TaxTMI 
TaxTMI 
2024 (7) TMI 1741
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....gan controlled by Bhanwarlal Jain Group to the amount of Rs. 1,10,68,895/-The assessment u/s 147 of the Act was made on 29.06.2017 and the AO has estimated profit earned on such bogus suspicious transactions @ 12.5% at Rs. 9,38,373/- and added the same to the total income of the assessee. The AO has also initiated penalty proceedings for furnish inaccurate particulars of income by issuing of notice u/s 271(1)(c) r.w.s. 274 of the Act on 29.06.2017. In the appeal, the ld. CIT (A) has restricted the addition to the extent of 2% of the bogus purchases. The assessing officer has levied penalty of Rs. 68,405/- u/s 271(1(c) of the Act vide order dated 04.02.2022. 3. The assessee filed appeal before the ld. CIT(A). The ld. CIT (A) has deleted the penalty levied an estimate basis following the decision of ITAT, Mumbai in the case of Sanjay Lalchand Bhatija vs ITO vide ITA No. 7141/M/2017. 4. Heard both the sides and perused the material on record. The case of the assessee was reopened on the basis of information received from Investigation Wing that assessee had obtained accommodation entries of bogus purchases from the entity that indulged in providing accommodat....
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....on has estimated the profit on bogus purchases @ 12.5% and restricted the addition to that extent. Thus, from the aforesaid facts, it is very much clear that what the assessee failed to prove is the source of purchase of goods. Otherwise, there is no dispute with regard to the fact that the assessee had purchased the goods, though, may not be from the declared source but from some other source. The failure on the part or the assessee to prove the source or purchases could be for various reasons, which in some cases may even turn out to be valid. Thus, in such circumstances, once the probable leakage of revenue has been taken care of by estimating its profit, there is no need to penalize the assessee any further by imposing penalty under section 271(1)(c) of the Act. More so, when the addition has been finally made on estimate basis. In view of the aforesaid, we have no hesitation in deleting the penalty imposed under section 271(1)(c) of the Act. Grounds are allowed. Respectfully following the jurisdictional ITAT, I direct the AO to delete the penalty imposed." 5. The ld. DR has referred the decision of Hon'ble Allahabad High Court in the case of ITO vs R.K. Brothers (2....
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....was also asked to produce books of accounts, bills and vouchers for verification but could not link the purchases with that of corresponding sales. The assessee produced books of accounts for verification. However, the AR of the assessee vide his written submission dated 12.03.2015 sated that - The assessee has already submitted purchase details alongwith correspondence sales and bills along with stock details. The assessee firmly believes that there are valid reasons for not treating purchases as fictious and also believes that no addition on account of disallowance of purchase should be made. The assessee has request to consider the case amicably. Assessee plead for non-levy of penalty of prosecution as consent letter is given to buy peace of mind and avoid further litigation cost, since the assessee has submitted all the documentary evidences in connection with the purchases from the said dealers. Kindly consider the same." However, the assessing officer has not agreed with the submission of the assessee and estimated profit element embedded in impugned purchases at 12.5% of the purchase amount of Rs. 108,71,191/-. However, the ITAT has restricted....
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....Act unsustainable. Ergo, the Assessing Officer is directed to delete the penalty." In the case of the assessee the supporting material as referred at para 7 of the assessment order was furnished however the addition on estimation basis of 12.5% of the purchase amount was made on the ground of extra profit earned by the assessee on such purchases because the parties were involved in issuing accommodation bills of purchases as per the information supplied by the Sales Tax Department. It is clear that in the case of the assessee the addition was made on estimation basis therefore following the decision of ITAT as referred supra we consider that penalty levied in the case of the assessee on estimated addition is not sustainable. Therefore, the penalty levied is deleted. Accordingly, both the grounds of appeal of the assessee are allowed. 7. The appeal of the assessee is allowed." 7. Following the decision of ITAT, we don't find any infirmity in decision of ld. CIT (A) for deleting the penalty levied on the estimated addition made by the assessing officer as discussed supra in this order. Therefore, all the grounds of the appeal of the revenue are dismissed. Accordi....
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....m DCIT, Central Circle Surat that assessee has entered into fictious transaction with entities controlled and managed by Shri Rajendra Jain, Shri Sanjay Choudhary & Shri Dharmichand Jain group in whose cases a search and seizure operation was carried out. Therefore, the case of the assessee was reopened u/s 147 of the Act by issuing of notice u/s 148 of the Act on 29.03.2019. During the course of assessment, the assessing officer held that assessee has entered into accommodation transactions of bogus purchases to the tune of Rs. 1,40,90,804/- through above mentioned group of concerns and thereby made addition @ 12.5% (profit element involved in the transaction) amounting to Rs. 17,61,351/-. 10. The assessee filed appeal before the ld. CIT(A). The ld. CIT (A) has restricted the addition to the extent of 2% of the bogus purchases after following the decision of ITAT in the case of assessee itself dated 30.10.2017. 11. Heard both the sides and perused the material on record. The case of the assessee was reopened u/s 147 of the Act on the basis of information received that assessee had entered into accommodation transactions of bogus purchases with the entity of the ....