Bogus Purchases upheld

The Kolkata Bench of the Income Tax Appellate Tribunal reaffirmed that where purchases are found to be routed through a non-genuine supplier engaged in issuing accommodation invoices, the entire purchase value can be disallowed as unexplained expenditure under 

Section 69C of the Income-tax Act, 1961. The Tribunal rejected the assessee’s plea that only the profit element embedded in the purchases should be taxed and upheld the addition of the entire purchase amount. 

The decision reflects the emerging judicial trend following recent Bombay High Court rulings that once the genuineness of purchases fails, estimation of profit is impermissible and the entire unexplained expenditure becomes liable to addition.