2024 (11) TMI 366 - AT - Income Tax

Penalty u/s 271(1)(c) - addition pertaining to the alleged bogus purchases - AO has added 100% value of bogus purchases but CIT(A) has restricted the addition to the extent of 12.5% - HELD THAT - Addition has been sustained by the Ld.CIT(A) on estimated basis. As decided in KRISHI TYRE RETREADING AND RUBBER INDUSTRIES 2014 (2) TMI 21 - RAJASTHAN HIGH COURT penalty u/s. 271(1)(c) of the Act is not leviable when the addition is made on estimation basis. Accordingly, we hold that the penalty u/s. 271(1)(c) of the Act is not leviable in the present cases - Also see SANGRUR VANASPATI MILLS LTD. 2008 (2) TMI 285 - PUNJAB AND HARYANA HIGH COURT and JATIN ENTERPRISES case 2024 (3) TMI 1073 - ITAT MUMBAI - Decided in favour of assessee.

Summary

The appeals were against the penalty levied by the AO under section 271(1)(c) of the Income Tax Act related to alleged bogus purchases. The CIT(A) sustained the additions at 12.5% of the value of the purchases. The Tribunal held that penalty cannot be levied on estimated additions, following previous court decisions. The penalties were directed to be deleted, and the appeals of the assessee were allowed.