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2021 (7) TMI 1194 - AT - Income TaxPenalty u/s 271(1)(c) - Bogus purchases - HELD THAT - Assessing Officer imposed penalty under section 271(1)(c) of the Act on ad hoc basis without adducing any evidence on record for concealment of income. Penalty under section 271(1)(c) of the Act is liable to be imposed only where the assessee has concealed its particulars of income or furnished inaccurate particulars. Action of making addition on ad hoc basis does not result into imposition of penalty u/s 271(1)(c) of the Act and hence cannot be termed as either concealment or furnishing of inaccurate particulars of income. Departmental Authorities has not brought any cogent material to prove otherwise warranting interference at the instance of the Revenue. In this view of the matter, we are of the considered view that the learned CIT(A) was indeed justified in deleting the penalty, as there was no concealment of income on the part of the assessee have been proved by the Revenue and additions made on estimation by the Assessing Officer do not call for initiation of penalty. - Decided against revenue.
Issues Involved:
1. Imposition of penalty under section 271(1)(c) of the Income Tax Act, 1961. 2. Allegations of concealment of income and furnishing of inaccurate particulars. 3. Basis of penalty imposition on ad-hoc estimation of non-genuine purchases. 4. Justification for deletion of penalty by the CIT(A). Issue-wise Detailed Analysis: 1. Imposition of Penalty under Section 271(1)(c) of the Income Tax Act, 1961: The Revenue challenged the deletion of a penalty amounting to ?9,93,809 imposed by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961. This penalty was related to the assessment year 2013-14 and was based on the alleged concealment of income and furnishing of inaccurate particulars by the assessee. 2. Allegations of Concealment of Income and Furnishing of Inaccurate Particulars: The Assessing Officer observed that the assessee had made purchases worth ?2,57,29,670 from two parties. Information from the Sales Tax Department indicated that these parties were involved in providing bogus accommodation entries. Consequently, the Assessing Officer assessed the income at 12.5% of the non-genuine purchases and imposed a penalty for concealment of income and furnishing of inaccurate particulars. 3. Basis of Penalty Imposition on Ad-hoc Estimation of Non-genuine Purchases: The CIT(A) deleted the penalty by relying on various judicial pronouncements. It was noted that the penalty was imposed on an ad-hoc basis without concrete evidence of concealment. The CIT(A) referenced decisions from the Hon'ble Supreme Court and various High Courts, indicating that penalty under section 271(1)(c) cannot be imposed merely on the basis of estimated additions or disallowances. 4. Justification for Deletion of Penalty by the CIT(A): The CIT(A) found that the assessee had provided all necessary documentation to substantiate the genuineness of the transactions. The CIT(A) relied on the case of DCIT vs. Unisynth Chemicals, where it was held that mere inability to produce parties does not amount to concealment of income if other details are provided. The CIT(A) also cited the Supreme Court's decision in CIT vs. Reliance Petro Products Pvt. Ltd., which clarified that making an incorrect claim does not automatically lead to furnishing inaccurate particulars. The CIT(A) further supported its decision by referencing multiple cases where penalties were deleted in similar circumstances, such as Ajay Loknath Lohia vs. ITO and Deepak Gogri vs. ITO. These cases emphasized that penalty cannot be levied on additions made on an estimated or ad-hoc basis, as it does not constitute willful concealment or furnishing of inaccurate particulars. Conclusion: The Tribunal, after considering the submissions of the Departmental Authorities and the material on record, upheld the CIT(A)'s decision to delete the penalty. The Tribunal agreed that the penalty was imposed on an ad-hoc basis without sufficient evidence of concealment or inaccurate particulars. The Tribunal referenced multiple judicial precedents supporting the view that penalties cannot be imposed on estimated additions. Consequently, the Revenue's appeal was dismissed, and the order of the CIT(A) was upheld. Result: The Revenue's appeal was dismissed, and the deletion of the penalty by the CIT(A) was upheld. The Tribunal found no evidence of concealment of income or furnishing of inaccurate particulars by the assessee.
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