Case Law Details
ITO Vs Broadcasting Services (ITAT Mumbai)
ITAT Mumbai held that estimated rate of profit applied on the alleged non-genuine purchases doesn’t amount to concealment of income or furnishing inaccurate particulars. Accordingly, penalty u/s 271(1)(c) of the Income Tax Act unsustainable.
Facts-
While completing reassessment, AO treated purchases of Rs. 36,38,274/- as non-genuine and accordingly estimated the profit element from non-genuine purchase at 17.8% and brought to tax an amount of Rs. 6,47,613/-. The assessee accepted the estimation of profit element from non-genuine purchases made by AO and no further appeal has been preferred.
Subsequently, AO initiated penalty proceedings and levied penalty of ₹.2,00,112/- u/s. 271(1)(c) of the Act for the A.Y.2009-10, stating that the assessee has 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 CIT(A) deleted the penalty since the disallowance was made by making estimation of Gross Profit on the purchases. Against this order of the CIT(A), revenue is in appeal before us.
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