MUN GEMS,MUMBAI vs. ACIT-19(2), MUMBAI

Assessee is aggrieved by penalty of Rs.5,68,596/- on account of addition made by applying GP rate of alleged bogus purchases. Apart from that, assessee has also raised additional

M/s. Mun Gems ground that Assessing Officer has not specified the charge under which limb penalty is to be levied in the notice u/s.274 r.w.s. 271(1)(c) and therefore initiation and passing of the penalty order is bad in law. 3. The facts in brief are that on the basis of certain information from Investigation, assessee was found taking accommodation entry of bogus purchases from four parties:

After hearing both the parties and perused the material on record, we find that before the ld. AO not only during the course of assessment proceedings but also during the penalty proceedings assessee had submitted the explanation that all the purchases were from the books and payments have been made through account payee cheques and ultimately addition has been sustained on purely adhoc estimate of gross profit rate. From the perusal of the records, it is seen that the assessee has submitted the quantitative details of purchases alongwith stock register entry and corresponding export sales which was also verified from the customer appraisal report. Once, the source of payment of purchases have been made through books of accounts and through account payee cheques and there is corresponding sales, then merely because some adhoc GP rate has been applied on such alleged bogus purchases to factor in suppression of alleged gross profit, no penalty can be levied for furnishing of inaccurate particulars of income or concealing particulars of income, which ld. AO has held in his penalty order that penalty is being levied under both the limbs, which itself shows his satisfaction is vague. Accordingly, penalty levied on such adhoc estimate cannot be sustained in the present case and hence