Section 69C

Section 69C — the law in short

What the courts have decided on section 69C, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• N.K. Proteins Ltd v DCIT Supreme CourtHelps departmentNo later treatment found
  Can the whole of a bogus purchase be added, rather than a percentage?
  On this line of authority, yes. The special leave petitions were dismissed, upholding the High Court, and the effect reported is that the 25% restriction was rejected and the entire fictitious purchase amount fell to be added.
• PCIT v Rajesh Suresh Chopra High CourtHelps taxpayerNo later treatment found
  If an estimate on the disputed purchases cannot be avoided, is there a High Court figure I can point to?
  Yes, on these facts. The Gujarat High Court dismissed the department's appeal against a Tribunal order that had confined the addition on roughly Rs 116.50 crore of alleged accommodation-entry purchases to 6 per cent, holding that no substantial question of law arose because the questions proposed were already answered by a coordinate bench, which had held 6 per cent of bogus purchases to be fair and reasonable. It is a percentage a High Court has let stand, not a rule — the figure follows the facts, and the department's contrary line on whole-invoice additions is unaffected.
• PCIT v Praveen Sawhney High CourtHelps taxpayerNo later treatment found
  The Department says my search assessment is in time because it made a reference to a foreign tax authority and gets a year excluded under s.153B. The reference was for years the treaty did not cover. Does the exclusion still apply?
  No. Clause (ix) of the Explanation to s.153B excludes the time taken on a reference for exchange of information only where the reference is made in terms of the agreement under s.90 or s.90A. A request made outside what the treaty permitted is not such a reference, gives no exclusion, and the assessments were time-barred. Twenty-nine Revenue appeals were dismissed.
• PCIT v Drisha Impex (P) Ltd High CourtHelps department
  The Tribunal gave me a small percentage addition on disputed purchases. Can the department get the whole disallowance back on appeal?
  Yes, where the file is empty. The Bombay High Court set aside the Tribunal's 3% estimate and restored the Assessing Officer's disallowance of the whole of the disputed purchases under s.69C, and the assessee's SLP was dismissed. What decided it was a list of documents that were not produced: no evidence of actual delivery of material, no supplier confirmations, no audited accounts, no quantitative details and no correlation between the purchases and the sales.
• PCIT v Kanak Impex (India) Ltd High CourtHelps department
  The officer says my purchases are accommodation entries. Can he add the whole purchase, or only a percentage?
  The whole of it, if you cannot show the purchases were real. The Bombay High Court set aside the Tribunal's order restricting the addition to a 12.5% profit estimate and restored the Assessing Officer's disallowance of the entire Rs 20.06 crore under s.69C, and the Supreme Court dismissed the assessee's SLP. The profit-element line only runs where the purchases themselves are accepted as having happened.
• PCIT v Mohommad Haji Adam & Co High CourtHelps taxpayer
  Your purchases are called bogus but your sales were accepted. How much can be added?
  Only the gross profit difference. Without purchases there cannot be sales, so where the department accepts the sales it cannot add the whole purchase amount — the addition is restricted to the GP rate on those purchases at the rate applied to genuine ones.
• CIT v RRJ Securities Ltd High CourtHelps taxpayer
  Papers of mine were seized in a search on somebody else and I have got notices under section 153C for six years. Which six years, and can completed assessments be reopened when the papers show nothing?
  It depends, and here the answer was no on both counts. The Delhi High Court held that for a person other than the searched person, the six assessment years under section 153C run from the date the seized material is handed over to his Assessing Officer - here the satisfaction note of 8 September 2010 - not from the date of the search. Assessment years 2003-04 and 2004-05 were therefore outside the section. It further held that completed assessments cannot be reopened where the seized documents have no bearing on those years. The Revenue's appeals were dismissed.
• CIT v Ratanlal Vyaparilal Jain High CourtHelps taxpayer
  Does the jewellery instruction explain the source of the gold, or only stop the department seizing it?
  It explains the source, to the extent of the quantities in it. The Gujarat High Court held that the Board's circular proceeds on recognised customs prevailing in Hindu society, so possession of jewellery within those quantities is taken to be explained unless the Revenue shows otherwise.
• Fakir Mohmed Haji Hasan v CIT High CourtHelps department
  An unexplained investment has been added to my income under section 69A and the asset was then confiscated. Can I set the loss off against that addition?
  No. The Gujarat High Court held that income deemed under sections 69, 69A, 69B and 69C falls under none of the heads in section 14, not even income from other sources, because those sections apply precisely where the source is unknown or unexplained. Since the deemed income cannot be classified under a head, the deductions that go with a head are not available against it. Gold worth Rs 48,72,000 found concealed in the assessee's car and confiscated by customs was rightly added under section 69A, and its confiscation could not be claimed as a trading loss.
