2018 (5) TMI 756

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.... in brief are that the assessee is proprietor of Deep Cotton Industries doing business of cotton process. A survey action under section 133A of the Act was carried out at the business premises of the assessee on 1.9.2008 in conjunction with other search and survey actions at the premises of edible oil mills group of Patan District and agents/brokers of Mehsana and Sabarkantha districts of Gujarat. Subsequent to the survey, the assessee filed return of income for the Asstt.Year 2008- 2009 on 30.9.2009 declaring a total income of Rs. 1,49,610/-. The return filed by the assessee was subjected to scrutiny assessment. On the basis of search and survey proceedings in the case of Edible Oil Group, the AO found that one M/s.Vishal Traders ("VT" for....

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....and quantified penalty at Rs. 17,69,186/-. 4. Aggrieved against aforesaid action of the AO towards imposition of penalty, the assessee preferred appeal before the CIT(A) without any success. 5. Further aggrieved, assessee has knocked door of the Tribunal for relief from the aforesaid imposition of penalty. 6. The ld.AR for the assessee vehemently contended that penalty has been erroneously imposed and confirmed in the quantum proceedings on estimated additions towards alleged bogus purchases. The ld.AR referred to the decision of the Coordinate Bench in quantum proceedings and submitted that the Coordinate Bench has clearly observed in para 11 of its order that while purchase bills from "VT" may be adjusted bills, but the purchases itsel....

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....gus purchases were found as a matter of fact after meticulous inquiry. It was submitted that record make it apparent that the assessee had subverted facts and recorded bogus purchases in its books of accounts, which fact has been endorsed by the ITAT in the appellate proceedings. Addition on this count was ultimately confirmed by the Tribunal albeit partly on the ground that purchases probably took place in view of corresponding sales. The ld.DR submitted that in the wake of speaking facts narrating deception and design of the assessee after elaborate inquiry, there can be no reasons to take a different view in the matter of penalty. The ld.DR submitted that action of the AO and the CIT(A) towards imposition of penalty with reference to the....

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....erately and willfully subverted real source and character of the transactions. While doing so, the assessee also prevented Revenue from knowing real source of supply and whereabouts of the supplier of the alleged goods purchased, if any. In the circumstances, appellate authorities were left with no option but to estimate a plausible overstatement of expenditure on purchases, and thereby understatement of profits. Thus, in these gross facts as recorded in the quantum proceedings, it is not a matter for consideration as to whether there was any concealment resorted by the assessee or not. Fact of under-statement of income is discernible. Only matter for consideration is extent of quantification of understatement of income. ITAT as a final fac....