When purchase transactions are proven to be bogus and the assessee fails to substantiate them with cogent evidence, the entire purchase amount is to be disallowed under Section 69C of the Income Tax Act, 1961, rather than restricting the disallowance to a percentage-based estimation.

आदेश / ORDER

PER SANDEEP GOSAIN, JM:

The present appeals have been filed by the assessee challenging the different impugned order dated 25.06.2025 and 27.06.2025 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre, Delhi (NFAC)/CIT (A) for the assessment year 2009-10 and 2010-11.

2. Since all the issues involved in both these appeals are common and identical therefore, they have been clubbed, heard together and consolidated order is being passed. Firstly, we shall take ITA No. 5024/Mum/2025, A.Y 2013-14 as lead case and facts narrated therein.

The following grounds are reproduced below:

“1. Ground No. 1-No independent verification of information done by AO

1.1. On the facts and in the circumstances of the case and in law, Hon'ble Commissioner of Income-tax (Appeals) has incorrectly affirmed the order of Learned Assessing Officer ('Learned AO') without considering the fact that the he has failed to verify the information received from the Sales Tax Department.

1.2. The Learned AO has neither given the Appellant an opportunity to cross-verify the information received by his goodself nor himself conducted any enquiry. Hence, the order affirmed by CIT(A) is misplaced and hence warrants deletion.

2. Ground No. 2-Incorrect facts determined

2.1. On the facts and in the circumstances of the case and in law, the Learned AO has arrived on conclusion therein based on incorrect factual understanding and therefore, the said impugned order, being bad in law is liable to be quashed or alternatively set aside.

3. Ground No. 3-Incorrect levy of interest

3.1. On the facts and in the circumstances of the case and in law, CIT(A) has incorrectly confirmed the levy of interest under section 234A and 234B of the Act. Thus, the said addition of interest being unjustified, ought to be deleted.

4 Ground No. 4- Initiation of the penalty proceedings

4.1. On the facts and in the circumstances of the case and in law, CIT(A) has incorrectly confirmed the initiation of penalty proceedings.

The Appellant craves leave to add. alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at the time of hearing of the appeal, so as to enable your goodself to decide this appeal according to law.”

2. At the very outset we noticed that there is delay of approximately 2 days in filing the appeal before us. Considering the entire factual position as explained before us and also keeping in view the principles laid down by Hon’ble Supreme Court in the case of Collector Land Acquisition, Anantnag & ... vs Mst. Katiji & Ors 1987 AIR 1353 (SC) wherein it has been held that where substantial justice is pitted against the technicalities of non-deliberate delay then in that eventuality substantial justice is to be preferred. In our view, the principle of advancing substantial justice is of prime importance, hence, considering the explanation put forth by the assessee by justifiably and properly explaining the delay which occurred in filing the appeal and considering the expression “sufficient cause” liberally we are inclined to condone the delay in filing the appeal before us. Consequently, the delay is condoned and the appeal is admitted to be heard on ground of merits.

3. All the grounds raised by the assessee are interrelated and interconnected and relates to challenging the order of the Ld. CIT(A) in upholding the additions made by the AO.

4. In this regard, we have heard the counsel for both the parties and perused the material placed on record, judgments cited before us, and also the orders passed by the Revenue Authorities. From the records, we noticed that during the course of assessment proceedings, it was observed by the AO that the assessee had obtained bogus purchase bills fr