Diagold Vs ACIT (ITAT Jaipur)
The ITAT Jaipur considered an appeal against the order of the Commissioner of Income Tax (Appeals), Jaipur-04 dated 29.10.2025 confirming the levy of penalty of ₹8,36,406 under Section 271(1)(c) of the Income-tax Act, 1961. The assessee contended that the quantum addition had been sustained only on an estimated basis by applying a gross profit rate and that there was no material establishing concealment of income or furnishing of inaccurate particulars.
The assessment was completed under Section 147 read with Section 143(3). The Assessing Officer treated purchases of ₹1,18,37,500 from two entities as alleged bogus purchases, rejected the books of account under Section 145(3), disallowed 25% of such purchases, and made an addition of ₹47,83,920. The CIT(A) subsequently applied a gross profit rate of 14.13% based on the assessee’s past history and restricted the addition to ₹27,06,815, which was affirmed by the ITAT.
The Revenue relied on information received from the Investigation Wing regarding accommodation entries allegedly provided by certain groups and on statements recorded during search and seizure proceedings. The Revenue contended that the assessee had furnished inaccurate particulars of income and that the case was covered by Explanation 1 to Section 271(1)(c).
The Tribunal noted that the assessee had produced purchase bills, evidence of payments made through cheques, and confirmations in support of the purchases. It further observed that throughout the quantum proceedings, including before the ITAT, there was no categorical finding that the purchases from the two entities had been conclusively established as bogus. The Tribunal also noted that there was no finding that the assessee’s explanation was false or unsatisfactory. Instead, the addition was ultimately sustained after rejection of the books of account and estimation of profit by applying a profit rate consistent with the assessee’s preceding years.
