No Section 271(1)(c) Penalty on Estimated Additions for Bogus Purchases

Khodiyar Impex Vs ITO (ITAT Mumbai) Estimation-Based Bogus Purchase Addition Cannot Attract Penalty under Secti0n 271(1)(c) -ITAT Mumbai Assessee, engaged in diamond trading, was subjected to reassessment u/s 144 r.w.s. 147 on 30.03.2015. AO treated purchases from alleged hawala dealers (Jewel Diam & Daksh Diamonds) as non-genuine & added entire ₹1.86 crore as bogus purchases. On appeal, CIT(A) restricted disallowance to 3% of disputed purchases (₹5,59,500) instead of 100%. Meanwhile, AO had levied penalty of ₹63.39 lakh u/s 271(1)(c), being 100% of tax on full addition. CIT(A) ...