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2020 (3) TMI 1231 - AT - Income TaxPenalty levied u/s 271(1)(c) - Bogus purchases - AO estimated the profit element from the non-genuine purchases at 12.5% - HELD THAT:- It is a settled position of law that penalty cannot be levied when an adhoc estimation is made. In this case an adhoc estimation was made by the Assessing Officer restricting the profit element in the purchases @12.5%. On identical situations the Coordinate Bench in the case of Shri Deepak Gogri v. Income Tax Officer [2017 (11) TMI 1857 - ITAT MUMBAI] held that no penalty is leviable as Assessing Officer had made only adhoc estimation of profit on certain purchases treated as unexplained expenditure. Assessing Officer did not doubt the sales made by the assessee from out of such purchases - there is no concealment of income or furnishing of inaccurate particulars as the profit element was determined by way of adhoc estimation. Hon'ble Delhi High Court in the case of CIT v. Aero Traders Pvt. Ltd. [2010 (1) TMI 32 - DELHI HIGH COURT]wherein the Hon'ble High Court affirmed the order of the Tribunal in holding that estimated rate of profit applied on the turnover of the assessee does not amount to concealment or furnishing inaccurate particulars. In the case on hand the Assessing Officer has only estimated the Gross Profit on the alleged non-genuine purchases without there being any conclusive proof of concealment of income or furnishing inaccurate particulars of such income. Thus, we do not observe any infirmity in the order passed by the Ld.CIT(A) in deleting the penalty u/s. 271(1)(c) of the Act levied by the Assessing Officer - Decided in favour of assessee
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