Case Law Details
Mukesh Shaligram Sharda Vs ITO (ITAT Mumbai)
If sales are not disputed, entire alleged bogus purchases cannot be disallowed and only the gross profit on the alleged purchases to be disallowed. No penalty under section 271(1)(c) is leviable on estimated additions.
It is undisputed fact that impugned penalty was levied only on estimated addition. The Assessing Officer had made addition of entire bogus purchases, however, did not doubt the sales made against such purchases. We observe that the Tribunals in various decisions have held that where sales are not disputed, entire alleged bogus purchases cannot be disallowed and only the gross profit on the alleged purchases to be disallowed. After taking into consideration the various decisions of the Tribunal that no penalty under section 271(1)(c) is leviable on estimated additions and also after taking into consideration the decision of Hon’ble Rajasthan High Court in the case of CIT vs Krishi Tyre Retreading & Rubber Industries 360 ITR 580; the decision of Hon’ble Punjab & Haryana High Court in the case of CIT vs Sangrur Vanaspati Mills Ltd 303 ITR 53 (P&H); and the decision of Hon’ble Gujarat High Court in the case of CIT vs Subhsh Trading Co Ltd 221 ITR 110 (Guj), we direct the Assessing Officer to delete the impugned penalty levied on estimated addition. Therefore, the appeal of the assessee is allowed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
These appeals filed by the assessee are directed against the two different orders of the Commissioner of Income-tax (Appeal)-2, Thane [hereinafter called, Ld.CIT(A)] dated 26/10/2016 and order of the National Faceless Appeal Centre (NFAC), Delhi dated 21/09/2021 for the assessment years 2011-12 and 2010-11, respectively. Since common issue on identical facts is involved in both these appeals, therefore, for the sake of convenience, ITA No.1907/Mum/2021 is taken as lead case for adjudicating this appeal and finding therein will be applicable to the other appeal filed by the assessee.
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