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TMI Blog2021 (3) TMI 1043X X X X Extracts X X X X X X X X Extracts X X X X ..... . While completing the reassessments the Assessing Officer treated purchases of Rs. 8,54,724/- made from M/s. Naman Enterprises and Rs. 3,73,907/- from M/s. Bhora Metal Industries as non-genuine for the A.Y. 2009-10 and A.Y. 2010-11 on the basis of the information received from DGIT (Inv.,), Mumbai that assessee has received accommodation entries from the above mentioned parties without making any purchases but made purchases only in gray market. The Assessing Officer treated such purchases from as non-genuine as the assessee could not produce the party and also could not establish the movement of goods. However, the Assessing Officer estimated the profit element from non-genuine purchases at 25% and brought to tax an amount of Rs. 2,13,681 and Rs. 93,477/- out of purchases of Rs. 8,54,724/- and Rs. 3,73,907/- for the A.Y. 2009-10 and A.Y. 2010-11 respectively. The assessee accepted the estimation of profit element from non-genuine purchases made by the Assessing Officer and no further appeal has been preferred. Subsequently, Assessing Officer initiated penalty proceedings and levied penalty of Rs. 89,541/- and Rs. 29,812/- u/s. 271(1)(c) of the Act for the A.Y. 2009-10 and A.Y. 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus we direct the Assessing Officer to delete the penalty levied u/s. 271(1)(c) of the Act." 6. Similarly, in the case of DCIT v. Manohar Manak, Alloys Pvt. Ltd. in ITA No. 5586/MUM/2015 dated 16.01.2017 the Coordinate Bench held as under:- "9. We have heard the rival parties and carefully considered material placed before us including the order of the authorities below. We find from the assessment order that the AO has made an addition of Rs. 45,76,587/- being 5% on total purchases on estimated basis in order to bring the bogus purchases to tax on the basis of information received from the third party i.e. State Sales Tax Department and DDIT(Inv) V(I), Mumbai which was not challenged by the assessee before the FAA and attained finality. Thereafter the AO levied penalty u/s. 271(1)(c) of the Act on the ground that the assessee did not challenge the assessment order and accepted additions so made thereby accepting the concealment of income. We find from the record that the additions as made by the AO was a pure estimate and nothing concrete as to bogus purchases were brought on records by the AO by making any further enquiries or investigation. In our view the penalty cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be effected without purchases. He has further placed reliance on the decision rendered by Hon'ble Gujarat High Court in the case of CIT Vs. M.K. Brothers (163 ITR 249). He has further relied upon the decision rendered by the Tribunal in the case of ITO Vs. Premanand (2008)(25 SOT 11)(Jodh), wherein it has been held that where the AO has made addition merely on the basis of observations made by the Sales tax dept and has not conducted any independent enquiries for making the addition especially in a case where the assessee has discharged its primary onus of showing books of account, payment by way of account payee cheque and producing vouchers for sale of goods, such an addition could not be sustained. The Ld. CIT(A) has also appreciated the contentions of the assessee that he was not provided with an opportunity to cross examine the sellers, which is required to be given as per the decision of Hon'ble Kerala High Court in the case of Ponkunnam Traders ( 83 ITR 508 & 102 ITR 366). Accordingly, the Ld. CIT(A) has deleted the impugned addition. On a careful perusal of the decision rendered by Ld. CIT(A) would show that the first appellate authority has analysed the issue in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;s income on estimate basis keeping in view his household expenses as well as the statement of accretion to his assets during the year under consideration, was bona fide. The Assessing Officer did not accept the reply and found that since the assessee had not filed any fresh evidence in penalty proceedings to prove that there was no attempt on his part to conceal his income, he, by his order dated March 10, 1992, imposed a penalty of Rs. 50,000. Feeling aggrieved by this order, the assessee filed an appeal before the Commissioner of Income-tax (Appeals), Patiala, who allowed the same holding that there was indeed no positive evidence whatever to show that the appellant's income during the year in question was, in fact, more than the income returned by him and that estimated additions in the returned income do not attract penalty under Section 271(1)(c) of the Act. The Revenue went up in appeal before the Income-tax Appellate Tribunal which was allowed by order dated May 30, 2001. It is against this order that the present appeal has been filed which raises the aforesaid question of law. 4. In order to attract Clause (c) of Section 271(1) of the Act, it is necessary that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the order is answered in the negative holding that the provisions of Section 271(1)(c) of the Act are not attracted to cases where the income of an assessee is assessed on estimate basis and additions are made therein on that basis." 8. Similar view has been taken by the Hon'ble Delhi High Court in the case of CIT v. Aero Traders Pvt. Ltd., [322 ITR 316] wherein the Hon'ble High Court affirmed the order of the Tribunal in holding that estimated rate of profit applied on the turnover of the assessee does not amount to concealment or furnishing inaccurate particulars. 9. In both these appeals on hand the Assessing Officer has only estimated the Gross Profit on the alleged non-genuine purchases without there being any conclusive proof of concealment of income or furnishing inaccurate particulars of such income. Thus, we do not observe any infirmity in the order passed by the Ld. CIT(A) in deleting the penalty u/s. 271(1)(c) of the Act levied by the Assessing Officer for both the Assessment Years. Grounds raised by the revenue are rejected. 10. In the result, appeals of the revenue are dismissed. Order pronounced on 05.03.2021 as per Rule 34(4) of ITAT Rules by placing th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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