9911796707
TMI Blog2010 (10) TMI 1152X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition made to the gross profit on the basis of estimation and confirmed by the order of the Hon ble Income Tax Appellate Tribunal that is wholly unsustainable in law and on facts. Both the lower authorities have failed to appreciate the fact that the Appellate has neither furnished inaccurate particulars nor concealed any income and held that simply because addition is sustained, penalty is leviable. The penalty levied being without any merits and justification requires to be quashed. 3. The facts of the case are of that the AO levied penalty under Section 271(1)(c) of the Act amounting to ₹ 10,26,000/- on the following two additions: i) The addition on account of low GP of ₹ 16,20,937/-; ii) The addition on ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w GP. The assessee had disclosed the GP as high as 30.40%. However, the AO adopted the GP at the rate of 38.93% being the GP of preceding year. She further submitted that in the preceding year i.e. A.Y.1994-95, the GP originally disclosed by the assessee was only 24.47%, but the assessee has disclosed certain income on account of bogus purchase and after such surrender of income, revised GP was determined at 38.93%. She further submitted that the addition for the bogus purchases in the year under consideration was uncalled for because the same was only receipt of the amount of bogus purchase which was effected in the earlier year. When the income was already offered for such bogus purchases in 1994-95, there was no justification of the addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d wrong particulars with regard to the purchases and therefore the levy of penalty under Section 271(1)(c) is fully justified. He therefore submitted that the penalty levied under Section 271(1)(c) by the AO and confirmed by the CIT(A) should be sustained. 7. We have carefully considered the arguments of both the sides and perused the material placed before us. We find that the AO made two additions one for low GP of ₹ 16,20,937/- and other for bogus purchase amounting to ₹ 9,43,681/-. In the quantum appeal, the CIT(A) had deleted the addition on account of low GP amounting to ₹ 16,29,937/-. However, he had confirmed the addition of bogus purchase amounting to ₹ 9,43,681/-. Both the parties i.e. the assessee as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion whatsoever has been submitted to meet this objection. Therefore, the case law relied upon cannot be applied to the case of assessee as it was obligatory on the part of the assessee to explain the facts and figures for fall in GP rate. 7. The claim of assessee that bogus purchases could not be considered to compute GP rate as they have been separately taxed also cannot be accepted as they have been found to be effected by the assessee as per incriminating material. In this view of the situation, we find that addition has wrongly been deleted by CIT(A), therefore, his order in this regard is set aside and that of Assessing Officer is restored. We may mention here that in assessee s appeal, it was the contention of ld. Counsel that if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, taking into consideration alternative contention of the assessee that out of the addition made on account of GP, set off of addition made on account of bogus purchases should be given. Accordingly we direct that the assessee should be given telescopic benefit of this addition out of addition upheld on account of low GP. This ground is, therefore, allowed on alternative contention. From the above, it is evident that though the total addition sustained after the order of the ITAT in quantum appeal was ₹ 16,20,937/-, but it had two components (i) addition for bogus purchase amounting to ₹ 9,43,681 and (ii) the remaining amount i.e. ₹ 6,77,256/- (Rs.16,20,937 minus ₹ 9,43,681) was on account of variation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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