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TMI Blog2025 (4) TMI 1623X X X X Extracts X X X X X X X X Extracts X X X X ..... in law and in the facts and circumstances of the case the learned Lower Authority grossly erred in confirming the penalty of Rs. 1,03,150/- imposed u/s 271(1)(c) of the Act on furnishing inaccurate particulars of income.'' 2.1 First of all, we take up the appeal of the assessee for adjudication the assessment year 2008-09 wherein the facts of the case as mentioned in the penalty order u/s 271(1)(c)of the Act are that the assessee filed his return of income on 22-09-2008 for the assessment year 2008-09 declaring a total income at Rs. 3,51,880/-. Assessment in this case was completed u/s 148/143(3) of the Act vide order dated 25-01-2016 determining total income at Rs. 9,53,340/- as detailed herein below : 1. Total income as declared by the assessee in ITR/e ITR 3,51,880/- Add: i) Disallowance out of bogus purchase 6,01,459/- 6,01,459/- Total income 9,53,339/- Rounded off 9,53,340/- In that assessment order ld. AO initiated penalty proceedings u/s 271(1)(c) vide notice dated 25-01-2016. 2.2 Assessee challenged that order of assessment before the ld. CIT(A) which was partly considered by ld. CIT(A) vide order dated 14-12-2018 in Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant and the books of account were rejected u/s 145(3). The income has to be estimated because of the "wrong" of the assessee. It is a settled principle that no one can be allowed to take benefit of his own wrong. Further, the estimate done in the background of there being on the record enough material to show that any particular entries in the books of account were false or incorrect. The way of assessment of income of the appellant in the present case no way takes away the guilt of the assessee or explain its failure to prove that the failure to return the correct income did not arise from any fraud or any gross or willful neglect on its part. Apparently the assessee was taking a chance-sitting on the fence. In view of the above discussion the levy of penalty in the penalty order under appeal is hereby upheld and this ground of appeal of the appellant is hereby dismissed. 2.4 Similarly for the assessment year 2009-10, the penalty of Rs. 13,782/- was imposed by the AO vide his order dated 17-03-2020 which has been confirmed by the ld. CIT(A) holding the same analogy in his order dated 12-09-2024. The relevant para 4.2of ld. CIT(A)'s order is reproduced as under:- ''4.2 I ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering the submission of the assessee, reduce the G.P. on estimated basis against the G.P. declare by the assessee. The detail of addition made by the ld. assessing officer and relief given by the ld. CIT(A) for the Assessment year 2008-2009 and 2009-2010 is as under:- A.Y. Purchase Disallowance (25%) Addition (Assessing officer) Addition restricted (CIT-A) 2008-2009 2405836 601459 333812 2009-2010 178783 44696 40548 Copy of order dated 14.12.2018 passed by the ld. CIT(A) against the addition made u/s 143/147 of the Act for the Assessment year 2008-2009 and 2009- 2010 is enclosed herewith. 4. That penalty proceeding u/s 271(1)(c) of the Act was initiated against the assessee in consequences of the order dated 25.01.2016 and the ld. assessing officer without appreciating the submission submit in response to Show-cause notice, without considering the precedents settled by the different benches of the Hon'ble tribunals that the penalty is not leviable on the addition based on estimated basis. 5. The ld. assessing officer grossly erred in holding that the addition made in the case of the assessee is not general G.P. addition, The addition was made on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis:- That Hon'ble ITAT, Jaipur Bench in the matter of Shri Alok Haldia v. ACIT [2019 (4) TMI 673-ITAT Jaipur] dated 08.04.2019 held that:- "We have considered the rival contentions and carefully gone through the orders of the authorities below. We had also deliberated on the judicial pronouncements referred by the lower authorities in their respective orders as well as cited by the ld. AR and ld. DR during the course of hearing before us in the context of factual matrix of the case. From the record, we found that in the course of quantum proceedings, the A.O. has estimated extra income of 25% of the alleged bogus purchases. The ld. CIT(A) has estimated 15% of the profit