| |
| The Tax Publishers2020 TaxPub(DT) 4492 (Mum-Trib) INCOME TAX ACT, 1961
Section 271(1)(c)
Where AO made addition on account of allegation towards bogus purchases made by assessee, wherein AO estimated profit element embedded in such purchases and added it back to income of assessee, additions of such estimated profit by no means would lead to an inference that assessee has either furnished inaccurate particulars of income or concealed its income, so as to impose penalty under section 271(1)(c).
|
Penalty under section 271(1)(c) - Validity - Addition towards bogus purchases on estimate basis -
AO imposed penalty under section 271(1)(c) due to fact that pursuant to information from Sales Tax Department, about bogus purchases made by assessee, AO made addition to taxable income of assessee. Held: Instead of disallowing entire purchases, AO only added profit element embedded in such purchases which clearly suggested that assessee, in fact, made purchases, though, the source of such purchases may not be established for whatever may be the reason. Even assuming that assessee was unable to prove the source of such purchases, what might have escaped assessment was only the profit element embedded in such purchases. For that reason only, AO estimated the profit element embedded in such purchases @ 12.5% and added back to the income of the assessee. Additions of such estimated profit by no means would lead to an inference that assessee has either furnished inaccurate particulars of income or concealed its income. Thus, provisions of section 271(1)(c) could not be pressed into action.
REFERRED : Harigopal Singh v. CIT (2002) 258 ITR 85 (P&H) : 2002 TaxPub(DT) 1625 (P&H-HC).
FAVOUR : In assessee's favour.
A.Y. : 2010-11 & 2009-10
IN THE ITAT, MUMBAI BENCH
 SUBSCRIBE FOR FULL CONTENT
|