2020 (5) TMI 179 - AT - Income Tax

Penalty u/s. 271(1)(c) - filing inaccurate particulars of income OR concealment of income - HELD THAT - As initiated penalty proceedings by issuing show caused notice u/s. 271(1)(c) of the Act for filing inaccurate particulars of income which is evident in the last page of assessment order. We note that the AO imposed penalty u/s. 271(1)(c) for concealment of income which is evident from para 5 of penalty order. Therefore, the imposition of penalty is contrary to the findings of AO in assessment proceedings and in view of the decision of Samson Perinchery 2017 (1) TMI 1292 - BOMBAY HIGH COURT as rightly pointed by Shri S.N. Puranik, the ld. AR and the penalty imposed and as confirmed by the CIT(A), in our opinion, is not justified. - Decided in favour of assessee. Bogus Hawala purchases - purchases from grey market - CIT(A) held that the assessee is not able to substantiate the genuineness of alleged purchases restricted the said addition to 10% to arrive at such conclusion - HELD THAT - We find this Tribunal on similar issues by placing reliance in the case of M/s. Chhabi Electricals Pvt. Ltd. 2017 (6) TMI 514 - ITAT PUNE confirming the addition at 10% on the bogus Hawala purchases. Therefore, considering the same, we find no infirmity in the order of CIT(A) and it is justified. Thus, grounds raised by the assessee fails and are dismissed.

Summary

Issues:
- Appeal against penalty imposed under section 271(1)(c) for assessment year 2011-12.
- Appeal regarding the addition of 10% in place of 20% made by the AO for assessment year 2012-13.

Issue 1: Penalty Imposed under Section 271(1)(c) for AY 2011-12
The appellant challenged the penalty imposed under section 271(1)(c) for filing inaccurate particulars. The contention was that the penalty for concealment of income was not justifiable based on the decision of the Bombay High Court. The AO recorded satisfaction for inaccurate particulars but imposed a penalty for concealment, which was deemed contrary to the law. Citing a previous judgment, it was highlighted that penalty cannot be imposed for a different ground than the one initiated. Following the legal precedent, the penalty imposed by the AO and confirmed by the CIT(A) was deemed unjustified, and the order confirming the penalty was quashed.

Issue 2: Addition of 10% for AY 2012-13
The appellant, a partnership firm engaged in various businesses, faced an addition based on purchases from Hawala operators. The AO added a specific amount as the purchases were made through brokers in the gray market. The CIT(A) restricted the addition to 10% based on the appellant's inability to substantiate the genuineness of the purchases. The CIT(A) relied on a previous tribunal order for this decision. The tribunal, considering similar cases, confirmed the addition at 10% for the bogus Hawala purchases. Consequently, the grounds raised by the appellant were dismissed, and the order of the CIT(A) was deemed justified. Therefore, the appeal for the assessment year 2012-13 was dismissed.

In conclusion, the appeal for assessment year 2011-12 was allowed, while the appeal for assessment year 2012-13 was dismissed. The judgment was pronounced on 16th December 2019 by the Appellate Tribunal ITAT Pune, with detailed analysis and legal references provided for each issue raised in the appeals.