SAMIR NAVIN SHAH,MUMBAI vs. ACIT,CIRCLE 19(3), MUMBAI, PIRAMAL CHAMBER,LOWER PAREL,MUMBAI

This appeal by the assessee is preferred against the order dated 23/08/2024 by NFAC, Delhi [hereinafter ‘ld. CIT(A)’], pertaining to AY 2013-14.

The sum and substance of the grievance of the assessee is that the ld. CIT(A) erred in confirming the levy of penalty of Rs.2,89,970/- u/s. 271(1)(c) of the Act. 3. The roots of the levy penalty lie in the assessment order dated 23/03/2016 framed u/s 143(3) of the Act in which the returned income of Rs.25,97,130/- was assessed at Rs.35,35,542/- after making addition on account of bogus purchases of Rs.9,38,412/-. The addition of 2 Rs.9,38,412/- was made on alleged bogus purchase of Rs.1,87,68,240/- from one Krishna Diam. 4. The additions were agitated before the ld. CIT(A) and after considering the facts of the case, the ld. CIT(A) directed the AO to re- compute the addition by applying 8% gross profit, after considering the profit declared by the assessee not considered by the AO. Accordingly, the estimated profit addition was reduced to Rs.3,02,169/-. Though, in his order, the ld. CIT(A) has directed the AO to re-compute the levy of penalty on the additions sustained by him but, in our considered opinion, once the addition has been made on estimate basis on alleged bogus purchase, we are of the considered view that the facts do not warrant for the levy of penalty u/s 271(1)(c) of the Act. 5. Considering the facts of the case in totality, we direct the AO to delete the penalty levied u/s 271(1)(c) of the Act. In the result, appeal of the assessee is allowed. 6. Order pronounced in the Court on 6th January, 2025 at Mumbai. (SANDEEP SINGH KARHAIL) ACCOUNTANT MEMBER