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2020 (10) TMI 505 - AT - Income TaxPenalty levied u/s 271(1)(c) - Bogus purchases - HELD THAT - Imposition of penalty is not automatic. Penalty proceedings are not to be initiated merely to harass the assessee. The approach of the Assessing Officer in this behalf must be fair and objective. Concealment of income and furnishing inaccurate particulars are different. Both concealment and furnishing of inaccurate particulars refer to del/berate acts on the part of the assessee. A mere omission or negligence would not constitute a deliberate act of suppression or furnishing of accurate particulars - See Dilip N. Shroff 2007 (5) TMI 198 - SUPREME COURT There is no active concealment of income on the part of the assessee and additions made on estimation by the AO do not called for initiation of penalty. Thus, penalty levied by AO has rightly been deleted by Ld. CIT(A). Accordingly, the grounds raised by the revenue stands dismissed.
Issues Involved:
1. Whether the appeal filed by the revenue is maintainable given the revised monetary limit set by CBDT. 2. Whether the penalty levied under section 271(1)(c) of the Income Tax Act on account of bogus purchases is justified. Issue-wise Detailed Analysis: 1. Maintainability of the Appeal: The revenue filed appeals against the order of the Ld. Commissioner of Income Tax (Appeals) for the Assessment Years 2009-10 and 2010-11. It was noted that the tax effect of the relief granted by the Ld. CIT(A) was below ?50 lakhs. As per Circular No.17 of 2019 issued by the CBDT, the monetary limit for filing appeals before the ITAT was revised to ?50 lakhs. Therefore, the present appeal filed by the revenue is below the prescribed monetary limit, making it non-maintainable. 2. Justification of Penalty under Section 271(1)(c): The Assessing Officer (AO) levied a penalty under section 271(1)(c) of the Income Tax Act on the basis of bogus purchases made by the assessee. The Ld. CIT(A) deleted the penalty, considering that the penalties were levied merely on disallowances of purchases without any finding of concealment of particulars to reduce taxable income. The Ld. CIT(A) relied on various judgments to support the deletion of the penalty. Upon reviewing the case, it was observed that the AO levied the penalty on an estimation basis without concrete evidence of actual concealment. As per the law, section 271(1)(c) applies only where the assessee has concealed particulars of income or furnished inaccurate particulars. The estimation of disallowance on bogus purchases by the AO cannot be termed as concealment or furnishing of inaccurate particulars of income. Several judicial precedents were cited to support this view, including: - Commissioner of Income-tax v. Norton Electronics Systems (P) Ltd.: Held that no penalty is sustainable when the addition is made on an estimate basis. - Asst. Commissioner of Income-tax v. Vision Research Management (P) Ltd.: Imposition of penalty on ad hoc and estimated disallowance/addition without clinching material suggesting concealment or furnishing inaccurate particulars was not justified. - Prem Chand vs. Asst. Commissioner of Income-tax: Levy of penalty on estimated value without concrete evidence was not sustainable. - Commissioner of Income-tax v. Brahmaputra Consortium Ltd.: Penalty could not be levied on disallowance of claim for deduction of expenditure and depreciation without finding concealment or furnishing inaccurate particulars. - Commissioner of Income-tax v. P. Roles: Penalty based on estimation of income was not justified. - Naresh Chand Agarwal v. Commissioner of Income-tax: Penalty under section 271(1)(c) could not be imposed on the basis of estimating sales and making additions by applying net profit rate. - Commissioner of Income-tax v. P. H. I. Seeds India Ltd.: Section 271(1)(c) is attracted only where there is an intent to mislead the Revenue by concealing particulars or furnishing inaccurate particulars. The Tribunal concluded that there was no active concealment of income by the assessee and that additions made on estimation by the AO do not warrant the initiation of penalty. Thus, the penalty levied by the AO was rightly deleted by the Ld. CIT(A). Procedural Note: The order was pronounced beyond the standard 90-day period due to the extraordinary circumstances of the COVID-19 lockdown. The Tribunal relied on the decision in the case of JSW Ltd and other judicial precedents to justify the delay, acknowledging the unprecedented disruption caused by the pandemic. Conclusion: Both the appeals filed by the revenue were dismissed. The penalty levied under section 271(1)(c) was not justified based on the estimation of income, and the deletion of the penalty by the Ld. CIT(A) was upheld. The order was pronounced in accordance with Rule 34(5) of the ITAT Rules, considering the exceptional circumstances.
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