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2015 (10) TMI 1705 - ITAT DELHI

2015 (10) TMI 1705 - ITAT DELHI - TMI - Penalty u/s 271(1)(c) - assessee has furnished inaccurate particulars of its taxable income by treating the purchases from three parties as bogus - CIT(A) deleted the penalty - Held that:- The work performed as reflected in the trading Account has been accepted by the AO which implies that work could be completed only after having taken into account the ostensible bogus purchases. Thus without the purchases, the work executed as well as the closing stock w .....

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f each case. In this case at hand, the addition made by the AO was rightly deleted in appeal to be replaced by a trading addition by applying an estimation of the GP rate of 27% instead of 16% as shown by the assessee. This naturally becomes an addition sustained on estimate basis. A fact or allegation based on estimation cannot be said to be correct only; it can also be incorrect.

Judgment of Punjab and Haryana High Court in the case of MM Rice Mills as reported in [2000 (10) TMI 4 - .....

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filed the appeal and Assessee has filed the Cross Objection against the Order dated 17.1.2013 passed by the Ld. Commissioner of Income Tax (Appeals) (Central), Gurgaon pertaining to assessment year 2008-09. 2. The grounds raised by the Department read as under:- i) Whether on the facts and in the circumstances of the case the Ld. CIT(A) was right in deleting the penalty of ₹ 22,63,450/- imposed by the AO u/s 271(1)(c) of the Income Tax Act, 1961 especially when the books of account of the .....

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hown in the books of account (d) Failed to justify the trading results and books of accounts were not showing the results as free from blemishes and in such a situation it was difficult to agree with the contention of the assessee that since the payments were made through account payee cheque, it would be genuine (iii) That the appellant craves to add, delete or modify any of the grounds of appeal before or at the time of hearing. 3. The grounds taken by the assesssee in its Cross Objection read .....

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), on the facts and circumstances of the case was justified in deleting the penalty u/s 271(1)(c) of the Income Tax Act, 1961 by relying upon the judgments of jurisdictional Punjab and Haryana High Court relied upon in the order and in the case of M.M. Rice Mills reported in 253 ITR 17 in which it has been held that where the addition was merely sustained on account of application of Gross Profit, the penalty would not be leviable. 3. The CIT(A), on the facts and circumstances of the case was ju .....

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unverified purchase in the assessment order. 5. The CI.T.(A) ,on the facts and circumstances of the case, was justified in deleting penalty, the Assessing officer had failed appreciate the conclusion of the CIT(A) that sufficient process of the evidences of transaction of the purchases made from various parties has been produced by the assessee which have not been denied by the Assessing Officer and have not been found to be false. 6. The CIT(A) on the facts and circumstances of the case was, j .....

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disputed, therefore, the same are not repeated here for the sake of convenience. 5. Ld. Counsel for the assessee stated that quantum on which the penalty has been imposed, has already been deleted by the ITAT. He requested that the penalty in dispute may kindly be deleted. He has also filed the copy of the order dated 8.7.2015 passed by the ITAT, Delhi Bench H in ITA No. 5599/Del/2010 & Others (AY 2008- 09) in assessee s own case. 6. Ld. DR relied upon the order of the AO, but could not con .....

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ils down to the fact that the whole basis of levying the penalty were unverifiable purchases from certain parties which has been deleted emphatically by the CIT(A) in a detailed manner and the addition which has been sustained is only on the basis of estimation of average G.P. rate of the five concerns of the group. In other words, the whole basis of making the addition by the AO has been set aside. Moreover, the work performed as reflected in the trading Account has been accepted by the AO whic .....

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re has been no rejection of the same. Needless to say assessment proceedings are independent from penalty proceedings and imposition of the penalty depends on the facts and circumstances of each case. In this case at hand, the addition made by the AO was rightly deleted in appeal to be replaced by a trading addition by applying an estimation of the GP rate of 27% instead of 16% as shown by the assessee. This naturally becomes an addition sustained on estimate basis. A fact or allegation based on .....

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