The Tax Publishers2021 TaxPub(DT) 0621 (Mum-Trib)

INCOME TAX ACT, 1961

Section 271(1)(c)

Where bogus purchases were disallowed by AO during the assessment proceedings only on the premises that assessee was unable to produce the actual delivery/physical delivery of goods but it is a fact that AO had not doubted the sales made by assessee or even the payments were made by account payee cheques and mere on presumption, penalty cannot be levied under section 271(1)(c).

Penalty under section 271(1)(c) - Bogus purchases disallowed - Allegation that assessee was unable to produce the actual delivery/physical delivery of goods -

Assessee was engaged in the business of sales and services of computers, mobile and accessories. Department received information from Sales Tax Department, that assessee had received a bogus purchase bill from a company which was bogus and AO added the entire amount under section 69C by observing that assessee was beneficiary of accommodation bill issued by the party mentioned, wherein there was no actual delivery/physical delivery of goods. Hence, penalty proceedings under section 271(1)(c) was initiation by AO. Held: This is a case of bogus purchases and bogus purchases were disallowed by AO during the assessment proceedings only on the premises that assessee was unable to produce actual delivery/physical delivery of goods but it was a fact that AO had not doubted the sales made by assessee or even the payments were made by account payee cheques. Once sales were not doubted, the entire purchases cannot be considered as bogus and that is also a presumption. Mere on presumption, penalty cannot be levied.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2011-12



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