2020 (8) TMI 746 - AT - Income Tax

Penalty u/s. 271(1)(c) - disallowance on account of bogus purchases - AO allowed 12.5% of aggregate of total alleged bogus purchases - CIT(A) after considering the submission of assessee concluded that no penalty under section 271(1)(c) can be levied on adhoc addition and deleted the entire penalty levied - HELD THAT - CIT(A) while passing the impugned order has followed the order of Tribunal in M/s Chempure vs. ITO 2010 (5) TMI 678 - ITAT MUMBAI Earthmoving Equipment Service Corporation vs. Dy.CIT 2017 (5) TMI 474 - ITAT MUMBAI . In our view, it is now settled position under the law that no penalty under section 271(1)(c) is leviable on adhoc addition. Therefore, we affirmed the order passed by ld. CIT(A). No contrary facts or law is brought to our notice to take other view. - Decided against revenue.

Summary

Issues:
- Appeal against deletion of penalty under section 271(1)(c) of the Income Tax Act, 1961 for Assessment Year 2011-12.

Analysis:
1. The appeal by the revenue challenged the deletion of penalty by the ld. CIT(A) under section 271(1)(c) of the Income Tax Act, 1961. The Assessing Officer disallowed 12.5% of alleged bogus purchases made by the assessee, resulting in a penalty of ?4,66,502. The main issue was whether the penalty was rightly deleted by the ld. CIT(A).

2. The Assessing Officer initiated the penalty under section 271(1)(c) after disallowing a portion of the alleged bogus purchases. The assessee contended that the purchases were genuine, supported by evidence such as Account Payee cheques, purchase bills, delivery challans, and ledger accounts. The ld. CIT(A) deleted the entire penalty relying on Tribunal decisions in similar cases.

3. During the appeal, the revenue argued that the assessee failed to substantiate the genuineness of purchases and furnished inaccurate particulars of income. However, as the assessee did not challenge the quantum assessment further, the penalty was levied based on estimated disallowances made by the Assessing Officer.

4. The Tribunal upheld the decision of the ld. CIT(A) to delete the penalty, citing established legal precedent that no penalty under section 271(1)(c) is applicable on adhoc additions. The Tribunal found no reason to overturn the decision as no new facts or laws were presented to warrant a different outcome.

5. Ultimately, the Tribunal dismissed the revenue's appeal, affirming the deletion of the penalty under section 271(1)(c) by the ld. CIT(A). The decision was based on the principle that penalties cannot be levied on adhoc additions, as established by previous legal interpretations.