SAMIULLAH MOHAMMAD KHALIL ANSARI,MUMBAI vs. THE INCOME-TAX OFFICER, WARD 20(3)(1), MUMBAI, MUMBAI

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ITA 1525/MUM/2026Status: DisposedITAT Mumbai18 June 2026AY 2011-123 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that penalty under Section 271(1)(c) is not leviable on ad-hoc or estimated disallowances. Therefore, the Assessing Officer was directed to delete the impugned penalty.

What were the facts?

The Assessing Officer disallowed certain purchases and levied penalty under Section 271(1)(c). The CIT(A) restricted the disallowance to 5% of the total purchases. The assessee appealed against the penalty.

What were the issues?

The primary issue was whether penalty could be levied on ad-hoc or estimated disallowances of purchases.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of ld. CIT(A) / NFAC, Delhi dated 06.09.2023 for Assessment Year (AY) 2011-12. Though the assessee has raised multiple grounds of appeal, however, the substantial ground of appeal relates to validity of penalty levied under section 271(1)(c) on the addition of adhoc disallowances of certain purchases. 2. Rival submissions of both the parties have been heard and record perused. The learned Authorised Representative (ld. AR) of the assessee submits that Assessing Officer (AO) while passing the assessment order disallowed certain purchases from nine parties aggregating of Rs. 46,21,964/-. However, on further appeal before ld. CIT(A) such disallowances was restricted to 5.00% of such total purchases. The AO levied penalty on such adhoc disallowances.

ITA 1525/Mum/2026 (AY: 2011-12) Samiullah Mohammad Khalil Ansari

It is settled position under law that no penalty is leviable on adhoc / estimated disallowances. The ld. AR of the assessee submits that he has also filed his short-written synopsis. 3. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) for the Revenue supported the order of lower authorities. The ld. Sr. DR for the Revenue submits that assessee is beneficiary of bogus purchases and the AO was quite reasonable in levying penalty on the additions sustained by ld. CIT(A). 4. We have heard the submissions of both the parties and have gone through the orders of lower authorities carefully. Admittedly, the AO levied penalty on disallowances made on estimation @ 5.00% of aggregating purchases from nine parties as mentioned in para 5 of assessment order. It is settled legal position under law that penalty under section 271(1)(c) is not leviable when addition is based on adhoc / estimated basis. Thus, the AO is directed to delete the impugned penalty. 5. In the result of appeal of the assessee is allowed Order was pronounced in open court on18/06/2026 at the time of hearing. Sd/- Sd/- MANOJ KUMAR AGGARWAL PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER

MUMBAI, Dated: 18/06/2026 Biswajit

ITA 1525/Mum/2026 (AY: 2011-12) Samiullah Mohammad Khalil Ansari

Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file.

By order

Assistant Registrar/DDO ITAT, Mumbai

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