The present appeals have been filed by the assessee and the Revenue challenging the impugned order dated 07.08.2025 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre, Delhi (NFAC) for the assessment year 2011-12.

2. First, we shall take up the appeal filed by the assessee i.e. ITA No. 6295/Mum/2025 (AY:2011-12). The following grounds are reproduced below:

“1. the learned Assessing Officer erred in law and on facts in making an addition of Rs. 3,35,79,037/- by treating the purchases made by the appellant as bogus purchases under section 69C of the Income-tax Act, 1961. The appellant had duly furnished before the learned Assessing Officer copies of purchase bills, bank statements evidencing payments through account payee cheques, and statements showing inward and outward movement of materials corresponding to such purchases. Despite these evidences, the Assessing Officer proceeded to treat the entire purchases as unexplained expenditure merely on the basis of general information obtained from the Sales Tax Department and on the ground that notices issued to certain suppliers under section 133(6) had returned unserved.

2. the learned Assessing Officer failed to appreciate that the sales corresponding to the alleged purchases have been accepted and not disturbed by him, which clearly establishes that the purchases were genuine. It is a settled principle of law that unless corresponding sales are treated as bogus, the purchases cannot be treated as non-genuine. Without rejecting the sales turnover, the treatment of corresponding purchases as bogus is erroneous and unsustainable in law. the Assessing Officer erred in invoking. the provisions of section 69C, which are inapplicable to the facts of the case, since the appellant had duly recorded the purchases in its regular books of account and made payments through verifiable banking channels. The addition under section 69C was thus wholly unjustified and contrary to the evidences on record.

3. the learned Assessing Officer erred in law and facts in disallowing the deduction of Rs. 3,65,298/- being interest expenditure claimed against interest income under the head "Income from Other Sources." The said disallowance was made without properly appreciating the facts of the case and without affording adequate opportunity to the appellant to substantia the nexus of such expenditure with the earning of interest income.

4. the learned Commissioner of Income-tax (Appeals) has erred in law and on facts in partly confirming the addition by sustaining an amount of Rs. 38,37,255/- on account of alleged bogus purchases. The Assessing Officer had originally made an addition of Rs. 3,35,79,037/- by treating the entire purchases from certain parties as unexplained expenditure under section 69C of the Act. The learned Commissioner of Income-tax (Appeals), while accepting that disallowance of the entire purchases was not sustainable, has nevertheless proceeded to estimate the profit element on such purchases and sustained an addition of Rs. 38,37,255/- by applying a profit margin.In arriving at this figure, the learned Commissioner of Income-tax (Appeals) noted that the appellant had shown purchases of Rs. 3,78,22,371/- from the said parties and corresponding sales of Rs. 4,16,59,626/-. By comparing these figures, the learned Commissioner of Income-tax (Appeals) worked out a difference of Rs. 38,37,255/- and treated the same as unaccounted income of the appellant. The appellant submits that such a method of estimation is arbitrary, incorrect, and unsustainable in law. The comparison between purchases and sales to determine unaccounted income is not a legally recognized method of computation. Further, once sales corresponding to the alleged purchases have been accepted by the Department, the genuineness of purchases cannot be doubted.

5. The appellant, therefore, submits that the order of the learned Commissioner of Income-tax (Appeals) in sustaining the addi