2020 (8) TMI 192

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....e levy of penalty under section 271(1)(c) of the Act of the Act for furnishing of inaccurate particulars of income and concealment of particulars of income on the issue of disallowance of bogus purchases by applying the profit rate. For this Revenue has raised the following two grounds: - "1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was right in deleting the penalty of Rs. 39,120/- levied under section 271(1)(c) of the Act of the I.T. Act 1961 without appreciating that the assessee had understated its income by furnishing inaccurate particulars of its income and concealed particulars of income, which were deleted during the course of assessment proceedings only and hence, provisions f section 271(1)(c)....

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....ls of stock register wherein these goods are entered into were produced before the Assessing Officer during the course of assessment proceedings and even during the penalty proceedings. The only premise by the Assessing Officer during the course of assessment proceedings and during penalty proceedings for making addition on profit rate basis and levying the penalty on the same amount is that the assessee could not discharge its onus by producing the transport receipts or weigh bridge challan, which prove that the goods were transported to the assessee's premises. But in any case it is to be seen that these disallowance of bogus purchase is made by Assessing Officer just on the estimate basis and while going through the penalty order, we cou....

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....s duly considered the rival contentions. Both the Commissioner (Appeals) as well as the ITAT have categorically held that in the present case, there is no record of satisfaction by the Assessing Officer that there was any concealment of income or that any inaccurate particulars were furnished by the assessee. This being a sine qua non for initiation of penalty proceedings, in the absence of such petition, the two authorities have quite correctly ordered the dropping of penalty proceedings against the petitioner. 6. Besides, we note that the Division Bench of this Court in Samson(supra) as well as in New Era Sova Mine(supra) has held that the notice which is issued to the assessee must indicate whether the Assessing Officer is satisfied th....

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.... Consequently, this appeal is dismissed." 5. As there is estimation of income on the bogus purchases, we are of the view that the CIT(A) has rightly deleted the penalty. No doubt the CIT(A) has entirely drawn on different findings for deleting the penalty relying on an old case law of Hon'ble Supreme Court in the case of B.A. Balasubramaniam & Bros. Co. by observing in Para 3.1.2 to 3.1.4 as under: - "3.1.2 I have given my careful consideration to the rival submissions, perused the material on record and duly considered the factual matrix of the case as also the applicable legal position. The issue inn quantum proceedings involve some purchases amounting to Rs. 89,044/- from one Vigneshwara Enterprises which was found to be a bogus trans....