No Addition under Income Tax Law on Bogus Purchases, Where Sales Are Accepted and Supplies Are Backed by GST Records and Banking Trail

Last updated: 27 July 2026

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The Income Tax Appellate Tribunal (ITAT) in Kolkata has ruled that additions for alleged bogus purchases cannot be sustained if the purchases are supported by valid tax invoices, e-way bills, GST returns, and banking transactions, especially when the corresponding sales are accepted. The tribunal emphasised that such purchases, particularly when input tax credit has been allowed by GST authorities, cannot be deemed bogus solely based on search statements or suspicion.

Court :
ITAT, Kolkata Bench

Brief :
The ITAT, Kolkata Bench in M/s Diach Chemicals & Pigments Pvt. Ltd. v. DCIT, Central Circle 4(2), Kolkata [ITA Nos. 1469 & 1470/KOL/2025 dated May 21, 2026] set aside the addition sustained by the Commissioner of Income-tax (Appeals) on account of alleged bogus purchases and held that where the impugned purchases are duly backed by tax invoices, e-way bills, lorry receipts, weighment slips, GSTR-1 and GSTR-3B returns filed by the suppliers and payments routed through banking channels, and where the corresponding sales stand accepted, the purchases cannot be branded bogus merely on the strength of a statement recorded during search or on suspicion — more so when the input tax credit availed on such purchases stands allowed by the GST authorities.

Citation :
ITA Nos. 1469 & 1470/KOL/2025 dated May 21, 2026

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1 Year PLAN - Rs.~~1999~~

1799

(Excl. of GST ₹323)

2 Years PLAN - Rs.~~3499~~

3149

(Excl. of GST ₹566)

BEST VALUE

3 Years PLAN - Rs.~~4999~~

4499

(Excl. of GST ₹809)

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Attached File : 671907_6046_itat_diach_chemicals_pigments_pvt_ltd.pdf

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Judgement posted by

Bimal Jain

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FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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