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2023 (5) TMI 30 - AT - Income TaxPenalty levied u/s. 271(1)(c) - Estimation of income on bogus purchases u/s. 69C - revenue contended that the assessee has failed to contradict the information received from the Maharashtra Sales Tax Department pertaining to the fact that the assessee was a beneficiary of bogus bills - HELD THAT - Addition made by the A.O. was on the basis of the estimation calculated @ 12.5% on the bogus purchase alleged to be made by the assessee from M/s. Arihant Steel supposed to be hawala party as per the Sales Tax Department. This is an undisputed fact which has been agreed by the Revenue. Various courts have held that the penalty cannot be levied in cases where the addition has been made on estimated basis. As justified that this proposition is a settled principle of law. The decisions relied upon by the ld. DR will not hold the case of the Revenue in the present scenario. Hence, by respectfully following the decisions cited above, we find no justification in the penalty levied u/s. 271(1)(c) of the Act in assessee s case. Decided in favour of assesee.
Issues involved: Challenge to penalty levied under section 271(1)(c) of the Income Tax Act, 1961 for Assessment Years 2010-11 and 2011-12.
Summary: Issue 1: Penalty under section 271(1)(c) of the Act The assessee filed its return of income, which was later scrutinized, resulting in an addition to the total income due to alleged bogus purchases. A penalty was imposed under section 271(1)(c) for furnishing inaccurate particulars of income. The assessee appealed the penalty imposition, arguing that purchases were genuine, supported by ledger accounts, bills, and delivery challans. The assessee also highlighted that payments were made through banking channels. The Revenue contended that the assessee failed to provide evidence to prove the genuineness of the transactions. The tribunal noted that the addition was based on an estimation of alleged bogus purchases and held that penalties cannot be levied in cases of additions made on an estimated basis, citing relevant legal precedents. Consequently, the penalty under section 271(1)(c) was quashed. Separate Judgement: Both appeals filed by the assessee challenging the penalty imposition were allowed, and the penalty under section 271(1)(c) was quashed.
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