TaxTMI 
TaxTMI 
2017 (2) TMI 739
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....nically and thus be cancelled. 6. The CIT (A) has erred in holding that assessee tried to conceal its income by making wrong claims of the purchases from Agra parties. 7. The CIT (A) has erred in holding that assessee has failed to offer a correct explanation in respect of the facts material to the computation of total taxable income. 8. The CIT (A) has erred in holding that penalty is leviable on the amount of bogus purchases added u/s 69 of the Act. 9. The aforesaid grounds of appeal arc independent and without prejudice to one another. 2. Briefly stated, the facts of the case are that the return of income for the A.Y. 1994-95 was filed by assessee on 30.11.1994 declaring at NIL. The assessment order u/s. 143(3) was passed on 31.03.1997 at 'NIL' income after certain additions/disallowances. The learned CIT (A) set aside the assessment vide order dated 24.02.1998. Fresh assessment order was passed u/s 143(3) dated 31.03.2000, whereby A.O. made certain additions in respect of Exports to Dubai, purchase from certain suppliers of Agra and disallowance of interest paid to banks. The deductions u/s. 80HHC & 80IA were restricted to business income only, which resu....
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....tted that even after disallowance on account of bogus purchases, the taxable income of the assessee remained at Nil and the appellant being a tax free company had no reason to make a wrong claim of purchases. It was submitted that out of 18 suppliers of Agra, 7 parties stood verified and the assessee could not manage the confirmations of remaining 11 parties due to adverse circumstances caused due to search conducted on assessee in April, 1995, employees' migration from the organization and the purchases made from small suppliers of unorganized sectors of Agra. Therefore, there being no deliberation act or omission on the part of assessee, the provisions of section 271(1)(c) of the Act could not be attracted in the instant case. The ld. Counsel for the assessee, inter alia, relied on the following decisions in addition to the reliance placed on the decisions, as are mentioned in the order of ld. CIT(A) : (i). CIT vs. Honeywell Dace (India) Ltd., 292 ITR 169 (Del.) (ii). Addl. CIT vs. Delhi Cloth & General Mills Co. Ltd., 157 ITR 822 (Del.) (iii). CIT vs. Oriental Power Cable Ltd., 303 ITR 49 (Raj.) 4. On the other hand, the ld. DR relying on the orders of the authoritie....
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....lear findings of the A.O based on sound investigation carried out before making the disallowance and as the appellant has not been able to controvert the findings with evidence, the addition made on account of purchases from Agra is sustained." 6. The Record reveals that these findings of the ld. CIT(A) are admitted to the assessee, as the same have not been challenged further. It is also an admitted fact that the appellant utterly failed to produce the purchase vouchers through which the alleged purchases were made as also the confirmations of any of the 11 suppliers of Agra, which were found fake and bogus on investigation, as noted above. The adverse circumstances, under which the assessee failed to file confirmations or the purchase vouchers, as stated above, are not supported by any evidence on record. We, therefore, find no justification to discard the finding of the ld. CIT(A) to the effect that an established businessman like assessee cannot be expected to conduct business or enter into the transactions of a high volume with unreliable and untraceable suppliers having bank accounts. Resultantly, the payment-wise and bill-wise details of purchases furnished by the assesse....
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....ions appended thereto, in our considered opinion, the eligibility for 100% deductions u/s. 80HHC or 80IA, would not mitigate the rigors of penal provisions for the reason the provisions of section 80HHC and 80IA merely provide for tax holiday on the turnover of assessee, but cannot exonerate the assessee from penal consequences as per provisions of section 271(1)(c) of the Act. We also get support from the decision of Hon'ble Suspreme Court in the case of JCIT vs. Saheli Leasing & Industries Ltd., 324 ITR 170 (SC), wherein the Hon'ble Court held as under : "The purpose behind s. 271(1)(c) is to penalise the assessee for (a) concealing particulars of income and/or (b) furnishing inaccurate particulars of such income. Whether income returned was a profit or loss, was really of no consequence. Therefore, even if no tax was payable, the penalty was still leviable. It is in that context, to be noted that even prior to the amendment by the Finance Act, 2002 w.e.f. 1st April, 2003, it could not be read to mean that if no tax was payable by the assessee, due to filing of return, disclosing loss, the assessee was not liable to pay penalty even if the assessee had concealed and/or furnish....