2019 (3) TMI 1263 - AT - Income Tax

Penalty u/s 271(1)(c) - quantum assessment order u/s 143(3) - addition being 25% of alleged bogus purchases - HELD THAT - The undisputed position that emerges is the fact that the penalty has been levied / confirmed merely against estimated disallowances of 12.5%. Nevertheless, the assessee s claim has been accepted substantially which do not suggest that there was furnishing of inaccurate particulars of income or concealment of income within the meaning of Section 271(1)(C). Therefore, the factual matrix does not inspire to concur with the stand of first appellate authority. Hence, we delete the impugned penalty. - Decided in favour of assessee.

Summary

Issues:
1. Contesting penalty u/s 271(1)(c) for AY 2010-11.
2. Assessment of estimated additions and penalty imposition.
3. Appeal against penalty reduction to 12.5%.
4. Justification for penalty deletion based on inaccurate particulars or concealment of income.

Analysis:
1. The appeal before the Appellate Tribunal ITAT MUMBAI challenged the penalty imposed under section 271(1)(c) for the Assessment Year 2010-11, contesting the order of the Ld. Commissioner of Income-Tax (Appeals)-37, Mumbai, regarding the confirmation of a penalty.

2. The quantum assessment order under section 143(3) dated 23/12/2015 revealed an estimated addition of ?3.31 Lacs, constituting 25% of alleged bogus purchases, leading to the initiation of penalty proceedings under section 271(1)(c). The Ld. AO imposed a penalty of ?1.02 Lacs on 15/06/2016 based on the quantum assessment order.

3. Subsequently, upon further appeal against the quantum additions, the estimated additions were reduced to 12.5% by the Ld. first appellate authority in an order dated 18/11/2017. Consequently, the Ld. first appellate authority directed the Ld. AO to reduce the penalty proportionately. Dissatisfied with this decision, the assessee appealed further to the Appellate Tribunal.

4. After considering the submissions and examining the relevant records, it was established that the penalty was imposed solely on the basis of estimated disallowances of 12.5%. However, as the assessee's claim was substantially accepted, indicating no furnishing of inaccurate particulars of income or concealment of income under Section 271(1)(c), the Tribunal concluded that the penalty was unjustified. Therefore, the Tribunal decided to delete the penalty, allowing the appeal in favor of the assessee. The order was pronounced in the open court on 22nd March 2019.