TaxTMI 
TaxTMI 
2015 (9) TMI 997
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.... 1. Deleting the penalty of Rs. 4,10,923/- imposed u/s 271(1)(c) when CIT(A) has confirmed the additions made on account of unverifiable purchases amounting to Rs. 4,96,970/- in Unit-I and Rs. 62,600/- in Unit-II. 2. Deleting the penalty of Rs. 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 Rs. 4,10,923/- imposed by the Assessing Officer. The return of income in this case was filed on 31/10/2005 declaring income of Rs. 1,40,475/-. The case of scrutinized U/s 143(3) of the Income Tax Act, 1961 (in short the Act). The assessee deals in the business of manufacturer, exporter and dealer of precious and semi precious stones and gems sto....
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....e 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 back by the postal authority with the remark either "left" or "not known". After detailed discussion made by the Assessing Officer regarding investigation in case of bogus purchases made by the assessee from page 3 to 28, the Assessing Officer applied 25% G.P. rate on unverifiable purchases at Rs. 1,79,62,706/- and addition in Unit-I was made by the Assessing Officer at Rs. 41,14,423/- and in Unit-II at Rs. 1,26,490/- after giving deduction U/s 10B @ 90%. The penalty proceeding....
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....ax sought to be evaded at Rs. 4,10,923/-. 3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the learned CIT(A), who had allowed the appeal by observing as under:- "4.3 I have carefully perused the assessment and penalty orders of the A.O., ld. CIT(A), Hon'ble ITAT, Jaipur Bench and the submissions of the AR, I concur with the submissions of the AR on the following grounds: (a) The Hon'ble ITAT, Jaipur Bench vide his order in the quantum appeal 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....
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....s 2004-05 and 2005-06 dated 16/5/2012. The Hon'ble ITAT in para 3.3 of its order summarized the facts of the case wherein there was decline in the g.p. rate and unreliability of the assessee's books of accounts due to unverified purchases. As against 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 ....
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....o far that 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 intentions of the assessee. There has to be conclusive evidence regarding an act of commission or omission. Therefore, the penalty imposed by the A.O. for furnishing of inaccurate particulars of income u/s 271(1)(c) of Rs. 4.10,923/- is delete....
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....s 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 concealed any income nor filed any wrong particulars of income. The various courts held that on estimated income, no penalty can be imposed. The Hon'ble ITAT, Jaipur Bench in order dated 28/4/2011 in the appeal of Dwarka Gems ITA No. 549/JP/2010 has deleted the penalty U/s 271(1)(c) on the same facts on estimated addition relying on the Hon'ble Rajasthan High Court decision in the case of Shiv Lal Tak 251 ITR 733. He also relied upon the decision in the case of CIT Vs. Reliance Petroproducts (P) L....