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TMI Blog2019 (10) TMI 989X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the assessee has filed return of income on 26.10.2007 declaring total income of Rs. 7,52,422/-. On verification carried out under section 133(6), the AO noted that the notice issued to purchaser parties namely U M Exports, L G Diamonds, S P Enterprise and Ashi Gems was returned unserved. Further information was also received from DDIT(Inv.) Mumbai regarding suspicious transaction in the bank account of the parties from whom the assessee has purchased goods. This was based on the statement of one Shri Mahesh Mehta, one of the proprietor of above mentioned parties. The DDIT (Inv) Mumbai in his report has stated the havala transaction of providing accommodation entries. In view of this matter, the AO has disallowed 25% of such purchases from the above mentioned parties amounting to Rs. 10,81,61,455/- which resulted in the addition of Rs. 2,70,40,363/-. 4. The assessee has carried the matter before ld.CIT(A). However, Ld.CIT(A) after considering the submissions of the assessee observed that it is an admitted facts that the appellant has take accommodation bills from erstwhile concerns and supplied such bills by initiating bogus sales. In return, earning some commission on such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [I.T.A.No. 2400 & 2407/Ahd/ dated 10.05.2013 of Ahmedabad tribunal, wherein net profit was estimated at 0.5% of turnover. The learned counsel for the assessee Further, submitted the Special Bench in the case of Manoj Agarwal v. DCIT [2008] 113 ITD 377 (Del) has estimated commission income at 0.50% for giving accommodation entries by holding the CIT (A) was justified in estimating net commission at 0.355 after allowing 0.15% for expenses. The learned counsel for the assessee. Therefore, it was submitted that the issue is squarely covered in favour of the assessee. The ld.Counsel further, relied on number of case laws as para his case laws Paper Book. 7. We have heard the rival submissions and perused the relevant material on record. We find that the Tribunal in the case of Shri Dineshkumar Chandanmal Jain vide order dated 05.04.2013 in I.T.A.No. 2635& 2636/Ahd/2009 A.Y. 05-06 & 06-07 dated 05.04.2013 has dismissed the revenue appeal and upheld the decision of ld.CIT(A) for restriction of addition to 0.25% of unverifiable purchases. It was observed by Tribunal that Ld.CIT(A) has allowed appeal on the ground that when income of the assessee has been directed to compute @ 0.25% on tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly return. Interest from both the concerns was duly shown in the books of accounts of Arpit Jewels. The name of the company of Neol Equity Research (P) Ltd. had changed as Sapphire Biz Forecasting and Consulting (P) Ltd. and cy of fresh certificate issued by the ROC was filed. Form No.16A was obviously issued in old name and books of accounts Arpit Jewels were also reflected entries of old name. In view of these facts and circumstances, the CIT (A) held that based on relevant facts the AO was not justified in making addition based on AIR information. Since the appellant has explained with duly document hence, addition was deleted. 11. Being aggrieved, the Revenue has filed this appeal before the Tribunal. The ld. D. R. relied on the order of the AO and could not bring anything contrary to the finding of the ld. CIT (A). 12. Au contraire, the learned counsel for the assessee relied on CIT (A). 13. We have heard the rival submissions and perused the relevant material on record. We find that the interest received was duly reflected in the books of accounts of Arpit Jewels (a sister concern of the assessee) which has been duly verified by the Ld. CIT (A). In view of this matter, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Shri Ajay Loknath Lohia vs. IT0 25 (2)(1) Mumbai in I.T.A.No. 2998/Mum/2017 dated 05.10.2018 wherein it was held that mere disallowance of purchases on adhoc basis does not tantamount to willful furnishing inaccurate particulars of income within the meaning of section 271(1)(c) of Income Tax Act, 1961. Hence, we are of the considered view that the AO erred in levying penalty u/s.271(1)(c) of the Act. The ld.Counsel further placed reliance on the decision in the case of Deepak Gogri vs. ITO in I.T.A.No. 1396/Mum/2017, Pr. CIT vs. Fortune Techno Comps. Pvt. Ltd., I.T.A.No. 313/ 2016 of Hon'ble Delhi High Court and also in the case of Shervni Hospitalities Ltd., Vs. CIT 85 CCH 76 (Del. SC) in support of this contention. It was further submitted that the AO has issued notice under section 271(1)(c) read with section 274 but has not strike out the relevant para. Hence, the assessee was not sure for which default the penalty is initiated. The learned counsel for the assessee has argued that the learned CIT(A) as wrongly considered that it is not a case of estimation of income. The addition of Rs. 2.70 crores made by the AO was reduced to Rs. 70,403/-by applying the net profit rat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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