2024 (5) TMI 1132 - AT - Income Tax

Penalty proceedings u/s. 271(1)(c) - Estimation of income on Bogus purchases - CIT(A) applied gross profit of 10% on the bogus purchases as against the addition made by the ld. AO of entire purchases and deleted the penalty - HELD THAT - We find that once it is not in dispute the payments for the purchases have been from the books and trough banking channels and assessee has also shown corresponding utilization in the manufacturing account and same has been accepted then entire purchases could not have been added u/s. 69C. Accordingly we do not find any infirmity in applying the profit rate of 10% which is in line with the decision of PCIT vs. Jagdish Thakkar 2022 (9) TMI 307 - BOMBAY HIGH COURT and in the case of PCIT vs. S V Jiwani 2022 (10) TMI 173 - BOMBAY HIGH COURT Accordingly the appeal of the Revenue is dismissed. Penalty imposed - Once the assessee had declared purchases and produced all the corresponding bills including the delivery challans and the source of the purchases are through books and through account payee cheques and corresponding utilization of purchases and the manufacturing has not been disputed then there cannot be any furnishing of inaccurate particulars or concealment of income on estimated profit rate of 10%. Accordingly we hold that ld. CIT(A) has rightly deleted the penalty. Decided against revenue.

Summary

The Appellate Tribunal ITAT Mumbai dismissed the Revenue's appeals against the quantum of assessment and penalty proceedings related to bogus purchases. The Tribunal upheld the application of a 10% profit rate on the purchases, citing relevant case law. The penalty was also deleted as the purchases were declared, supported by documentation, and made through legitimate channels. The appeals of the Revenue were both dismissed. (Judgment dated: 21st May, 2024)