TaxTMI 
TaxTMI 
2020 (10) TMI 1192
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....ision in the case of N. K. Proteins Ltd, Tax Appeal No. 242 of 2003 dated 20/06/2016 against which the SLP was dismissed by the Hon'ble Supreme Court and also ignoring the fact that Department received specific credible information in this case from the Sales Tax Department of the State Government of Maharashtra" in respect of non-genuine purchases. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the penalty levied u/s 271(1)(c) without appreciating the fact that there was a definite finding in the assessment order in respect of bogus purchases and of furnishing inaccurate particulars of income relating to purchases resulting into concealment of income. 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the penalty levied u/s 271(1)(c) without appreciating the fact that there was an admission of additional income in respect bogus purchases during the survey u/s 133A and the admission of additional income was not a voluntary admission by the assessee but it was due to survey (which conclusively proves furnishing inaccurate particulars....
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.....O called upon the assessee to explain as to why the purchases of Rs. 3,16,400/- which were claimed to have been made from M/s Manav Impex may not be considered as bogus and therein disallowed. In reply, it was submitted by the assessee that post survey proceedings, on verifying the purchase bill file and other voluminous records, it was able to find the octroi declaration forms in respect of purchases of Rs. 3,16,4000/- made from M/s Manav Impex. However, the A.O in order to verify the genuineness and veracity of the aforesaid purchase transactions called upon the assessee to produce the aforementioned party. Further, the assessee was also directed to place on record the copies of transport receipts, details of vehicles expenses, copies of octroi receipts/delivery challans etc. pertaining to the impugned purchases claimed to have been made from M/s Manav Impex. In compliance, the assessee submitted copy of bills of M/s Manav Impex, copy of purchase order and copy of declaration for octroi exemption in respect of the purchases of Rs. 3,16,400/- made from M/s Manav Impex. In order to verify the veracity of the aforesaid purchase transactions the A.O issued a notice under Sec. 133(6)....
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....of penalty under Sec. 271(1)(c) of the Act. Apropos the disallowance of the impugned bogus purchases and the consequential addition made by the A.O, the CIT(A) was of the view that a simplicitor disallowance of a percentage of purchases de hors any finding of concealment on the part of the assessee would not justify levy of penalty under Sec. 271(1)(c) of the Act. In fact, it was observed by the CIT(A) that disallowance of a percentage of purchases would not automatically justify levy of penalty under Sec. 271(1)(c) of the Act. In the backdrop of his aforesaid observations the CIT(A) vacated the penalty of Rs. 1,99,294/- that was imposed by the A.O under Sec. 271(1)(c) of the Act. 6. The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. As is discernible from the assessment order, the assessee company in its return of income filed under Sec. 148 of the Act had disallowed purchases of Rs. 5,23,050/-. As observed by us hereinabove, the aforesaid disallowance of purchases by the assessee w....
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....allow the aforesaid purchases. In the totality of the facts involved in the case before us, we find ourselves to be in agreement with the view taken by the CIT(A) that an income offered as an addition/disallowance by an assessee, de hors any material proving concealment or furnishing of inaccurate particulars of income on its part, cannot on such standalone basis justify levy of penalty under Sec. 271(1)(c) of the Act. As the lower authorities had failed to place on record any material which could prove to the hilt that the assessee had concealed or furnished inaccurate particulars of its income, we thus are unable to persuade ourselves to subscribe to the view taken by them that a simplicitor disallowance of Rs. 5,23,050/- by the assessee in respect of the impugned purchases would justify imposition of penalty under Sec. 271(1)(c) of the Act. On a similar footing, as the A.O had merely on the basis of an estimation made an addition of Rs. 63,280/- (20% of Rs. 3,16,400/-) of the unproved purchases claimed by the assessee to have been made from M/s Manav Impex, the same in our considered view would not be sufficient to justify saddling the assessee with penalty under Sec. 271(1)(....