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2021 (4) TMI 373 - AT - Income TaxPenalty u/s 271(1)(c) - Bogus purchases - addition on account of alleged bogus purchases at the rate 12.5% - HELD THAT:- Where a claim of expenditure is neither found inaccurate nor could be viewed as concealment of income on the part of the assessee, then merely because the said claim was not accepted or acceptable to the revenue would not by itself attract penalty under Sec.271(1)(c). Now, in the case before us, as the revenue had failed to disprove to the hilt on the basis of clinching documentary evidence the authenticity of the claim of the assessee of having made purchases from the aforementioned parties, therefore, merely on the basis of the unproved claim of purchases no penalty under Sec. 271(1)(c) could have been validly imposed on the assessee. In fact, the restriction of the disallowance of entire purchases made by the CIT(A) to 12.5% of the aggregate value of such purchases speaks for itself that the disallowance sustained in the hands of the assessee is merely backed by a process of estimation and not based on any concrete evidence. As in the case before us no clinching material had been brought on record by the revenue which could disprove the authenticity of the purchases claimed by the assessee to have been made from the aforementioned parties thus, no penalty under Sec.271(1)(c) could have validly been imposed upon him. We thus not being able to persuade ourselves to subscribe to the observations of the lower authorities therein vacate the penalty imposed by the A.O under Sec. 271(1)(c). Accordingly, the order of the CIT(A) upholding the penalty imposed by the A.O under Sec. 271(1)(c) is vacated. - Decided in favour of assessee.
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