• Arun Pratap Singh v ITO, New Delhi ITATHelps departmentNo later treatment found
  The Assessing Officer has disallowed my s.80GGC deduction and, on top of that, added five per cent of the donation under s.69C read with s.115BBE as commission I am presumed to have paid. Will the Tribunal delete at least the commission?
  Not necessarily. The Delhi Bench dismissed the appeal in its entirety, holding that where a search under s.132 on the recipient party produced sworn statements of the President and key office bearers admitting that donations received through banking channels were returned to donors in cash after deducting commission, the payment through NEFT and a valid donation receipt do not save the deduction. The order does not separately deal with the s.69C addition; it upholds the impugned order as a whole.
• Diach Chemicals and Pigments P Ltd v DCIT ITATHelps taxpayerNo later treatment found
  The department says my purchases are bogus. Do the suppliers' returns and the input credit allowed on those invoices count for anything in the income-tax assessment?
  They are part of the record, but they are not what carried this case. The addition was deleted on a much wider evidentiary base: notices the Assessing Officer himself issued under s.133(6) came back with direct confirmations from every supplier, the primary documents were complete, the books had been audited four ways with no defect pointed out, and actual production marginally exceeded the standard yield, so the raw material bought had demonstrably gone into the goods sold. The suppliers' returns and the input credit allowed on the purchases sit in that list of supporting facts; the operative paragraph rests on the addition being estimation and surmise with no substantive basis, and does not mention them.
• DCIT v ACE Infracity Developers P Ltd ITATHelps taxpayer
  My lenders are NBFCs that make hundreds of loans. How much of their own affairs do I have to prove?
  Not their internal affairs. Where the lender is a non-banking finance company and lending is its regular business, identity is not in doubt, and creditworthiness is tested against its share capital, reserves and long-term advances rather than its turnover for the year. Allegations that the lender's directors were dummies do not touch the borrower unless the borrower is shown to be connected to them.
• Ashokkumar Gokulchand Sananda v ACIT, Akola Circle ITATHelps taxpayerNo later treatment found
  The CBDT cancelled my donee's s.35(1)(ii) approval with retrospective effect two years after I donated, and the reassessment has taken away my 175 per cent weighted deduction and added a notional commission. Does the deduction survive?
  Yes, on these facts. The Explanation in s.35(1) says in terms that the deduction shall not be denied merely because the approval granted to the institution has been withdrawn after the payment, so a retrospective cancellation is by itself no ground for disallowance. A general Investigation Wing report about the donee, never furnished to the donor and never linked to his particular transaction, will not carry the disallowance either, and the consequential s.69C commission addition falls with it.
• Muhammed Arif Shaikh v Asst. Unit, Income Tax Department ITATHelps taxpayerNo later treatment found
  For one year the department accepted 8 per cent presumptive profit on my client's crypto sales; for the next year, on the same information, it has added the whole purchase figure under section 69C. Can it do that?
  Not on this decision. The Ahmedabad Bench held that where the same assessment unit had, for AY 2017-18, accepted a presumptive deemed profit at 8 per cent of the crypto sales, it could not for AY 2018-19 — reopened on the same common information and where the assessee had again offered 8 per cent of his crypto turnover, which the Assessing Officer accepted — go on to add the crypto purchases of Rs 17,52,838 as unexplained expenditure under s.69C. Taking inconsistent stands in the assessee's own case in two different assessment years was held not proper and against the provisions of law, and the addition was deleted.
• Ankit Gems (P) Ltd v Circle 5(1)(1), Mumbai ITATHelps taxpayerNo later treatment found
  The officer says I took accommodation entries from a party I have never dealt with. What do I actually have to do?
  Show that the purchases are not in your books, and the burden goes back to the officer. A s.69C addition of Rs. 38,68,049 was deleted where the purchase register - covering both the firm and the company that succeeded it during the year - recorded no purchase at all from the concern named in the information from a search on a third-party group. Applying K.P. Varghese, the onus of establishing that the conditions of taxability are fulfilled is always on the Revenue, and an assessee cannot be called upon to prove a negative. The first appellate authority had himself recorded that the register showed no such purchase and had then sustained the addition on a theory of his own.
• Seo Lehenga House v DCIT ITATHelps taxpayerNo later treatment found
  I have already offered the profit on the disputed transactions. Can the officer add the broker's commission on top under s.69C?
