2021 (5) TMI 896 - AT - Income Tax

Penalty u/s 271(1)(c) - Estimation of income on bogus purchases - CIT-A deleted the penalty - HELD THAT - AO had disallowed the entire purchases alleged to be bogus; however, learned Commissioner of Income-tax (Appeals) restricted the disallowance to 12.5% being the profit element estimated on the alleged bogus purchases. Thus the purchase of goods by the assessee is not in doubt, but the source of such purchases is doubtful. For that reason alone, the learned Commissioner of Income-tax (Appeals) has made an estimated addition. In the aforesaid scenario, it cannot be said that the assessee has, either concealed its income or furnished inaccurate particulars of income. That being the case, we do not find any infirmity in the order of learned Commissioner of Income-tax (Appeals) in deleting the penalty imposed. - Decided against revenue.

Summary

Issues:
1. Penalty imposed under section 271(1)(c) of the Income-tax Act for the assessment year 2010-11.

Analysis:

The appeal before the Appellate Tribunal ITAT Mumbai was regarding the penalty imposed under section 271(1)(c) of the Income-tax Act for the assessment year 2010-11. The assessing officer disallowed an amount representing alleged bogus purchases made by the assessee, initiating penalty proceedings. The learned Commissioner of Income-tax (Appeals) granted partial relief to the assessee by disallowing the profit element embedded in the alleged bogus purchases at 12.5%. The assessing officer then imposed a penalty alleging concealment of income, which was subsequently deleted by the learned Commissioner of Income-tax (Appeals).

Upon analyzing the facts and the impugned order, the Appellate Tribunal found that while the assessing officer disallowed the entire alleged bogus purchases, the learned Commissioner of Income-tax (Appeals) restricted the disallowance to 12.5% profit element. It was noted that the purchase of goods by the assessee was not in doubt, but the source of such purchases was doubtful. The Tribunal concluded that since the assessee did not conceal income or furnish inaccurate particulars of income, there was no infirmity in the order of the learned Commissioner of Income-tax (Appeals) in deleting the penalty imposed.

In conclusion, the appeal was dismissed by the Appellate Tribunal, upholding the decision of the learned Commissioner of Income-tax (Appeals) to delete the penalty imposed under section 271(1)(c) of the Income-tax Act for the assessment year 2010-11. The order was pronounced on 05/05/2021.