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2015 (9) TMI 997 - ITAT JAIPUR

2015 (9) TMI 997 - ITAT JAIPUR - [2015] 42 ITR (Trib) 254 (ITAT [Jai]) - Penalty u/s 271(1)(c) - additions made on account of unverifiable purchases - CIT(A) deleted the penalty - Held that:- The addition made by the Assessing Officer was specific on account of unverifiable purchases on which G.P. @ 25% was applied and added in the income. However, the same was reduced by the ld CIT(A) and applied different G.P. rate. However, the additions were specific. The assessee has not been able to produc .....

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duce the profit. The parties names figured in this case also were similar to those cases, therefore, we hold that the addition made by the Assessing Officer was specific and assessee had concealed the income and furnished inaccurate particulars of income. Further the assessee's explanation is not bonafide. The case laws referred by the assessee are not squarely applicable. In this case, the addition was specific with reference to unverifiable purchases. Therefore, we reverse the order of the ld .....

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s justified in :- 1. Deleting the penalty of ₹ 4,10,923/- imposed u/s 271(1)(c) when CIT(A) has confirmed the additions made on account of unverifiable purchases amounting to ₹ 4,96,970/- in Unit-I and ₹ 62,600/- in Unit-II. 2. Deleting the penalty of ₹ 4,10,923/- imposed u/s 271(1)(c) ignoring explanation-I(B) of Section 271(1)(c). 2. Both the grounds are revolving around deleting the penalty of ₹ 4,10,923/- imposed by the Assessing Officer. The return of income in .....

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n U/s 10B of the Act. As per book result, the unit-I was showing loss whereas Unit-II was showing substantial profit. The ld Assessing Officer in assessment proceedings found that there were purchases from the following parties. UNIT-I a)M/s G.R. Enterprises ₹ 663240/- b)M/s Nisha Exports ₹ 50528/- c)M/s Jodhpur Gems ₹ 451839/- d)M/s Pragya Gems ₹ 494241/- e)M/s Sapna Gems ₹ 1308633/- f)M/s Welcome Gems ₹ 823331/- ₹ 3791812/- UNIT-II a)M/s Jodhpur Gems & .....

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s, M/s Jodhpur Gems, M/s Nisha Exports, M/s Pragya Gems, M/s Sapna Gems and M/s Welcome Gems vide ordersheet entry dated 01/11/2007. The assessee was not able to produce these parties. Summons were issued to these parties but summons were returned back by the postal authority with remark either "left" or "not known". In case of M/s Abhay International, M/s Girish Diam. M/s Raj Shree Gems, M/s Creative Gems and M/s S.P. Jewellers, summons were issued, which were also returned .....

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lty proceeding U/s 271(1)(c) of the Act has been initiated for concealment of income and furnishing inaccurate particulars of income. The Assessing Officer before imposing penalty U/s 271(1)(c), he again had given reasonable opportunity of being heard, which was not availed by the assessee. The assessee challenged the quantum addition before the ld CIT(A) and finally addition for unit-1 was confirmed at ₹ 4,96,970/- and in unit-II ₹ 62,600/-. The Assessing Officer in absence of asses .....

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ct. The assessee had claimed bogus deductions and there was clear cut concealment and as per Hon'ble Karnataka High Court decision in the case of Basavappa & Sons 159 CTR 198 (Kar) lays down the principle in regard to bogus deductions. The assessee was found guilty of furnishing inaccurate particulars of income to the extent of ₹ 4,96,970/- in unit-I and ₹ 62,600/- in unit-II within the meaning of Section 271(1)(c) of the Act. Therefore, he imposed 100% penalty of tax sought .....

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l of the assessee for assessment year 2005-06, ITA No. 69/JP/2009 dated 18/12/2009 has confirmed the findings of the ld CIT(A) in toto. The ld. CIT(A) vide his order ITA No. 686/07-08 dated 19/11/2008 has observed on page 5 that by producing the confirmation of the suppliers their PAN, RST/CST Nos. etc. the existence of the suppliers was proved on paper but the existence of the business could not be proved conclusively. Since the appellant failed to discharge its onus he confirmed the rejection .....

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urchases only and not on the entire turnover." He observed that it may be presumed that the intention of the appellant in indulging into unverified purchases may be to reduce its profits. Thereafter the trading addition was reduced to ₹ 4,96,970/- and ₹ 62,600/- in Unit-I and Unit-II respectively. With these observations the first two grounds of appeal wee being decided partly in favour of the appellant. b) Similar matter came up for adjudication before the Hon'ble ITAT, Jai .....

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disclosed g.p. rate of 3.83% and 4.10% (for A.Y. 2004-05 and 2005-06), the assessment though initially made at 11% in view of the past history, stood finalized only at g.p. rate of 4.50%. The Hon'ble ITAT observed that what is paramount, and of essence, is the finding of the fact supporting the higher estimate. If there is none, it is only a matter of one person's estimate against the other. For both the years, the clear finding by the Tribunal for sustaining a higher g.p. rate is to plu .....

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d a higher expenditure than claimed, though definitely valid for effecting a disallowance of the claimed expenditure; the assessee having failed to prove their actual cost as incurred, cannot lead to the inference of a wrong claim, justifying the levy of penalty. "That is, the very fact of the Tribunal sustaining a higher g.p. rate only to plug a possible leakage of revenue on account of unverifiable purchases, proves the assessee's claim of absence of any charge of having not disclosed .....

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at the books of accounts were rejected on account of unverifiable purchases; there was no fact or evidence to support the higher estimate of income apart from the past history of the case of the appellant. In fact the ld CIT(A) has categorically mentioned that no suppression/inflation of sales/purchases came to the notice of the A.O. and it can only be presumed that unverified purchases may have been made to reduce profits. A penalty u/s 271(1)(c) cannot be levied on presumptions regarding the i .....

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ng accommodation entry from various parties. In this case also, the total unverifiable purchases were ₹ 1,79,62,706/- on which the G.P. has been confirmed by the ld CIT(A). Therefore, the addition made by the Assessing Officer was specific and there was a definite concealment of income and furnishing inaccurate particulars of income. Therefore, she prayed reverse the order of the ld CIT(A). 5. At the outset, the ld AR for the assessee submitted that the assessee had filed confirmation givi .....

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ainst the g.p. rate of 9.22% declared by the assessee and in unit-II, the CIT(A) applied G.P. rate of 21.36% as against 17.72% declared by the assessee. The ld Assessing Officer himself admitted in para No. 6 and para No. 3 of penalty order that addition was on estimate basis. The ld Assessing Officer accepted the opening stock, purchase, sale and closing stock. He had not pointed out that which purchases and sales had not been recorded in the books of account. Hence the assessee has neither con .....

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