on such purchases, accordingly given partial relief. In quantum appeal, the Tribunal have confirmed the order of the ld. CIT(A) upholding the addition @ 15%. The A.O. has also imposed penalty U/s 271(1)(c) of the Act with regard to estimated quantum addition upheld by the ld. CIT(A). The assessee is in further appeal before us with regard to penalty so imposed by the A.O. U/s 271(1)(c) of the Act. However, the quantum and penalty proceedings are separate and if in the penalty proceedings, it is found that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verification and also summons were returned back to the officer unserved. This Bench recently decided this issue in detail in the case of Shri Anuj Kumar Varshney Vs. I.T.O. and other cases in ITA No. 187/JP/2012 order dated 22/10/2014 and gave detail findings on unverifiable purchases in number of cases. The department has been able to prove that in gems and jewellery business, some of the parties were giving accommodation entry and some of them accepting the accommodation bill to reduce the profit. The parties names figured in this case also were similar to those cases, therefore, we hold that the addition made by the Assessing Officer was ITA No.95/JP/2017 Shri Ashosk Kumar Gupta vs ITO, Ward- 4(2), Jaipur 7 specific and assessee had concealed the income and furnished inaccurate particulars of income. Further the assessee's explanation is not bonafide. The case laws referred by the assessee are not squarely applicable. In this case, the addition was specific with reference to unverifiable purchases. Therefore, we reverse the order of the ld CIT(A)." Ld. AR of the assessee has placed reliance on the decision in the case of Shiv Lal Tak Vs CIT (supra) wherein the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther observed that on similar issue of imposing penalty u/s 271(1)(c) of the Act, the ITAT Jaipur Bench in the case of Deepak Dalela vs ITO (supra) has deleted the penalty by observing as under:- 5. We have heard the rival contentions of both the parties, perused the material available on the record and also gone through the orders of the lower authorities. The Coordinate Bench in the identical case i.e. in the case of ITO Vs. M/s Bhansali Trading Corporation, has held as under:- "6. We have heard the rival contentions of both the parties and perused the material available on the record. The addition made by the Assessing Officer was specific on account of unverifiable purchases on which G.P. @ 25% was applied and added in the income. However, the same was reduced by the ld CIT(A) and applied different G.P. rate. However, the additions were specific. The assessee has not been able to produce these parties for verification and also summons were returned back to the officer unserved. This Bench recently decided this issue in detail in the case of Shri Anuj Kumar Varshney Vs. I.T.O. and other cases in ITA No. 187/JP/2012 order dated 22/10/2014 and gave detail findings on unverifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that: Penalty cannot be levied when income has been estimated - Where the assessee had not maintained any accounts but had filed his return of income on estimate basis, and the Assessing Officer made his own estimate with which the Tribunal did not agree, it could not be said that the assessee had 'concealed' his income so as to attract penalty. There has to be a positive act of concealment on the assesses part and the onus to prove this is on the department. Thus, looking at the facts and circumstances of the case it is submitted that the penalty imposed by the ld. assessing officer and confirmed by the ld. CIT(A) is completely illegal, without following the settled law and thus penalty deserves to be deleted.'' 2.6 Further, the ld. AR of the assessee has filed the following documents as Index to support his arguments in the cases of the assessee. INDEX S.no. Particular Page No. 1. Written Submission 01-09 2. Copy of order dated 14.12.2018 passed by the ld. CIT(A) against the addition made u/s 143/147 for the Assessment year 2008-2009. 