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2022 (6) TMI 1068 - AT - Income TaxPenalty u/s 271(1)(c) - Addition u/s 69C - bogus purchases - As per AO most of the purchases made by the assessee were not from genuine parties and were bogus as per the information received from Sales Tax Department - HELD THAT - As in the present case, the explanation of the assessee has not been accepted by the Revenue and no contradictory evidence to disprove the explanation so offered has been brought on record by the Assessing Officer, we are of the considered view that penalty levied merely on estimated addition cannot be sustained in the absence of anything to prove that there was any concealment of income or furnishing of inaccurate particulars of income by the assessee. Accordingly, the grounds raised in present appeal are allowed and the Assessing Officer is directed to delete the penalty, as affirmed by the learned CIT(A). Appeal of assessee allowed.
Issues:
Challenge to penalty under section 271(1)(c) of the Income Tax Act, 1961 for assessment year 2010-11. Analysis: 1. Grounds of Appeal: The assessee challenged the penalty under section 271(1)(c) of the Act, contending that the addition of alleged non-genuine purchases was made on an estimated basis and there was no concealment or inaccurate filing of income. The appeal raised concerns about the Assessing Officer's actions and the notice issued for the penalty. 2. Assessment Proceedings: The Assessing Officer observed that most purchases made by the assessee were not genuine, leading to an addition of Rs. 9,21,532 under section 69C of the Act. The CIT(A) partially upheld this addition. In a quantum appeal, the Tribunal restricted the disallowance to 10% of the impugned purchases. 3. Penalty Imposition: A penalty of Rs. 2,84,756 was levied by the Assessing Officer under section 271(1)(c) based on alleged inaccurate particulars of income. The CIT(A) confirmed the penalty but reduced it to Rs. 28,476, aligning with the Tribunal's quantum appeal decision. The assessee appealed against this penalty imposition. 4. Arguments and Considerations: The authorized representative argued that the penalty was based on an estimated addition relying on the Sales Tax Department's report. The Departmental Representative supported the lower authorities' orders. The Tribunal noted that the entire addition was made on estimation without independent inquiry or incriminating material. 5. Judicial Precedents: The Tribunal referred to a case where penalties on estimated disallowances were set aside due to lack of conclusive proof of concealment or inaccurate particulars. In another case, penalties were deleted as gross profit was estimated without conclusive evidence of concealment. These decisions influenced the Tribunal's ruling in the present case. 6. Ruling: As the explanation of the assessee was not accepted, and no contradictory evidence was presented by the Assessing Officer, the Tribunal deemed the penalty levied on estimated addition unsustainable without proof of concealment or inaccurate particulars. Consequently, the Tribunal allowed the appeal, directing the deletion of the penalty as affirmed by the CIT(A). 7. Conclusion: The Tribunal pronounced the order in favor of the assessee, allowing the appeal and directing the deletion of the penalty imposed under section 271(1)(c) for the assessment year in question. This detailed analysis covers the grounds of appeal, assessment proceedings, penalty imposition, arguments presented, judicial precedents referenced, the Tribunal's ruling, and the ultimate conclusion in this legal judgment challenging the penalty under section 271(1)(c) of the Income Tax Act, 1961.
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