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TMI Blog2018 (10) TMI 739X X X X Extracts X X X X X X X X Extracts X X X X ..... rchases deserves to be assessed as income of the assessee. Respectfully following the judgment of Hon’ble jurisdictional High Court we allow this appeal of the assessee and delete the penalty. - ITA No. 93/Ahd/2016 And ITA No.814/Ahd/2016 - - - Dated:- 10-10-2018 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER For The Assessee : Shri Tushar P. Hemani, AR For The Revenue : Shri Lalit P. Jain, Sr.DR ORDER PER RAJPAL YADAV, JUDICIAL MEMBER: ITA No.93/Ahd/2016 is directed against order of the ld.CIT(A), Gandhinagar, Ahmedabad vide which the ld.CIT(A) has dismissed appeal of the assessee and further enhanced the income. ITA No.814/Ahd/2016 is against order of the ld.CIT(A) vide which the ld.CIT(A) has imposed penalty of ₹ 70,72,217/- under section 271(1)(c) of the Income Tax Act, 1961 on the addition made by enhancing the income at his end. 2. First we take quantum appeal: Though the assessee has taken six grounds of appeal, but its grievance relates to disallowance of expenses debited towards purchases amounting to ₹ 2,08,06,760/- and ₹ 3,15,000/-. 3. Brief facts of the case are that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outstanding balance of Ricasil Ceramic Industries P.Ltd. The ld.CIT(A) did not allow of this amount on the ground that no payment has been made by the assessee to this concern, and this concern did not respond to the notice of the AO. 6. Before us, the ld.counsel for the assessee contended that it has made genuine purchases from the above referred three parties and in support of its claim, it has filed following documentary evidence: Particulars Pgs of P/B Purchase ledgers 106-112 Ledgers of concerned three parties 113-117 Purchase bills w.r.t. purchases from concerned parties 118-133 Details w.r.t. purchases viz. name and address of parties, date of purchase, amount and quantity of purchases, etc. and like details for sales as we well 134-154 Quantitative details of stock 154 Tax Audit Report and Annual accounts 82-87, 93-104 7. He Placed on record copy of Hon ble Gujarat High Court s j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25% of purchases were disallowed to the assessee and addition was made. However, considering the nature of business carried out by the assessee in the case of Gujarat Ambuja, the Hon ble Gujarat High Court upheld the addition made by the Tribunal at 5% of the total purchases. No doubt, there is discrepancy in the purchases made by the assessee from three parties. The payments were outstanding at close of the accounts substantially, and before us, the ld.cousnel for the assessee agreed that if an adhoc disallowance of the purchases is being made then the assessee would have no objection. He prayed that such adhoc addition should be restricted at 5% of the total purchases made from these concerns. The ld.DR contended that it should not be less than 25%. 9. On due consideration of the above facts and circumstances, we are of the view that the assessee failed to substantiate its purchases with plausible evidence, though it has submitted details, but these are purchase ledgers maintained by the assessee. They demonstrated quantitative details of purchases, details of parties, but confirmation from those parties have not been filed. Hence, purchases from these three parties are to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 271(1)(c) is imposable. The question framed by the Hon ble High Court in that case reads as under: A) Whether on the facts and circumstances of the case, the Income-tax Appellate Tribunal, was right in law in confirming the penalty under Section 271(1)(c) of the Income-tax Act, 1961 in respect of the addition of ₹ 2,09,150/- being 25% of purchases of ₹ 8,36,601/-? B) Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal, was right in law in upholding the order of CIT(A) to confirm the penalty under Section 271(1)(c) of the Income-tax Act, 1961 in respect of addition of ₹ 2,09,150/- sustained in appeal? 12. Hon ble High Court thereafter replied to the question as under: 4. Learned Counsel for the appellant has drawn the attention of this Court to the decision of this Court in the case of Vijay Proteins Ltd. v. Commissioner of taxmann.com 44 (Gujarat) and relevant paragraphs are reproduced as under :- Insofar as T.A.No.243/2002 is concerned, the question of law raised therein is already concluded by a decision of this Court rendered in T.A. No.461/2000 allied matters, as stated herein above. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsequently, the penalty imposed was quashed and set aside. It is submitted in the facts of present case, the order of penalty also imposed upon the assessee may be dismissed. 5. On the other hand, learned Counsel for the respondent - Department has submitted that in view of the bogus purchases, the order of penalty may be confirmed. 6. We have heard learned Counsel for the respective parties and perused the records of the case. Taking into consideration the order the Tribunal, the evidence which has surfaced on record as well as the decision of this Court in the case of Vijay Proteins Ltd. v. Commissioner of Incometax (supra), we are of the view that the issues raised in this Appeal are to be answered in favour of the assessee and against the Department. 13. A perusal of the above judgment would indicate that addition in that case was made on the similar line. Penalty was also imposed on similar reasoning. Tribunal has confirmed the penalty and Hon ble High Court reversed order of the Tribunal and deleted penalty. Hon ble Court put reliance upon its earlier judgment in the case of Vijay Proteins Ltd. CIT, Tax Reference No.139 of 1996 as well as Krishi Tyre R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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