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2016 (5) TMI 464 - ITAT AHMEDABAD

2016 (5) TMI 464 - ITAT AHMEDABAD - TMI - Penalty u/s 271(1)(c) - inaccurate particulars of income towards unverifiable purchases - Held that:- Purchases are supported with the bills issued by the suppliers and the purchases of the assessee have not been questioned by the Assessing Officer during the course of assessment proceedings and neither any details are available on record to prove that additions have been made in the previous years in regard to unverifiable purchases. Also books of accou .....

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has duly shown complete details of sundry creditors in its return of income for this year under appeal and in past also and addition for unverifiable purchases have been made without conducting any independent enquiry therefore, it is not a fit case for levy of penalty u/s 271(1)(c) of the Act. - Decided in favour of assessee. - ITA No.1151/Ahd/2012 - Dated:- 1-4-2016 - Shri Rajpal Yadav, JM, & Shri Manish Borad, AM For The Appellant : Shri Shailesh Vaidya, AR For The Respondent : Shri Prad .....

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onfirming the action of the Assessing Officer in sustaining penalty on addition of ₹ 28,70,422/- out of total addition of ₹ 36,91,511/-u/s. 271(1)(c) of the Act. 2. It is therefore prayed that above penalty levied by Assessing Officer and confirmed by CIT(A) may please be deleted.. 3. Appellant craves [eave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal. 2. Briefly stated facts of the case as culled out from the assessment records are th .....

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rifiable purchases and restricted the addition u/s 40(a)(ia) of the Act at ₹ 8,21,089/-. 3. Thereafter penalty order u/s 271(1)(c) of the Act was framed imposing penalty of ₹ 13,50,810/- for furnishing inaccurate particulars of income at ₹ 36,91,811/- (Rs.8,21,089 + ₹ 28,70,422). Aggrieved, assessee went in appeal before ld. CIT(A) against imposition of penalty u/s 271(1)(c) of the Act who thereby deleted penalty imposed on addition sustained u/s 40(a)(ia) of the Act and .....

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sis and difference of opinion amongst the directors, the company had incurred heavy losses and ultimately it had to close down its activities. During the earlier year i.e. year ended 31.03.04 (A.Y.2004-05), the turnover of the company was of ₹ 6.70 crores which included job work of ₹ 3.67 lacs only. Whereas during the year i.e. A.Y.2005-06, the company's turnover was only ₹ 1.04 crores and it included ₹ 29.93 lacs for jobwork income. It clearly indicates that the comp .....

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also reduced the credit facility. In the earlier year, the working capital c/c a/c limit was of ₹ 2.34 crores which was reduced to ₹ 73.46 lacs during the year. Due to reduction in working capital facility by bank, the company could not make payments to its creditors at proper time. However it tried its level best to reduce the balance of its creditors. In the earlier year, the balance of creditors was of ₹ 54.91 lacs which were reduced to ₹ 28.70 lacs during the year. Al .....

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ny had neither concealed any income nor furnished any inaccurate particulars of income. It is, therefore, humbly requested to drop the penal proceedings u/s. 271(1)(c) of the Act and oblige. 6. On the other hand, ld. DR supported the orders of lower authorities. 7. We have heard the rival contentions and perused the material on record. The issue before us is to examine as to whether ld. CIT(A) has rightly sustained the penalty of ₹ 10,50,354/- being pro-rata calculated on the basis of orde .....

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ar. We also observe that sundry creditors for goods and expenses which were shown in the books of accounts on 31.3.2004 at ₹ 54,91,467/- has come down to ₹ 28,70,422/-, which shows that considerable amount of sundry creditor have been paid off. Further all the details relating to sundry creditors for earlier years and for the year under appeal were available on record with the assessing authority and no defect has been pointed out in these details. The only reason given by ld. Assess .....

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year under appeal. Purchases are supported with the bills issued by the suppliers and the purchases of the assessee have not been questioned by the Assessing Officer during the course of assessment proceedings and neither any details are available on record to prove that additions have been made in the previous years in regard to unverifiable purchases. Also books of account of the assessee are audited under the Companies Act and under the provisions of section 44AB of the Act and they have not .....

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itors even when a considerable amount has been paid during the year to most of the sundry creditors and detailed list of outstanding sundry creditors was available on record with the assessing authority. 8. We further find that similar issue has been dealt in by the coordinate bench in the case of DCIT vs. M/s Darshan Agro Oils Ltd. in ITA No.26/Ahd/2013 for Asst. Year 2008-09 wherein vide its order dated 14.02.2014, the bench has observed as under :- 5. We have considered the rival submissions .....

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subsequent assessment year 2009-10. The assessee has been, thus, able to offer an explanation which should not be found to be bogus or false. Hon'ble Supreme Court in the case of CIT vs. Sugauli Sugar Works Pvt. Ltd., 236 ITR 518 held that unilateral action cannot bring about a cessation or remission of liability. In this case, since the assessee has shown outstanding balances carried forward from the earlier years and even carried forward in the subsequent assessment year, would show that t .....

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