10-41 3. Copy of order dated 14.12.2018 passed by the ld. CIT(A) against the addition made u/s 143/147 for the Assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACIT (2019 (4) TMI 673-ITAT, Jaipur] dated 08.04.2019, () Deepak Dalela Vs ITO in ITA No. 1027/JP/2013 dated 22/12/2016 (iii) Ashok Kumar Gupta v ITO [2018 (6) TMI 69-ITAT Jaipur] dated 30.05.2018 and other judgements and contended that the penalty cannot be levied in the case as the appellant had given all the documentary evidences in support of the purchases and that the addition is on estimate basis which has been gradually and substantially reduced by the ld. CIT(A) and Hon'ble ITAT. Initially the disallowance was made by the learned AO at the rate of 25% of the purchase value which ultimately came to be restricted to 10.28% Considering the facts of the case and the circumstances, respectfully following the judgements of honourable ITAT Jaipur bench, the penalty levied by the learned AO is hereby directed to be deleted and this ground of appeal of the appellant is hereby allowed.'' 2.9 Thus, it is clear from the above order of the ld. CIT(A) that he has allowed the penalty appeal of the assessee for the assessment year 2007- 08 on the same set of facts whereas for assessment years 2008-09 and 2009-10 though the facts being same should have been allowed. The doctrine of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars. Hence, in view the entirety of the matter, both the appeals of the assessee relating to penalty u/s 271(1)(c) for the assessment year 2008-09 and 2009-10 are allowed, respectfully following the rule of judicial consistency and decision of the apex court. 3.0 In the result, both the appeals of the assessee relating to levy of penalty under section 271(1)(c) of the Act are allowed. Sd/- (राठोडकमलेशजयन्तभाई ) (Rathod Kamlesh Jayantbhai) लेखासदस्य @Accountant Member PER :NARINDER KUMAR, JUDICIAL MEMBER. I have gone through the draft order communicated by my Learned Brother-Accountant Member. I have reasons to add in dealing with the issue involved, and as such, I proceed to append my reasons, observations and opinion. 2. Two separate orders passed by Learned CIT(A) i.e. order dated 11.09.2024 relating to the assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned CIT(A) while dealing with challenge to an order dated 17.05.2024 by which penalty u/s 271(1)(c) of the Act relating to the assessment year 2007-08 was imposed, set aside said penalty order, and as such, even on this ground the penalties imposed by the Assessing Officer deserved to be set aside. 6. On the other hand, Ld. DR for the department has contended that while framing assessment, these cases were found to be of bogus purchases, for the reasons recorded by the Assessing Officer, and as such, the Assessing Officer was justified in imposing penalty in respect of the said assessment years, and Learned CIT(A) was also justified in confirming the said penalties, for the reasons recorded in the impugned orders. 7. As regards setting aside of the previous penalty order by Learned CIT(A) relating to the assessment year 2007-2008, Learned DR has not disputed this factual position that penalty order was set aside. Copy of said order is available from page 83 to 92 of the paper book submitted on behalf of the appellant. In said order, Learned CIT(A) considered the contention raised before him on behalf of the appellant that the appellant had given all the documentary evidences ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bogus. Had it been so, then the matter would have been different, and both these appeals, deserved to be dismissed in view of decision in Sandeep Kewalchand Mehtav.ACIT,[2025] 173 taxmann.com 315 (Mumbai - Trib.). Therein, levy of penalty u/s 271(1)(c) of the Act amounting to Rs. 1,84,771/-stated to be on estimated profits on the addition of unverified purchases, was confirmed by Ld. CIT(A). Prior to the penalty order, assessment order dated 30/03/2015 was passed u/s 143(3) r.w.s. 147 of the Act wherein, during the course of the scrutiny assessment proceedings, on the basis of the information received from the Sales-tax authorities, the AO came to know that the assessee had made bogus purchases from hawala parties amounting to Rs. 43,48,834/-, and the entire amount was added to the income of the assessee. Matter came up before the Appellate Tribunal. The Tribunal vide its order dated 31/10/2017, restricted the quantum addition at 12.5% of the bogus purchases. It was in pursuance of the order of the Tribunal, penalty proceedings were initiated u/s 271(1)(c) of the Act, and a penalty of Rs. 1,84,771/- was levied. There, on behalf of the appellant, it was contended that since the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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