following the above decision, we direct the AO to add 12.5% of the non-genuine purchases of Rs.22,48,735/- amounting to Rs.2,81,092/- and Printed from counselvise.com ITA No.8824/MUM/2025/AY 2009-10 Chirag Praful Punatar 6 reduce therefrom the gross profit declared by the assessee on such non-genuine transactions. In the result, the AO is directed to add Rs.1,94,220/- and Rs.2,81,092/- minus GP already declared on the bogus transactions. The ground is partly allowed. 8. The other grounds are general in nature and do not require adjudication. 9. In the result, the appeal of the assessee is partly allowed. Order is pronounced on 27.03.2026. Sd/- Sd/- (RAHUL CHAUDHARY) (BIJYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER *Aniket Chand; Sr. PS MUMBAI Date: 27.03.2026 Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, MUMBAI 6. Guard File By Order Assistant Registrar ITAT, MUMBAI Printed from counselvise.com "