Case Law Details
DCIT Vs Sri Anil J Kothari (ITAT Ahmedabad)
AO has made addition on account of unverifiable purchases at Rs.2,70,40,363/- being entire purchases which were reduced to 0.25% of total disputed purchases. Thus, the addition was estimated @ 0.25% of transaction amount, which cannot therefore, be termed as conclusive proof of concealment of income or furnishing inaccurate particulars of income. The finding recorded in assessment order is not conclusive for imposition of penalty but it has only persuasive value. Therefore, the profit arrived at is only a guess work which could be estimated by applying any rate of net profit based on np disclosed in earlier year`s. Thus, the facts remains that it is a case of estimate on which no penalty offer concealment of income could be levied.
Once the assessment order of the AO in the quantum proceedings was altered by the CIT(A) in a significant way, the very basis of initiation of the penalty proceedings was rendered non-existent. The AO could not have thereafter continued the penalty proceedings on the basis of the same notice. Also, the Court concurs with the CIT(A) and the ITAT that once the finding of the AO on bogus purchases was set aside, it could not be said that there was any concealment of facts or furnishing of inaccurate particulars by the Assessee that warranted the imposition of penalty under Section 271(1)(c) of the Act.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal by the Revenue is directed against the order of learned Commissioner of Income tax (Appeals)-IV, Surat (in short “the CIT (A)”) dated 23.03.2010 for the Assessment Year 2007-08 against quantum addition deleted by the ld.CIT(A) and appeal by the assessee is directed against the order of ld.CIT(A) -1, Surat dated 03.09.2013 for the assessment year 2007-08 against the confirmation of penalty of Rs.91,017 /- levied under section 271(1)(c) of the Act.
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