  Not where the commission is already inside the profit you offered. The Tribunal deleted a s.69C addition for cash commission paid to a broker for arranging bogus purchases and sales, in each of six consolidated appeals covering two assessees and five assessment years, because in every year the gross profit the assessee had already declared on those transactions exceeded the commission the Assessing Officer himself had determined. For the leading year the gross profit was Rs. 14,57,154 at 1.60 per cent against a determined commission of Rs. 5,31,795, and the Rs. 3,32,371 the first appellate authority had sustained was deleted. The rates differ year by year.
• Nand Lal Popli v DCIT ITATCuts both ways
  I return income under 44AD. Can the AO treat the balance of my receipts as expenditure actually incurred?
  No. Once income is estimated at a percentage of gross receipts, the residual percentage is a notional figure, not a finding that expenditure of that amount was in fact incurred. With the declared turnover undisturbed, an addition built on that assumption has no foundation.
• DCIT v Rajeev G Kalathil ITATHelps taxpayer
  The only thing against my supplier is that the indirect-tax authorities have put him on a list. Is that enough to make my purchase bogus?
  No, not by itself. A supplier being declared a hawala dealer by the sales tax department is a good starting point for further investigation, but the Assessing Officer left the job at the initial point, and suspicion of the highest degree cannot take the place of evidence. The listing shifts the officer's attention; it does not discharge his burden. Two limits sit on the face of the order. Only one of the two suppliers in issue was on the listing - for the other the number on the bills returned no result at all - and the holding is conditional on what the officer failed to do: he had not called for the suppliers' bank accounts to look for an immediate cash withdrawal, movement of the goods to site was not in doubt, and part of the goods was in closing stock.
• CBDT letter of 29 May 2026 on invoking ss.68 to 69D with s.115BBE CBDT Circulars & InstructionsHelps taxpayer
  Is there anything from the Board telling the officer he has to establish the section before he makes a deeming addition?
  Yes. Following a C&AG compliance audit that found officers were invoking the wrong section and applying the wrong rate, the Board directed field offices that the Assessing Officer "has to satisfy himself as to the true nature and source of the amounts for which such sections are invoked", that the necessary enquiry — including under s.133(6) — may be carried out, and that "Based upon inquiry and facts of the case, relevant provisions of the Act may be invoked." The same letter gives the Income-tax Act 2025 counterparts: s.195 for s.115BBE and s.252 for s.133(6), each one for one, and “section 102, 103, 104, 105 and 106” against the whole set “section 68, 69A, 69B, 69C and 69D”, which is a correspondence between two lists and not between their members in order.
• Statutory position — section 158BB: how the block figure is built, what is kept out of it, and why Abhisar Buildwell does not simply carry across CBDT Circulars & InstructionsCuts both ways
  The block assessment adds amounts for which nothing was found in the search. Can I take the Abhisar Buildwell point that there must be incriminating material?
  Not in the form in which that case decides it, because Abhisar Buildwell construes section 153A and section 158BB is worded differently. Section 158BB(1) makes the total undisclosed income of the block period the aggregate of only two things — what the assessee declares as undisclosed income in his section 158BC return, and what the Assessing Officer determines under section 158BB(2); and section 158BB(2) requires that determination to be made 'on the basis of evidence found as a result of search or survey or requisition of books of account or other documents and any other material or information as are either available with the Assessing Officer or come to his notice during the course of proceedings under this Chapter'.
• Statutory position — section 79A: no set-off against undisclosed income found in a search, requisition or survey, from AY 2022-23 CBDT Circulars & InstructionsCuts both ways
  A search threw up unaccounted stock and cash and the Assessing Officer has added it. I have a large brought-forward loss and unabsorbed depreciation sitting there. Can I set them off against the addition?
  For AY 2022-23 and every later year, no. Section 79A, inserted by the Finance Act 2022 (Act No. 6 of 2022) with effect from 1 April 2022, says that where, consequent to a search under s.132, a requisition under s.132A or a survey under s.133A other than s.133A(2A), the total income of any previous year includes undisclosed income, no set-off of any loss — brought forward or of the current year — and no set-off of unabsorbed depreciation under s.32(2) shall be allowed against that undisclosed income under any provision of the Act.
• CBDT Circular No. 11/2019 — set-off of loss against s.115BBE income CBDT Circulars & InstructionsHelps taxpayer
  Is there anything from the Board itself I can put in front of the officer on setting off losses against s.68 or s.69 additions in an old year?
  Yes. Circular No. 11 of 2019 records the Board's view that an assessee is entitled to claim set-off of loss against income determined under s.115BBE up to assessment year 2016-17. It is the department's own instruction, so an Assessing Officer cannot take a contrary view for those years — and by the same document, the position from assessment year 2017-18 is that the set-off is denied.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.