TMI Blog2019 (10) TMI 989X X X X Extracts X X X X X X X X Extracts X X X X ..... find that the interest received was duly reflected in the books of accounts of Arpit Jewels (a sister concern of the assessee) which has been duly verified by the Ld. CIT (A). In view of this matter, we do not find any infirmity in the order of CIT (A), accordingly, same is upheld. This ground of appeal is therefore, dismissed. Penalty levied u/s 271(1)(c) - HELD THAT:- As decided in FORTUNE TECHNOCOMPS (P) LTD. [ 2016 (5) TMI 859 - DELHI HIGH COURT] Once the assessment order of the AO in the quantum proceedings was altered by the CIT(A) in a significant way, the very basis of initiation of the penalty proceedings was rendered non-existent. The AO could not have thereafter continued the penalty proceedings on the basis of the same notice. Also, the Court concurs with the CIT(A) and the ITAT that once the finding of the AO on bogus purchases was set aside, it could not be said that there was any concealment of facts or furnishing of inaccurate particulars by the Assessee that warranted the imposition of penalty under Section 271(1)(c) of the Act. We find that the addition was made and income was estimated. Therefore, we are of the view that the penalty cannot be levied. - De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It transpires that the assessee has given name, address, PAN, copy of return, copy of audit report in support of his claim of purchases. Hence, purchases cannot be termed as unverifiable as the appellant has fulfilled the primary onus cast upon him to prove the purchases. However, core issue that the seller has accepted before the authorities for providing accommodation entries bills, the genuineness of transaction is doubted. This leaves to estimate the real income. However, the Gross Profit and NP disclosed by the assessee was on higher side. Hence, CIT (A) has not disturbed the same. However, Ld. CIT (A) following his findings in the case of Dines C Jain [CAUSE-IV/110/2008-09 has directed the AO to compute the income from such accommodation entries @ 0.25%. Accordingly, the addition was restricted to ₹ 2,70,403/- as against ₹ 2,70,40,363/-. 5. Being aggrieved, the Revenue has filed this appeal before the Tribunal. The learned D.R. assailed the order of CIT (A). It was contended that the tribunal by following decision in the case of Mayank Diamonds Pvt. Ltd. v. ITO [Tax Appeal No. 200 of 2003] dated 17.11.2014 [2014] 11 (TMI) 812 (Gujarat) is estimating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n directed to compute @ 0.25% on total turnover of ₹ 1,08,76,86,861/-, which was worked out at ₹ 27,19,217/-. The ld.CIT(A) had allowed all the expenses claimed by the appellant by relying upon the decision in case of Bharat A Master vs. ITO in I.T. Act, 1961. No.177/Ahd/2013 dated 29.02.2008 and Hon Supreme Court decision in case of Poona Electric vs. CIT 57 ITR 521 (SC). After considering the orders of the A.O. and submission of the assessee, the ld. CIT(A) has directed to compute the income on the basis of 0.25% on total turnover and no benefit of any expenditure would be allowed. The learned counsel for the assessee has relied in the case of Arman Fashion Pvt. Ltd. v. ITO Ward 1(1) Surat [I.T.A.No. 2400 2407/Ahd/ dated 10.05.2013 of Ahmedabad tribunal, wherein net profit was estimated at 0.5% of turnover. The learned counsel for the assessee Further, submitted the Special Bench in the case of Manoj Agarwal v. DCIT [2008] 113 ITD 377 (Del) has estimated commission income at 0.50% for giving accommodation entries by holding the CIT (A) was justified in estimating net commission at 0.355 after allowing 0.15% for expenses. Therefore, we find that the is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest received was duly reflected in the books of accounts of Arpit Jewels (a sister concern of the assessee) which has been duly verified by the Ld. CIT (A). In view of this matter, we do not find any infirmity in the order of CIT (A), accordingly, same is upheld. This ground of appeal is therefore, dismissed. 14. In the result, the appeal of the Revenue is dismissed. I.T.A.No. 2645/Ahd/2013/ by the assessee: 15. Ground No.1 to 3 relates to confirming penalty of ₹ 91,017 levied under section 271(1)(c) of the Act. 16. Brief facts are that that the assessee has filed return of income on 26.10.2007 declaring total income of ₹ 7,52,422/- which was assessed at ₹ 2,81,88,438/- by making addition of ₹ 2,70,40,363/- on account of unverifiable purchases, disallowance of donation of ₹ 2,352/- and addition of interest income of ₹ 3,95,644/-. On which penalty proceedings under section 271(1)(c) were also initiated. The assessee has preferred an appeal before CIT (A) who deleted the addition of ₹ 3,95,644/- and restricted the addition of ₹ 2,70,40,363/- to ₹ 2,70,403/- by direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hence, the assessee was not sure for which default the penalty is initiated. The learned counsel for the assessee has argued that the learned CIT(A) as wrongly considered that it is not a case of estimation of income. The addition of ₹ 2.70 crores made by the AO was reduced to ₹ 70,403/-by applying the net profit ratio of 0.25% of unverifiable purchases. The penalty cannot be levied on estimated addition as decided in many judicial pronouncements like CIT v. Lalubhai Jogibhai Patel 261 ITR 216 (Guj), Hari Gopal Singh v. CIT 258 ITR 85 (P H) , CIT v. Valmikibhai H Patel 280 ITR 487 (Guj). 19. Per contra, Ld. D.R. supported the order of CIT (A). 20. We have heard the rival submissions and perused the relevant material on record. Looking to the facts and circumstances of the case, we find that the AO has made addition on account of unverifiable purchases at ₹ 2,70,40,363/- being entire purchases which were reduced to 0.25% of total disputed purchases. Thus, the addition was estimated @ 0.25% of transaction amount, which cannot therefore, be termed as conclusive proof of concealment of income or furnishing inaccurate parti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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