Bogus Purchases from Non-Existent Supplier: ITAT Kolkata Confirms Full Addition Under Section 69C
Case Reference
Anowar Hossain Mondal Vs ITO (ITAT Kolkata)
Assessment Year: 2018-19
Order Date: 5th May, 2026
Background and Core Legal Question
The Income Tax Appellate Tribunal, Kolkata Bench, was called upon to adjudicate whether purchases worth ₹15,08,950/- allegedly made from a supplier — subsequently identified as a fictitious accommodation entry provider issuing fake GST invoices — could be treated as entirely bogus and subjected to full addition under Section 69C of the Income Tax Act, 1961, or whether only an estimated profit component should be subjected to tax.
The assessee, an individual operating a proprietorship firm named New Bengal Hardware situated at Guskara Bus Stand, Purba Burdwan, was engaged in the supply of hardware goods to Gram Panchayats. The disputed purchases were allegedly made from M/s Rajbhar Trade Commercial during the financial year 2017-18 relevant to AY 2018-19.
Facts of the Case
The assessee had originally filed his return of income for AY 2018-19 on 10.10.2018, declaring total income of ₹11,92,700/-, which was processed under Section 143(1) of the Act on 10.02.2019.
Subsequently, the case was reopened under Sections 147/148A on the basis of specific intelligence received from DDIT(Inv.)-2(1), Kolkata and DDIT(Inv.)-1(4), Kolkata. The Investigation Wing had determined that Mr. Sumit Rajbhar, the proprietor of M/s Rajbhar Trade Commercial, was actively engaged in generating fake GST invoices to facilitate irregular input tax credits for various business entities. Despite disclosing a turnover of ₹60,68,62,642/- in its return for AY 2018-19, the supplier declared a gross total income of merely ₹3,73,127/- with no fixed assets whatsoever — an anomaly that reinforced the department's characterisation of the entity as a paper concern.
The department concluded that all transactions routed through this entity were sham in nature, and that the assessee was among the beneficiaries of bogus purchases aggregating ₹15,08,950/- during the relevant year, which had escaped assessment.
In response to reassessment notices, the assessee submitted copies of purchase invoices, RTGS payment proofs, bank statements, and a confirmation letter from the supplier. A revised return was filed on 11.11.2022 under Section 148, declaring taxable income of ₹12,70,870/-. The case was then taken up for scrutiny under Section 147.
Assessing Officer's Findings
The Assessing Officer, after conducting detailed verification including issuance of notices under Section 133(6), arrived at the following conclusions:
- Non-existence of supplier: Field enquiry by the Investigation Wing established that M/s Rajbhar Trade Commercial was not found operating at its declared address and had no fixed assets, infrastructure, inventory, or financial capacity to conduct genuine business.
- Failure to respond to statutory notices: Notices issued under
Section 133(6)remained unserved, and no corroborative response was received directly from the supplier. - Unverifiable transport details: Vehicle numbers appearing on the purchase invoices were found to be either de-registered or non-operational during the relevant period, making it impossible to establish actual movement of goods.
- Absence of delivery evidence: No delivery challans, weighment slips, or transport receipts were produced to substantiate the physical receipt of goods by the assessee.
On the basis of the above findings, the entire purchase amount of ₹15,08,950/- was added to the assessee's income as unexplained expenditure under Section 69C.