2016 (7) TMI 1365 - AT - Income Tax

Penalty levied u/s. 271(1)(c) - addition on account of bogus purchases - Held that - The assessee rightly points out, materially identical addition in respect of bogus purchases was confirmed by the Division Bench; however, so far as penalty in respect of the same is concerned, the same penalty has been deleted by another Division Bench by order 2013 (7) TMI 1084 - ITAT AHMEDABAD . While doing so, the Division Bench has taken note of the fact that income was assessed on estimate basis and this estimation varied from forum to forum. The views so expressed by the Division Bench bind this SMC Bench. Respectfully following the esteemed views of the Division Bench in assessee s own case for Assessment Year 2005-06, I deem it fit and proper to delete the impugned penalty - Decided in favour of assessee.

Summary

Issues: Challenge to correctness of penalty under section 271(1)(c) for Assessment Year 2006-07 based on related quantum additions for bogus purchases.

The judgment by the Appellate Tribunal ITAT Ahmedabad involved an appeal challenging the correctness of a penalty imposed under section 271(1)(c) of the Income Tax Act for Assessment Year 2006-07. The appellant argued that a Division Bench had restricted quantum additions to 20% of alleged purchases for a previous year and deleted the penalty for a similar case in another Assessment Year. The Departmental Representative contended that since the Tribunal confirmed the quantum addition for bogus purchases, the penalty should also stand. The Accountant Member considered the arguments, noting that a Division Bench had deleted the penalty in a materially identical case for a previous year, emphasizing that the estimation of income varied across forums. Consequently, following the precedent set by the Division Bench, the Accountant Member decided to delete the penalty of ?99,320 imposed on the appellant, granting relief accordingly. The appeal was allowed, and the decision was pronounced on July 7, 2016.