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2023 (10) TMI 1316 - AT - Income TaxPenalty u/s 271(1) - estimation of income on bogus purchases - HELD THAT:- Disallowance in the instant case is on estimated basis on the presumption that expenditure incurred is excessive having regard to nature and business activity of assessee and also having regard to the non-availability of cogent evidences to support purchases. Significantly, the assessee, in the instant case, has inter alia pointed out that the purchases do not belong to the Assessment Year 2012-13 in question but the amount outstanding against the respective suppliers are opening balances during the year therefore, no expenditure has been incurred towards bogus purchases in the year. We observe that on this point alone, the imposition of penalty towards disallowance of bogus purchases affected during the year is unsustainable in law. Also see Vijay Proteins Ltd. [2015 (1) TMI 828 - GUJARAT HIGH COURT] and Sanjay Oil Cake Industries [2008 (3) TMI 323 - GUJARAT HIGH COURT] wherein the penalty imposed u/s 271(1)(c) was struck down in similar circumstances of estimated disallowance towards bogus purchases. Decided in favour of assessee.
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