2022 (6) TMI 692 - AT - Income Tax

Penalty u/s 271(1)(c) - Bogus purchases - HELD THAT - As purchases has been held to be bogus in view of the information received from Sales Tax Department of Maharashtra and the assessee failed to substantiate those purchases. Even the efforts made by the Assessing Officer for verification of those purchases by way of issue notice under section 133(6) and 131 of the Income Tax Act could not succeed as those parties were not traceable. The assessee was duly confronted with those facts and was asked to produce those purchase parties, however the assessee failed to do so. In the circumstances both the Ld. CIT(A) and ITAT has confirmed disallowance of part of the bogus purchases. In such circumstances, it is not a disallowance of expenses merely an estimate basis, but it is a disallowance in respect of a wrong committed by the assessee, which has resulted in furnishing of inaccurate particulars by the assessee. In our opinion, the Ld. CIT(A) has passed a reasoned order and we do not find any infirmity in the same. Accordingly, we uphold the both the impugned orders of the Ld. CIT(A) and dismiss the grounds raised by the assessee

Summary

Issues:
Appeals against penalty for furnishing inaccurate particulars of income for assessment years 2010-11 and 2011-12.

Analysis:
1. The appeals were against penalty orders passed by the Ld. CIT(A) for furnishing inaccurate particulars of income. Despite no representation from the assessee, the Tribunal proceeded ex-parte. Disallowance of bogus purchases was partly upheld by the FAA and further by the ITAT, leading to penalty imposition under section 271(1)(c) of the Income-Tax Act, 1961 for both years.

2. The Ld. CIT(A) confirmed the penalty citing deliberate furnishing of inaccurate particulars by the assessee. The assessee's claims were deemed incorrect, and the Ld. CIT(A) found the assessee's actions deliberate and willful, falling within the ambit of Section 271(1)(c) of the Act. The reliance was placed on precedents where penalty was justified for inaccurate particulars resulting in hiding income.

3. The assessee contended that all information was provided in the income tax return and argued against the penalty imposition. However, the Ld. CIT(A) found the claims to be wrong and not bonafide, upholding the penalty based on the decisions in relevant cases. The Tribunal agreed with the disallowance of part of the bogus purchases, emphasizing the failure of the assessee to substantiate the purchases despite verification attempts by the Assessing Officer.

4. The Tribunal upheld the Ld. CIT(A)'s orders, stating that the disallowance was not merely an estimate but a result of the assessee's wrong actions leading to furnishing inaccurate particulars. The Tribunal found no infirmity in the Ld. CIT(A)'s reasoned order and dismissed the appeals, confirming the penalty imposition for both assessment years.

In conclusion, the Tribunal dismissed the appeals, upholding the penalty for furnishing inaccurate particulars of income for the assessment years in question.