2022 (1) TMI 688 - AT - Income Tax

Penalty u/s. 271(1)(c) - bogus purchases - as during the survey assessee had admitted to disclose additional income on account of bogus purchases - survey was included in the return of income filed by the assessee in response to notice u/s 148 - HELD THAT - As decided in own case 2019 (8) TMI 991 - ITAT PUNE perusal of statement recorded during the course of survey also reveals that it was stated that assessee firm had made actual purchases from the market for which it had received the bills from the parties and had also made payments through account payee cheques but since assessee was unable to prove the genuineness of the purchases to the extent required by the Revenue, and in order to avoid litigation and buy peace of mind, the income was offered by the assessee. It is a fact that the income declared during the course of survey was included in the return of income filed by the assessee in response to notice u/s 148 of the Act. Thereafter in the assessment order passed u/s 143(3) r.w.s. 147 of the Act the AO had accepted the return of income filed by the assessee and no addition was made therein. There is no question of levying penalty on account of concealment on the assessee. Hence, we direct to delete the penalty levied by the AO and which was confirmed by Ld.CIT(A). Thus, the grounds of assessee are allowed - Decided in favour of assessee.

Summary

Issues Involved:
Appeals against penalty imposed under section 271(1)(c) of the Income Tax Act for assessment years 2008-09, 2009-10, and 2010-11.

Detailed Analysis:

Issue 1: Penalty Imposed for Assessment Year 2008-09
The assessee, a partnership firm trading steel material, faced penalty under section 271(1)(c) for alleged bogus purchases. The AO imposed a penalty of ?16,45,000 due to the assessee's admission of additional income following a survey. The CIT(A) upheld the penalty, stating the admission was not voluntary. However, the ITAT, considering similar cases for previous years, found no grounds for penalty imposition. Citing previous rulings, the ITAT concluded the penalty was unjustified and deleted it, allowing the appeal.

Issue 2: Appeals for Assessment Years 2009-10 and 2010-11
The issues and facts in the appeals for these two years were identical to the case for 2008-09. Both parties agreed on the similarity of circumstances. Consequently, the ITAT applied its decision on the 2008-09 penalty to these appeals as well. Following the same reasoning, the ITAT allowed both appeals for 2009-10 and 2010-11, leading to the deletion of penalties imposed under section 271(1)(c) for these years.

In conclusion, the ITAT allowed all three appeals filed by the assessee against the penalties imposed for assessment years 2008-09, 2009-10, and 2010-11. The penalties were deleted based on the ITAT's findings that the admissions of additional income were not voluntary and did not warrant penalty under section 271(1)(c) of the Income Tax Act. The judgments were pronounced on 10th January 2022.