ITAT disallows 6% for alleged bogus purchases as purchases from unregistered dealers could not be ruled out.
In a recent judgment, ITAT has held that a disallowance of 6% for alleged bogus purchases was appropriate as purchases from unregistered dealers per se could not be altogether ruled out and corresponding sales had not been questioned.
ABCAUS Case Law Citation:
5195 (2026) (08) abacus.in ITAT
Important Case Laws relied upon by Parties:
In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming addition under section 69C of the Income Tax Act, 1961 (the Act) towards alleged bogus purchases.
The Tribunal observed that the assessee was engaged in the business of wholesale trading of iron and steel all along wherein possibility of assessee sourcing its purchases from unregistered dealers per se could not be altogether ruled out as well. And that his corresponding sales had nowhere been questioned in both the lower proceedings.
The Tribunal also noted that various recent judicial precedents have decided the instant issue of bogus purchases with divergent views as well.
In view of the peculiar facts of the case, the Tribunal opined that it would be deemed appropriate in the larger interest of justice that a lumpsum disallowance @ 6% of the assessee’s alleged bogus purchases would be just and proper with a rider that the same shall not be treated as a precedent. The assessee’s book entries were accordingly rejected to the very extent.
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