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2024 (2) TMI 44 - ITAT RAIPUREstimation of income - Unexplained expenditure u/s 69C - bogus/unverified purchases - HELD THAT:- Admittedly, it is a matter of fact borne from record that the assessee had failed to substantiate the authenticity of his claim of having made genuine purchases from the mentioned tainted parties. At the same time, we find that it is a matter of fact borne from record that the A.O in the course of the assessment proceedings, had observed that the assessee in the garb of bogus bills procured from the aforementioned parties had routed the unaccounted stock available with him through his regular books of account When the A.O was of the view that the assessee had not made any genuine purchases from the aforesaid bogus/hawala parties and had merely procured bogus bill from them to route the unaccounted stock through his regular books of account, then, the sole inference which can be drawn is that the assessee had purchased goods not from the aforementioned tainted parties but had procured the same at a discounted value from open/grey market. We are unable to concur with the A.O who had made addition of the entire value of the impugned purchases in the hands of the assessee. Also, we find that the A.O had at no stage rejected the books of account of the assessee u/s.145(3). Addition in the case of the assessee could only have been made to the extent of the profit element which he would have made by procuring goods at a discounted value from the open/grey market as against the value booked by him in the garb of aforesaid bogus purchase bills in his books of account. In so far the issue of quantification of the profit which the assessee would have made by procuring the goods in question from the open/grey market is concerned, we find that in the case of Pr. Commissioner of Income Tax-17 Vs. M/s. Mohhomad Haji Adam & Company, [2019 (2) TMI 1632 - BOMBAY HIGH COURT] while upholding the order of the Tribunal, had observed, that the addition in the hands of the assessee as regards the bogus/unproved purchases was to be made to the extent of bringing the G.P rate of such purchases at the same rate as those of other genuine purchases. Profit made by the assessee in the case before us by procuring the goods at a discounted value from the open/grey market can safely be determined by bringing the G.P rate of such bogus purchases at the same rate as that of the other genuine purchases. We, thus, in terms of our aforesaid observations restore the matter to the file of the A.O, with a direction to him to restrict the addition in the hands of the assessee w.r.t the impugned bogus/unverified purchases made by him by bringing the GP rate of such bogus purchases at the same rate as that of the other genuine purchases. Penalty u/s 271(1)(c) - defective notice u/s 274 - non specification of clear charge - HELD THAT:- Failure on the part of the A.O to clearly put the assessee to notice as regards the default for which penalty under Sec. 271(1)(c) was sought to be imposed on him by clearly and explicitly pointing out the specific defaults in the SCN, for which the assessee was called upon to explain that as to why penalty u/s.271(1)(c) of the Act may not be imposed upon him, had, thus, left the assessee guessing of the default for which he was being proceeded against, and had divested him of an opportunity to put forth an explanation before the A.O that no such penalty was called for in his case. We, thus, in the backdrop of our aforesaid observations are of a strong conviction that as the A.O had clearly failed to discharge his statutory obligation of fairly putting the assessee to notice as regards the default for which he was being proceeded against, therefore, the penalty under Sec. 271(1)(c) imposed by him being in clear violation of the mandate of Sec. 274(1) of the Act cannot be sustained - Decided in favour of assessee.
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