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2017 (3) TMI 889 - AT - Income TaxPenalty u/s. 271(1)(c) - quantum addition of estimated gross profits after rejection of books - Held that:- Assessee’s gross profits are @42.99% as against 45.77% in the immediate preceding assessment year. The case file indicates that its gross profits at much lower rates of 40.90% have been assessed in assessment year 2001-02, very high rate of 50.25% in assessment year 2007-08 and again a very low figure of 32.59% in assessment year 2010-11; respectively as disclosed and accepted in scrutiny assessments. The assessee had sought to justify its decline in gross profit as compared to the preceding assessment year by placing on record all necessary details which formed the necessary basis for the Assessing Officer to reject its book and arrive at estimated GP @45%. It has also come on record that he examined all the raw material items, their purchase prices, consumption as well as all other heads of expenses stated in the record at assessee’s behest only. It is evident that the Assessing Officer is very fair in admitting in his assessment order that the assessee could not get verified key component of its excess consumption of raw material in the impugned assessment year. All this indicates that the assessee’s supportive evidence justifying the above low GP ratio in the impugned assessment year lacked verification rather than being in the nature of an altogether false explanation. We thus conclude that the above estimation of gross profits after rejection of books in quantum proceedings neither amounts to furnishing of inaccurate particulars nor concealment of income for the purpose of imposing Section 271(1)(c) penalty under challenge. The same is accordingly deleted. See Reliance Petroproducts’ case [2010 (3) TMI 80 - SUPREME COURT] - Decided in favour of assessee.
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