2024 (7) TMI 1534 - AT - Income Tax

Levy of penalty u/s 271(1)(c) - Estimation of income - bogus purchases treated as unexplained u/s 69C - disallowance to the tune of 15% of the alleged bogus purchases made by CIT(A) - HELD THAT - As penalty is hardly sustainable on ad hoc addition, seems to be logical and tenable. It is also important to mention herein that as submitted by the Ld. Advocate that even otherwise the Hon ble Tribunal in the last para of the order in the quantum appeal has categorically held that the Assessee was a trader and on being asking by the AO, has furnished the necessary details like bills, vouchers, payment through banking channel and the bank statements etc.. Therefore, the facts are distinguishable to the case of N.K. Industries Ltd. 2016 (6) TMI 1139 - GUJARAT HIGH COURT decided wherein the purchases were found as bogus. We observe that the co-ordinate Bench of the Tribunal by considering the overall facts and circumstances of the case and taking a broader view for the ends of justice and litigation, restricted the addition to 20% of the disallowance in place of 15% as restricted by the then Ld. CIT (A) against 100% of the addition made by the AO, which also dents the levy of penalty. Therefore, on this reason itself, the penalty is un-sustainable. Coming to the other aspect of the case, it is not the case of the Revenue that the Assessee in the assessment proceedings has not submitted the relevant document/details as desired by the AO and therefore we are unable to understand that how the charge of concealment of income is attracted in this case, whereas the penalty proceedings have been initiated u/s 271(1)(c) of the Act for both of the limbs i.e. concealment of income and filing of inaccurate particulars of income and resulted into imposing the penalty for both of the limbs. Concealment refers to deliberate act on the part of the Assessee whereas mere omission or negligence would not constitute a deliberate act or suppression or suggesting falls information. The Hon ble Apex Court in the case of T. Ashok Pai 2007 (5) TMI 199 - SUPREME COURT has clearly held that the both the limbs i.e. concealment of income and filing of inaccurate particulars of income carries the different connotation/meaning and cannot be used as substitute to each other. Hon ble Apex Court in the case of CIT Vs. Reliance Petro Products Pvt. Ltd. 2010 (3) TMI 80 - SUPREME COURT has clearly laid down the dictum that merely making an incorrect claim does not tantamount to furnishing of inaccurate particulars . Hence, in our considered view, on this count as well, the penalty is un-sustainable. Appeal filed by the Assessee stands allowed.

Summary

Issues:
1. Disallowance of alleged bogus purchases under section 69C of the Income Tax Act, 1961.
2. Imposition of penalty under section 271(1)(c) for concealment of income and filing inaccurate particulars of income.

Analysis:
1. The case involved an appeal by the Assessee against an order by the National Faceless Appeal Center regarding disallowance of alleged bogus purchases. The Assessing Officer made additions under section 69C of the Act, which were later modified by the Ld. CIT (A) and further enhanced by the Hon'ble Tribunal. The penalty proceedings under section 271(1)(c) were initiated based on the disallowance. The Assessee submitted various documents during the quantum proceedings to support the purchases made, but the penalty was still imposed by the AO. The Ld. Commissioner affirmed the penalty, leading to the appeal before the Tribunal.

2. The Tribunal considered the facts and circumstances of the case, noting that the addition of alleged bogus purchases was uncertain as it varied from 15% to 20% of the total amount. The Tribunal also observed that the Assessee had provided necessary details during the assessment proceedings, distinguishing the case from instances of deliberate concealment. The Tribunal referred to judicial pronouncements and highlighted that penalty cannot be sustained on ad hoc additions. Additionally, the Tribunal emphasized the difference between concealment of income and filing inaccurate particulars of income, citing relevant case laws to support the argument that mere incorrect claims do not constitute inaccurate particulars. Consequently, the Tribunal concluded that the penalty was unsustainable and ordered its deletion.

Overall, the Tribunal allowed the Assessee's appeal, ruling in favor of deleting the penalty imposed under section 271(1)(c) for concealment of income and filing inaccurate particulars of income.