2023 (12) TMI 1462

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....ppeals) (in short 'CIT(A)'). 2. The brief facts are that the appellant-assessee is a company engaged in the manufacture of craft paper. The assessee filed its return of income for Assessment Year 2011-12 declaring total income of Rs. 1,34,48,577/-. It appears that the case was reopened on the basis of information received from the Sales Tax Department, Mumbai alleging bogus purchases. It was found that the assessee was one of the beneficiaries and had availed accommodation entries during the financial year 2010-11 (Assessment Year 2011-12) for Rs. 7,17,020/-. The Assessing Officer completed the assessment under Section 143(3) read with section 147 of the Act on 26.02.2015 assessing the total income at Rs. 1,41,65,597/- thereby making an ....

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....ate, the Assessing Officer was not justified in imposing penalty under Section 271(1)(c) of the Act. Reliance in this regard is placed on the decision of Hon'ble Rajasthan High Court in CIT vs Krishi Tyre Retreading & Rubber Industries, 360 ITR 580 (Rajasthan) and Hon'ble Gujarat High Court in CIT vs Whitelene Chemicals, 360 ITR 385 (Gujarat). 6. It is submitted that before the Assessing Officer, appellant had produced material to show that the impugned purchases were genuine and thus, even on facts, no addition could have been made. It is alternatively submitted that, in any event, the addition was restricted to Rs. 89,628/- and thus, the penalty as originally imposed on the basis of 100% addition of the alleged bogus purchases cannot b....

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....orks out to Rs. 89,628/-, which was essentially on the basis of estimate of gross profit. The issue about, justification of imposition of penalty, where the addition is made on the basis of an estimate is no longer res integra and is covered by certain decisions of this Tribunal as also various High Courts. A useful reference in this regard can be made to the decision of Hon'ble Rajasthan High Court in the case of CIT vs Krishi Tyre Retreading & Rubber Industries (supra) and Hon'ble Gujarat High Court in the case of CIT vs Whitelene Chemicals (supra). In Whitelene Chemicals (supra) one of the reason for imposition of penalty was that there were additions made in the income after rejection of book results on the basis of fair gross profit ra....