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2019 (1) TMI 466 - AT - Income TaxLevy of penalty u/s 271(1)(c) - addition on account of unverifiable purchases @ 25% - Held that:- There is no dispute that while completing the assessment U/s 143(3) of the Act, the Assessing Officer rejected the books of account of the assessee U/s 145(3) of the Act and consequently the income in respect of unverifiable/bogus purchases was estimated @ 25% of such purchases. The said addition made by AO was restricted by the CIT(A) to 7% to those purchases as against 25% addition made by the Assessing Officer. Thus, it is clear that the addition sustained by the ld. CIT(A) is nothing but is based on the estimation of income by taking 7% of such unverifiable purchases. The Coordinate Bench of this Tribunal have taken a consistent view on this issue of levy of penalty against the addition made by the Assessing Officer by taking the income @ 25% of the unverifiable purchases holding that the penalty levied against the addition based on estimation of income is not sustainable In view of the decision of the CIT Vs Mahendra Singh Khedla (2012 (3) TMI 568 - RAJASTHAN HIGH COURT), the levy of penalty against the addition made on the basis of estimation of income by taking 25% of the unverifiable purchases which was reduced in the said case to 15% was found to be not sustainable. This view has been consistently taken even in other decisions - Decided in favour of assessee.
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