2021 (6) TMI 886 - AT - Income Tax

Penalty u/s 271(1)(c) - Bogus purchases - HELD THAT - As it transpires from the record available before us that the Assessing Officer levied penalty under section 271(1)(c) of the Act on estimate basis without any evidence on record with regard to concealment of income. Penalty under section 271(1)(c) of the Act is leviable to be imposed only where the assessee has concealed its particulars of income or furnished inaccurate particulars. Action of making addition on ad-hoc basis does not result into imposition of penalty u/s. 271(1)(c) of the Act and hence cannot be termed as either concealment or furnishing of inaccurate particulars of income. - Decided against revenue.

Summary

Issues Involved:
1. Challenge to penalty under section 271(1)(c) of the Income Tax Act, 1961 for furnishing inaccurate particulars of income in relation to alleged bogus purchases.
2. Justifiability of penalty imposition on estimate basis without concrete evidence of concealment of income.

Issue 1: Challenge to Penalty under Section 271(1)(c)
The Appellate Tribunal ITAT Mumbai addressed the challenge to penalties under section 271(1)(c) of the Income Tax Act, 1961. The case involved two separate orders dated 24th June 2019, passed by the Commissioner (Appeals)-21, Mumbai, for the assessment year 2009-10. The dispute arose from the assessment of alleged bogus purchases totaling &8377; 49,20,896. The Assessing Officer reopened the assessment under section 147 based on information indicating the assessee's involvement in accommodation entries. The Assessing Officer disallowed the entire amount of the alleged bogus purchases and added it to the assessee's income. Subsequently, penalty proceedings were initiated under section 271(1)(c) separately. The Commissioner (Appeals) partly allowed the assessee's appeal, reducing the addition to &8377; 6,15,112. The Assessing Officer then levied a penalty of &8377; 2,00,000, which the assessee challenged before the Commissioner (Appeals).

Issue 2: Justifiability of Penalty Imposition on Estimate Basis
The Tribunal examined the justifiability of imposing penalties on an estimate basis without concrete evidence of income concealment. The Tribunal noted that penalties under section 271(1)(c) are applicable when an assessee conceals income or furnishes inaccurate particulars. In this case, the Assessing Officer made additions on an ad-hoc basis without evidence of concealment, leading to the penalty imposition. However, the Tribunal cited various judicial pronouncements and case laws to support the position that penalty imposition based on estimations is not sustainable. The Tribunal emphasized that actions based on estimations do not amount to concealment or furnishing inaccurate particulars of income. As the Revenue failed to provide substantial evidence of income concealment, the Tribunal upheld the Commissioner (Appeals)'s decision to delete the penalty. Consequently, the Tribunal dismissed the Revenue's appeal, affirming the deletion of the penalty.

In conclusion, the Appellate Tribunal ITAT Mumbai dismissed the Revenue's appeals challenging penalties under section 271(1)(c) for alleged bogus purchases, emphasizing the necessity of concrete evidence to support penalty imposition and highlighting the inapplicability of penalties based solely on estimations without proof of income concealment.