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TMI Blog2015 (1) TMI 828X X X X Extracts X X X X X X X X Extracts X X X X ..... ied in disallowing 25% of the purchase price. - Decided against the assessee Levy of penalty under Section 271(1)(c) - Held that:- The only condition which was required to be fulfilled for getting the immunity, after the search proceedings got over, was that the assessee had to pay the tax together with interest in respect of such undisclosed income up to the date of payment. Clause (2) did not prescribe the time limit within which the assessee should pay tax on income disclosed in the statement u/s.132(4) and thus, the assessee was entitled to immunity under clause (2) of Explanation 5 to section 271(1)(c). - Decided in favour of assessee. - INCOME TAX REFERENCE NO. 139 of 1996 With TAX APPEAL NO. 243 of 2002 - - - Dated:- 9-12-2014 - MR. KS JHAVERI AND MR. K.J.THAKER, JJ. FOR THE APPELLANT : MR SN SOPARKAR, ADVOCATE FOR THE RESPONDENT : MR PRANAV G DESAI, ADVOCATE JUDGEMENT Per: K S Jhaveri: 1. In the Reference Application filed before the Income Tax Appellate Tribunal, Ahmedabad Bench C u/s.256(1) of the Income Tax Act, 1961, both the Revenue as well as the Assessee had proposed several questions of law but, after appreciating the facts of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer passed the order of assessment u/s.143(3) on 18.03.1994 computing the income at ₹ 1,28,22,500/-. Being aggrieved by the order of Assessing Officer, appeal was preferred before the CIT(A). The CIT(A) deleted / confirmed various additions as per the details mentioned below; (a) Deleted the addition of ₹ 1,89,982/-. (b) Reduced the addition of ₹ 37,35,089/- and ₹ 3,19,618/- to ₹ 30,00,000/-. (c) Upheld the additions of ₹ 70,03,826/-, ₹ 17,99,788/- and ₹ 5,02,752/- towards payment on account of bogus purchases, credit balances in respect of bogus purchases and kharajat expenses in respect of bogus purchases respectively. 6. Against the order of CIT(A), the assessee filed appeal being ITA No.5898/AHD/1994 before the Tribunal. The Tribunal heard the parties and concluded that the transactions in respect of oil cakes shown as purchases by the assessee from the 33 parties were not genuine transactions and that the sale invoices claimed to have been issued by them were fictitious ones, by judgment and order dated 18.01.1996. 7. Pursuant to the judgment and order dated 18.01.1996 passed by the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooking to the nature and business activities of the assessee. The assessee is dealing in iron and steel wherein sales tax rate if 4 paise in one rupee. He further submitted that the other taxes including excise duty etc. are also less than the commodities of the said decision. After considering the totality of the case, we find that it is an admitted fact that the purchase were bogus and for this purpose, we confirm the order of AO but for the purpose of calculating amount of disallowance, we follow the decision of the Tribunal in the case of Vijay Proteins (supra) and after considering the submissions of the ld. AR and after considering the submission of the ld. AR and after considering the nature of business of the assessee and other circumstances, we find it reasonable and fair to both the parties if 15% disallowance of bogus purchases of ₹ 16,04,032/- is made. Accordingly, an addition of ₹ 2,40,605/- is confirmed out of the addition of ₹ 13,63,427/- is deleted. In the light of above discussion, we modify the orders of authorities below accordingly. The first common ground of both the appeals is disposed of accordingly. 5. The decision of this Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o found to be fictitious and the bank account in the name of M/s. Pooja Traders was found to have been opened and operated mainly with a view to accommodate these fictitious transactions carried out by the assessee in respect of oil cakes shown as purchases from such bogus suppliers. The above findings were recorded on the basis of the material on record of the Tribunal. 13. The question which then arises for consideration is as to whether the entire amount of the said bogus purchases and freight payments made in relation thereto should have been disallowed or the assessee should have been held to be eligible for grant of deduction of a reasonable amount of purchase price of the oil cakes in question in view of the fact that receipts of the materials in question by the assessee were supported by various registers and books of accounts maintained by the assessee, which the Revenue has not disputed. The Revenue has also not disputed the genuiness of said documents. 14. On the basis of the entries recorded in the books of accounts of the assessee, the provisions of Section 40A(3) of the Act would not be applicable as such payments were shown to have been made by crossed cheques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are of the opinion that the penalty has been wrongly imposed under Section 271(1)(c) of the Act. In the case of Krishi Tyre Retreading and Rubber Industries (supra), it has been held that as the addition had been sustained purely on estimate basis and no positive fact or finding had been had been found so as to even make the addition which was a pure guess work, no penalty under section 271(1)(c) of the Act could be said to be leviable on such guess work or estimation. We therefore answer the issue involved in appeals no. 833 to 836 of 2005 in the negative and in favour of the assessee. 18.1 At this juncture, it would be relevant to refer to a decision of the Apex Court in the case of Asst. Commissioner of Income-tax v. Gebilal Kanhaialal, HUF, [2012] 348 ITR 561 (SC) wherein, it has been held that the only condition which was required to be fulfilled for getting the immunity, after the search proceedings got over, was that the assessee had to pay the tax together with interest in respect of such undisclosed income up to the date of payment. Clause (2) did not prescribe the time limit within which the assessee should pay tax on income disclosed in the statement u/s.132(4) and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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