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TMI Blog2021 (7) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... etermining the income at Rs..1,55,59,025/- and Rs..1,03,13,010 for the A.Y: 2009-10 and A.Y.2010-11 respectively. While completing the reassessment the Assessing Officer treated purchases of Rs..23,78,395/- and Rs..14,64,008/- for the A.Y:2009-10 and A.Y. 2010-11 respectively,made from various dealersas non-genuine on the basis of the information received from DGIT (Inv.,), Mumbai that assessee has received accommodation entries from various dealers without making any purchases but made purchases only in gray market. The Assessing Officer treated such purchases as non-genuine as the assessee could not produce any delivery challan to prove that the delivery of goods has been actually received by the assessee from the alleged suppliers. However, the Assessing Officer estimated the profit element from non-genuine purchases at 10% and brought to tax an amount of Rs..23,78,395/-out of purchases of Rs..2,37,83,952/- for the A.Y.2009-10 and amount of Rs..14,64,008/- out of purchases of Rs..1,46,40,086/- for A.Y. 2010-11. On further appeal the Ld.CIT(A) restricted the Gross Profit element to 5% of the alleged non-genuine purchases. Subsequently, Assessing Officer initiated penalty proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cealment of income. No allegation by Assessing Officer that the assessee failed to disclose the particulars relating to its claim in the return of income. Thus we hold that there is no concealment of income or furnishing of inaccurate particulars of income. 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 concea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestigation. In the instant case also, the assessing officer has made the impugned addition on the basis of statements given by the parties before the Sales tax department. We notice that the ld.CIT(A) has taken note of the fact that no sales could 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 Po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee pleaded that since no positive concealment had been detected by the Department and the addition was made in his income only on estimate basis, no penalty under Section 271(1)(c) of the Act could be imposed because the assessee'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 allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the explanation furnished by the assessee had not been substantiated or that he had failed to prove that such explanation was not bona fide. 5. In the result, the appeal is allowed and the question posed in the earlier part of 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 the caseson 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 orders passed by the Ld.CIT(A) in deleting the penalty u/s.271(1)(c) of the Act levied by the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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