2025 (2) TMI 830 - AT - Income Tax

Penalty u/s 271(1)(c) - estimation of income on bogus purchases - AO added the entire bogus purchases whereas the Tribunal restricted the addition to 12.5% of the bogus purchases being the profit element imbibed in such bogus purchases HELD THAT - The undisputed fact is that the additions were made on account of bogus purchases and the quarrel travelled up to the Tribunal and the Tribunal restricted the quantum addition at 12.5% of the bogus purchases. No merit in the contention of the ld. Counsel that the profit has been estimated and the penalty has been levied on estimated profit. Facts on record show that there were bogus purchases and only the profit element has been added which means that the assessee has concealed the income to this extent in the garb of purchases which turned out to be bogus. No hesitation in confirming the penalty so levied u/s 271(1)(c) - Decided against assessee.

Summary

The appeal before the ITAT Mumbai involved a dispute regarding the levy of a penalty under section 271(1)(c) of the Income Tax Act on alleged estimated profits from unverified purchases. The Tribunal upheld the penalty, stating that the addition was based on bogus purchases, with only the profit element being added. The Tribunal found no merit in the argument that the profit was estimated, as the actual purchases were found to be bogus. The penalty was confirmed, and the appeal by the assessee was dismissed on 19th February 2025 in Mumbai.