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2012 (5) TMI 743 - ITAT JAIPURLevy of penalty u/s. 271(1) (c) - higher g.p. rate - Held that:- For both the years, the clear finding by the tribunal for sustaining a higher g.p. rate is to plug a possible leakage of revenue on account of unverifiable purchases; the assessee having exhibited the purchase of goods against its unverifiable purchases. The assessee can under the circumstances only be considered as having substantiated it explanation, if not to the hilt, substantially so, with all the facts material to the computation of income being on record. Once it is accepted as a fact that the goods had indeed been purchased, an addition on account of a possibility of having incurred a higher expenditure than claimed, though definitely valid for effecting a disallowance of the claimed expenditure; the assessee having failed to prove their actual cost as incurred, cannot lead to the inference of a wrong claim, justifying the levy of penalty. That is, the very fact of the tribunal sustaining a higher g.p. rate only to plug a possible leakage of revenue on account of unverifiable purchases, proves the assessee’s claim of absence of any charge of having not disclosed its correct income, and of having a plausible explanation in support of the returned income. The same, though, would not prove its case as regards the claim of expenditure (or income), yet remains a valid claim for the purpose of levy of penalty. No penalty is exigible in the instant case - Decided in favour of assessee.
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