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2023 (2) TMI 1058 - AT - Income TaxPenalty u/s 271(1)(c) - GP estimation - Bogus Purchases - HELD THAT:- As decided in decision of M/s. Fancy Diamonds India Pvt. Ltd.[2022 (6) TMI 1359 - ITAT MUMBAI] which has held that in case where the addition is made on estimated basis, the penalty u/s. 271(1)(c) of the Act is not leviable. In the present case in hand, it is observed that the A.O. has made addition @ 2.58% + 3% on VAT which was restricted by the ld. CIT(A) to 2.58% of gross profit on the bogus purchases made by the assessee with the hawala parties. This clearly indicates that the addition in assessee’s case was made on estimated basis. The penalty u/s. 271(1)(c) of the Act cannot be levied where the addition is made on estimated basis. From the above observation we hereby delete the penalty levied by the A.O. and find no justification in the order of the ld. CIT(A). - Decided in favour of assessee.
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