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2018 (10) TMI 724

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..... er Singh(JUDICIAL MEMBER) And Shri G Manjunatha (ACCOUNTANT MEMBER) For The Appellant : Shri Ajay R Singh For The Respondent : Shri Himanshu Sharma ORDER Per G Manjunatha, AM : This appeal filed by the assessee is directed against order of the CIT(A)-37, Mumbai dated 03-02-2017 and it pertains to AY 2009-10. The assessee has raised the following grounds of appeal:- ASSESSMENT YEAR 2009-10 On the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeals) - 37, Mumbai General: 1. erred in confirming the order of the Assessing Officer that penalty levied on your appellant is in order. Penalty U/s 271(l)(c) of ₹ 3.40.980A 2. failed to appreciate that there is neither concealment of particulars of income nor furnishing of inaccurate particulars of income. Therefore penalty imposed under section 271(l)(c) is bad in law. 3. erred in ignoring the facts that addition is made only on estimated basis on account of difference in gross margins earned from sale against purchase from party alleged to be non-genuine. An addition which is made purely on an estimate basis, it cannot be .....

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..... ng officer for verification. Moreover, the Hawala parties had admitted in front of the sales tax department that they have not made any sales or purchase transactions. Thus undisputed fact was that purchases claimed to have been made from above parties remained unverified. The assessee suppressed income, inspire of knowing very well that the same are duly required to be offered for taxation. Hence, it cannot be said that the assessee has not furnished inaccurate particulars in this regard. In order to prove the genuineness of the same, the assessee could have brought on record any evidence or reconciliation duly authenticated from such parties to verify the amounts as per its books as correct and genuine. The details supplied in the return of income are thus proved to be are not accurate, not exact or correct, not according to truth or erroneous. The wrongful claims in respect of the above items have been detected and added in the total income only after receipt of information. Had the information not been received and the necessary investigations/enquiries were not done by the Assessing Officer, the wrongful claim by the assessee in respect of the above bogus purchases would have .....

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..... to ₹ 3,40,980/-. Demand notice is issued. 3. Aggrieved by the penalty order the assessee preferred appeal before the CIT(A). Before the CIT(A), the assessee has filed elaborate written submissions which has been reproduced at para 4 on pages 3-10 of CIT(A) s order. The sum and substance of arguments of the assessee before the Ld.CIT(A) are that mere disallowance of gross profit embedded in alleged bogus purchases does not amount to furnishing of inaccurate particulars of income which warrants levy of penalty u/s 271(1)(c) of the Act. The assessee further submitted that although he has not filed appeal against addition made by the AO before CIT(A), but fact remains that such addition has been made on estimate basis ignoring all evidences filed by the assesse to prove purchases from above parties as genuine. The Ld.CIT(A), after considering relevant submissions of the assessee and also by relying upon certain judicial precedents, including the decision of Hon ble Delhi High Court in the case of CIT vs Zoom Communications Pvt Ltd reported in 327 ITR 510 (Del) held that the assessee has failed to offer any explanations in respect of addition made by the AO towards alleged b .....

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..... asis; hence, it cannot be considered as deliberate attempt to evade tax. The Ld.AR further submitted that the assessee has furnished all evidences and no information given in the return was found to be incorrect. Therefore, the assessee cannot be held to be guilty of concealing of particulars of income or furnishing of inaccurate particulars of income. The assessee has filed various details to justify purchases from above parties, but the AO has ignored all evidences only on the basis of report received from Sales-tax department. Though the assessee has not filed any appeal against addition made by the AO, but such addition is on the basis of estimation of gross profit. Mere fact that the assessee has not preferred appeal may not be a ground to hold the assessee guilty of furnishing inaccurate particulars of income. 5. The Ld.DR, on the other hand, strongly supported the order of Ld.CIT(A). 6. We have heard both the parties and perused the material available on record. The AO has levied penalty u/s 271(1)(c) on the ground that the assessee failed to offer any explanation to the satisfaction of the AO in respect of estimation of gross profit on alleged bogus purchases in the l .....

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