2022 (6) TMI 1190 - AT - Income Tax

Penalty levied u/s 271(1)(c) - bogus purchases - HELD THAT - The quantum addition 2018 (8) TMI 2085 - ITAT DELHI issue was agitated before the learned Commissioner of Income-tax (Appeals) who directed the Assessing Officer to restrict the disallowance to 30 per cent. of the purchases. Penalty has been levied on such estimation made by the learned Commissioner of Income-tax (Appeals). Facts of the earlier assessment year also show that estimation was made in respect of purchases from same party which was subsequently reduced to 25 per cent. while giving appeal effect to the order of the Tribunal. When the addition as have been made on estimated basis, there is no conclusive evidence to show that the assessee has concealed the income or has furnished inaccurate particulars of income. Therefore, we do not find any merit in the levy of penalty on estimated income. We, accordingly, direct the Assessing Officer to delete the penalty so levied. - Decided in favour of assessee.

Summary

Issues:
- Appeal against penalty levied under section 271(1)(c) of the Income-tax Act, 1961.
- Assessment year 2009-10.
- Genuineness of purchases from M/s. Om Trading Company.
- Quantum addition and disallowance of purchases.
- Estimation of purchases and penalty imposition.
- Tribunal's decision on estimation of purchases.
- Conclusive evidence for concealment of income.
- Deletion of penalty and appeal allowed.

Analysis:
The appeal before the Appellate Tribunal ITAT DELHI was filed against the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 2009-10. The issue revolved around the genuineness of purchases made from M/s. Om Trading Company, which were treated as bogus by the Assessing Officer, resulting in an addition of Rs. 32,76,000 during the scrutiny assessment proceedings. The Commissioner of Income-tax (Appeals) directed the Assessing Officer to restrict the disallowance to 30% of the purchases, leading to the imposition of penalty based on this estimation.

During the quantum proceedings, the matter reached the Tribunal, which confirmed the Commissioner's decision to uphold the 30% estimation of purchases, similar to the assessment year 2008-09. It was noted that in the previous assessment year, the estimation of purchases from the same party was initially at 30%, later reduced to 25% upon appeal effect. The Tribunal, considering the estimated nature of the addition, found no conclusive evidence of income concealment or furnishing inaccurate particulars of income by the assessee.

Therefore, the Tribunal directed the Assessing Officer to delete the penalty imposed on the estimated income, as there was no merit in the levy of penalty based on estimation. Consequently, the appeal of the assessee was allowed by the Tribunal, emphasizing the lack of conclusive evidence supporting the penalty imposition in this case. The judgment was pronounced on February 25, 2022, in the presence of both the representatives involved in the case.