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While completing the reassessments the Assessing Officer treated purchases of Rs.2,63,898/-, Rs.21,07,189/- and Rs.90,67,990/- made from various dealers as non-genuine for the A.Ys. 2009-10, 2010-11 and 2011-12 respectively on the basis of the information received from Sales Tax Department, Mumbai that assessee has received accommodation entries from the party without making any purchases but made purchases only in gray market. The Assessing Officer treated such purchases from the parties as non-genuine as the assessee could not produce the parties and also could not establish the movement of goods. However, the Assessing Officer estimated the profit element from non-genuine purchases at 12.5% and brought to tax. The assessee accepted the estimation of profit element from non-genuine purchases made by the Assessing Officer and no further appeals have been preferred. Subsequently, Assessing Officer initiated the penalty proceedings and levied penalty u/s. 271(1)(c) of the Act stating that the assessee has deliberately furnished inaccurate particulars of its income and concealed its income within the meaning of section 271(1)(c) r.w. Explanation 1 of the Act. On appeal the Ld.CIT(A) deleted the penalty since the disallowance was made by making estimation of Gross Profit on the purchases. Against this order of the Ld.CIT(A), revenue is in appeal before us. In thecaseon hand the Assessing Officer has only estimated the Gross Profit on the alleged non-genuine purchases without there being any conclusive proof of concealment of income or furnishing inaccurate particulars of such income. Thus, we do not observe any infirmity in the order passed by the Ld.CIT(A) in deleting the penalty u/s. 271(1)(c) of the Act levied by the Assessing Officer for all these assessment years. Grounds raised by the revenue are rejected.

Shanti Prime Publication Pvt. Ltd.

Sec. 271(l)(c) of Income Tax Act, 1961— Penalty —  Assessee an individual engaged in the business of “Trading in Electrical Items” filed return of income on 26.09.2009, 28.09.2010 and 26.09.2011. Assessments were reopened u/s. 147 of the Act and reassessments were completed on 27/28.01.2015 u/s. 143(3) r.w.s 147 of the Act.While completing the reassessments the Assessing Officer treated purchases made from various dealers as non-genuine for the A.Ys. 2009-10, 2010-11 and 2011-12 respectively on the basis of the information received from Sales Tax Department, Mumbai that assessee has received accommodation entries from the party without making any purchases but made purchases only in gray market. The Assessing Officer treated such purchases from the parties as non-genuine as the assessee could not produce the parties and also could not establish the movement of goods. However, the Assessing Officer estimated the profit element from non-genuine purchases at 12.5% and brought to tax. The assessee accepted the estimation of profit element from non-genuine purchases made by the Assessing Officer and no further appeals have been preferred. Subsequently, Assessing Officer initiated the penalty proceedings and levied penalty u/s. 271(1)(c) of the Act stating that the assessee has deliberately furnished inaccurate particulars of its income and concealed its income within the meaning of section 271(1)(c) r.w. Explanation 1 of the Act. On appeal the Ld.CIT(A) deleted the penalty since the disallowance was made by making estimation of Gross Profit on the purchases. Against the order of the Ld.CIT(A), revenue filed appeal before tribunal. The Assessing Officer has only estimated the Gross Profit on the alleged non-genuine purchases without there being any conclusive proof of concealment of income or furnishing inaccurate particulars of such income. Thus, tribunal do not observe any infirmity in the order passed by the Ld.CIT(A) in deleting the penalty u/s. 271(1)(c) of the Act levied by the Assessing Officer for all these assessment years. Grounds raised by the revenue are rejected. Thus, the appeals of revenue was dismissed.---ITO vs. SHRI MEHUL INDUKUMAR PAREKH. [2020] 23 ITCD Online 40 (MUM)