TaxTMI 
TaxTMI 
TaxTMI 
2015 (3) TMI 1288
X X X X Extracts X X X X
X X X X Extracts X X X X
....g Officer. The assessee filed the returned income for A.Y. 2004-05 on 23/3/2005 and 31/10/2005 for A.Y. 200506 at Rs. 49,49,630/- and 63,56,854/- respectively. The ld. Assessing Officer found that there were unverifiable purchases in both the years. Therefore, he made detailed investigation regarding these purchases and he has given detailed findings and also reproduced the statement recorded during the course of search and seizure operation at Newai, district- Tonk of Shri Nemi chand Jain, Smt. Shakuntala Devi, Shri Shikhar Chand Jain, Shri Satyanarayan Jain, Shri Bimal Kumar Jain, Shri Kailash Chand Yogi, Shri Sandip Chabra, Shri Bhagchand Khandelwal, Shri Sanjay Bairathi and Shri Raj Kumar Khandelwal. The Ld. Assessing Officer held on the basis of evidence collected and statement recorded in the case of M/s Laxmi Diagold Jewellers, Newai, Tonk and it was held by him that there was no business of that concern except giving the bogus bills to the assessee. Similar findings were also given in respect of other parties namely Mine-o-Gems, Manvi Export, R.H. Jewellers, Shri Ji Jewellers, R.K. Gems and Arihant Export. He also relied upon various cases i.e. Assam Pesticides and Agro Che....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... under this Act, such person fails to offer an explanation or offers an explanation which is found by the Assessing Officer to be false, or such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bonafide and that all the facts relating to the same and material to be computation of his total income have been disclosed by him, then the case of the assessee comes within the purview of section 271(1)(c). IN this case the books of account of the assessee were not found complete and errorless which has also been approved by the ld. CIT(A) and the profit shown from these defective books cannot be true profit of the business and as such assessee has shown lesser business profit which was detected by the Assessing Officer and was duly approved by the CIT(A). For rejection of books, positive material evidences were brought on record by the A.O. to disprove the explanation of the assessee and it was established that the purchases are genuine. Hence, having defects in the books of account and furnishing of inaccurate particulars of income by disclosing lesser business profit leads to attract penal provisions by virtue of section 271(1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Hon'ble ITAT it is noted, that in this case the A.O. has applied GP rate of 11% keeping in view the past history of GP at 14% the worthy CIT(A) reduced such GP rate to 8% and the A.O. has accordingly imposed penalty on account of such GP addition. The Hon'ble Tribunal has accordingly held that sustaining of high GP rate to plug leakage of income will not constitute concealment of income and accordingly penalty imposed by A.O. was deleted. Again the facts and circumstances of the appellant's case are different with the case of M/s Kamlesh Dangayach discussed above in as much as in appellant's case there is no such application of GP rate and whatever addition was made by the A.O. was specifically on account of bogus purchases. Therefore, even the case laws relied upon by the appellant are not applicable to the facts and circumstances of the appellant's case. He further held that in these circumstances it is a case where the appellant was essentially concealed its income by way of wrong claim of bogus purchases amounting to Rs. 5 lacs. In this context reliance is also placed on the decision of Hon'ble High Court of Gujarat in the case of A.M. Shah & Co. Vs. CIT (1999) 238 ITR 415....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed addition of Rs. 5,00,000/- on probability only i.e. to "plug the leakage, if any caused by the above discrepancy". This does not amount to concealment of furnishing of inaccurate particulars within the meaning of Section 271(1)(c). The Ld. A.O. in penalty order made discussion based on his findings on assessment order or that of CIT(A) in appeal order without taking into consideration the findings of Hon'ble ITAT in its appeal order. The Ld. CIT(A) wrongly rejected submissions of assessee and legal precedents cited by assessee. The judgment of A.M. Shah & Co. Vs. CIT (1999) 238 ITR 415 is not applicable because in that case finding of A.O. was that assessee has not entered all sales and purchases in the books of accounts which facts are not in the case of assessee. In case of CIT Vs. Zoom Communication P. Ltd. (2010) 327 ITR 510 it was held that "if the assessee has made a claim which is not only incorrect in law but is also wholly without basis and explanation furnished for making such a claim is not found bonafide' then it will be definitely a case of penalty u/s 271(1)(c) of I.T. Act which facts also are not in case of assessee firm. Thus Ld. CIT(A) has by wrongly applying th....