S. 69C : Unexplained expenditure-Bogus Purchases-Addition based on estimation cannot be made without rejection of books of account. Assessee produced invoices, e-way bills, ledger accounts and bank statements, and Revenue failed to establish purchases as bogus; the entire addition was deleted. [S. 37(1), 145(3)]
The assessee, engaged in the business of hoarding advertisements, was subjected to an addition of ₹30.37 lakh under section 37(1) on account of alleged bogus purchases from one supplier. The CIT(A) restricted the disallowance to 12.5%. The Tribunal observed that the assessee had produced complete documentary evidence including invoices, e-way bills, ledger accounts and bank statements substantiating the purchases, and the Assessing Officer had neither pointed out any defect in these documents nor rejected the books of account under section 145(3). Further, in the assessee’s group concern, the Tribunal had already held the very same supplier to be genuine. Following the principles of judicial consistency and binding precedent, and relying on CIT v. Teletronics Dealing Systems (P.) Ltd. (Bom.) and PCIT v. Forum Sales (P.) Ltd. (Delhi), the Tribunal held that estimated disallowance without rejection of books of account was unsustainable. Since no corroborative evidence was brought on record to establish that the purchases were bogus, the entire addition was directed to be deleted and the Revenue’s appeal was dismissed. (AY. 2023-24)( ITA Nos. 2136 & 2671/Mum/2025, dated 16-04-2026. )
Jagdishkumar Madanlal Gupta v. Dy. CIT (Mum.)(Trib.) www.itatonine.org
[Coram : Hon’ble Shri Sandeep Gosain, JM & Hon’ble Shri Bijayananda Puruseth, AM]