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TMI Blog2020 (8) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee and particularly when part of material is recorded in stock, it cannot be justified that the estimation made by the Assessing Officer warrants penalty under section 271(1)(c) - It can be a case of addition or disallowance of bogus purchases on estimate basis but it cannot be a case of levy of penalty for concealment of income under section 271(1)(c) - In the present case the entire purchase totaling to ₹89,044/- are treated as bogus purchases and addition is only to the extent of disallowance of depreciation at the rate of 60% on the fixed asset of ₹62,500/- as ₹37,560/-. Thereby, the total addition on account of bogus purchases and disallowance of deprecation of bogus purchases comes to ₹1,26,604/-. - Penalty d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w, the Ld. CIT(A) was right in deleting the penalty of ₹ 39,120/- levied under section 271(1)(c) of the Act of the I.T. Act, 1961 without appreciating that the claims made is not only incorrect in law but is also wholly without any basis and the explanation furnished by it for making such a claim is not found to be bona fide triggering Explanation 1 to section 271(1)(c) of the I.T. Act, 1961. As held by Hon ble Delhi High court in the case of Zoom Communication Pvt. Ltd. 40 DTR 249 (2010)?. 3. At the outset, it is noticed that the amount involved is ₹39,120/- Which is the penalty levied by the Assessing Officer on estimated addition and further it is below the prescribed limit of circular issued by Central Board of Direct T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of income by the assessee. Merely suspicion or doubt cannot be the basis for levying penalty under section 271(1)(c) of the Act of the Act either for concealment of particulars of income or for furnishing of inaccurate particulars of income as the case may be. Furthermore, once there is no reason to disbelieve the sales made by the assessee and particularly when part of material is recorded in stock, it cannot be justified that the estimation made by the Assessing Officer warrants penalty under section 271(1)(c) of the Act. It can be a case of addition or disallowance of bogus purchases on estimate basis but it cannot be a case of levy of penalty for concealment of income under section 271(1)(c) of the Act in the given facts and circums ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income or furnishing of inaccurate particulars of income or both, with clarity. If the notice is issued in the printed form, then, the necessary portions which are not applicable are required to be struck off, so as to indicate with clarity the nature of the satisfaction recorded. In both Samson Perinchery and New Era Sova Mine(supra), the notices issued had not struck of the portion which were inapplicable. From this, the Division Bench concluded that there was no proper record of satisfaction or proper application of mind in matter of initiation of penalty proceedings. 7. In the present case, as well if the notice dated 30/09/16 (at page 33) is perused, it is apparent that the relevant portions have not been struck off. This coup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso disallowed depreciation claimed of ₹ 37,560/- on the assets claimed to be purchased from the said party. The penalty now has been levied in respect of the same addition, albeit at a minimum level. 3.1.3 The appellant has contended that they did not go for an appeal against the quantum order, as it is a BIFR company, having huge unabsorbed business losses of ₹ 37.41 crores and UAD loss of ₹ 777 crores. That, had they gone in for appeal, they would surely have won, as their facts are very strong. They further contend that when there is a turnover of around ₹ 15 crores, why should they be indulging in bogus purchases. 3.1.4 I find that the Hon'ble SC has in the case of B A Balasubramaniam Bros. Co, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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