AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (6) TMI 643
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....d. CIT(A) was right in holding that penalty levied is not sustainable when the purchases. were held to be tainted/bogus and it was only the profit out of this which was estimated?" 2. "Whether the Ld. CIT(A) was right in holding that penalty levied is not sustainable when the purchases were held to be tainted/bogus, and it was only the profit out of this which was estimated?" 3. "Whether the Ld. CIT(A) erred in holding that penalty levied is not sustainable as the addition was made on estimated basis, whereas the Hon'ble High Court of Delhi in the case of JRD Stock Brokers (P.) Ltd. Vs Commissioner of Income Tax - II (2015) held that levy of penalty on estimated basis is justified if on basis of material discovered, there is determined to be additional income that radically changes the character of income originally declared?" 4. "Whether the Ld. CIT(A) erred in holding that penalty levied is not sustainable as the addition was made on estimated basis, whereas the Hon'ble High Court of Patna in the case of CIT vs Md. Warasat (1987) held that assessment by estimate is one of the known process in the taxation world, and that, where the asse....
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....igation, Mumbai. As the assessee was found to be beneficiary of such bogus purchase, the case of the assessee was reopened by issue of notice under Section 148 of the Act dated 18^th February 2015. The reassessment proceedings culminated into reassessment order passed on 19^th February, 2016, wherein the learned Assessing Officer after rejecting the books of accounts u/s 145 (3) of the Act estimated income of such bogus purchases and made an addition at the rate of 9% for extra price paid by the assessee above prevalent price relying on the decision of the Hon'ble Gujarat High Court in 365 ITR 451 and 355 ITR 219. Thus, 9% of the profit of Rs.11,62,000/- was considered as income arising out of bogus purchases of Rs.1,29,11,206/-. 07. During reassessment proceedings the assessee submitted the stock register, sales invoice details and purchase invoices along with ledger accounts etc. stating that payments have been made through account payee cheques. The notice under Section 133(6) of the Act, sent by the learned Assessing Officer to those bogus hawala dealers was returned by the postal authorities with remark „undelivered‟. 08. Based on this the total income of....
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....entative also referred to two judicial precedents mentioned in ground no.3 and 4 of the appeal wherein even on the estimated addition penalty is levied. Therefore, appellate order of the learned CIT (A) is not sustainable. 015. The learned Authorized Representative, Ms. Kinjal Bhuta, referred to a paper book containing 48 pages and it was submitted that. i. Identical order of assessment was passed for A.Y. 2009-10, where also the identical penalty proceedings were initiated. However, vide order dated 18^th March 2019, the learned Assessing Officer himself dropped the penalty proceedings for A.Y. 2009-10. She also referred to the office note in the assessment order for A.Y. 2010-11, wherein this fact is also mentioned. She submitted that as there is no change in the facts and circumstances in the case of the assessee for A.Y. 2010-11 and 2011-12, the learned Assessing Officer should not have levied the penalty proceedings under Section 271(1)(c) of the Act on the principles of consistency. ii. She further referred to the ITAT order in the case of the assessee for A.Y. 2009-10, dated 14^th December 2018, wherein in paragraph no.6, the income of the assessee is de....
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....requisite monetary limit and therefore, as per CBDT Circular 2/18 dated 7^th November 2018, amended further on 20^th August 2018, these are low tax effect penalty appeals which could not have been preferred by the learned Assessing Officer. For this proposition, she also relied on the decision of Stripco Springs Pvt. Ltd.(supra), wherein in paragraph no.10 the co-ordinate Bench has held that the penalty orders on such facts could not have been agitated by the Revenue before ITAT and only exception is with respect to the quantum addition. 016. On the argument that these are low tax effect appeal, ld. DR submits that penalty orders arising out of the quantum addition which is covered by exception are also covered. She submitted that it could not be the case that on addition revenue can prefer appeal and on penalty on the same addition, revenue cannot appeal. If this view is taken then despite the addition confirmed by lower authorities, but penalty deleted, revenue would be deprived of appeal before ITAT. This situation cannot be stated to be correct. 017. We have carefully considered the rival contentions and perused the orders of the lower authorities. The facts show that ass....
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....se of any information furnished by the assessee found to be inaccurate, but it is a failure of the assessee to substantiate the documents to the extent desired by the learned Assessing Officer. It is also the fact that notices under Section 133(6) of the Act were issued to the various hawala dealers which could not have been served and returned. However, that could have been the reasons for making addition but could not be reason to held that assessee has furnished inaccurate particulars of income. It is further pointed out that on identical facts and circumstances for A.Y. 2009-10, the learned Assessing Officer initiated the penalty proceedings under Section 271(1)(c) of the Act, wherein the addition of bogus purchases made by way of assessment order passed under Section 143(3) read with section 147 of the Act dated 14th March, 2015 and partially deleted by ld. CIT (A), such penalty proceedings were dropped. It is uncontroverted that the facts for A.Y. 2009-10 and for these two assessment years are not different. Further, the office note placed in re-assessment order for A.Y. 2010-11 clearly shows that facts for all these three assessment years are identical where a decision is ta....
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....above by learned advocate for the appellant we are of the opinion that the penalty has been wrongly imposed under Section 271(1)(c) of the Act. In the case of Krishi Tyre Retreading and Rubber Industries (supra), it has been held that as the addition had been sustained purely on estimate basis and no positive fact or finding had been had been found so as to even make the addition which was a pure guess work, no penalty under section 271(1)(c) of the Act could be said to be leviable on such guess work or estimation. We therefore answer the issue involved in appeals no. 833 to 836 of 2005 in the negative and in favour of the assessee." 18.1 At this juncture, it would be relevant to refer to a decision of the Apex Court in the case of Asst. Commissioner of Income-tax v. Gebilal Kanhaialal, HUF, [2012] 348 ITR 561 (SC) wherein, it has been held that the only condition which was required to be fulfilled for getting the immunity, after the search proceedings got over, was that the assessee had to pay the tax together with interest in respect of such undisclosed income up to the date of payment. Clause (2) did not prescribe the time limit within which the assessee should pay tax ....