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Facts
The assessee filed an appeal against the penalty order levied under section 271(1)(c) of the Income Tax Act, 1961. The National Faceless Appeal Centre confirmed the penalty imposed by the Assessing Officer. The assessee's grounds of appeal primarily challenged the validity and legality of the penalty proceedings and order, citing lack of concealment of income or furnishing inaccurate particulars.
Held
The Tribunal noted that none appeared on behalf of the assessee despite proper service of summons. The Tribunal observed that the penalty was levied due to the assessee concealing income through bogus purchases, a finding supported by the CIT(A) and corroborated by various judicial precedents. No new evidence was presented to rebut these findings.
Key Issues
Whether the penalty levied under section 271(1)(c) for concealment of income through bogus purchases is valid and legally sustainable, especially when the assessee remained absent and provided no contrary evidence.
Sections Cited
271(1)(c), 250
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Income Tax Appellate Tribunal, “C” BENCH MUMBAI
ORDER
PER SANDEEP GOSAIN, JM:
The present appeal has been filed by the assessee challenging the impugned order 16.10.2025 passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre, Delhi (NFAC) for the assessment year 2011-12. The following grounds are reproduced below:
1. On the facts and in the circumstances of the case and in law, the penalty proceedings initiated u/s 271(1) (c) of the Act is invalid and bad in law.
2 2. On the facts and in the circumstances of the case and in law, the penalty order levying a penalty of Rs 17,04,977/- passed u/s 271(1) (c) of the Act is invalid and bad in law.
3. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in dismissing the appeal and confirming the penalty levied of Rs 17,04,977/- u/s 271(1) (c) of the IT Act.
On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in dismissing the appeal and confirming the penalty levied of Rs 17,04,977/- u/s 271(1) (c) of the IT Act although there has been neither any concealment of income nor furnishing of inaccurate particulars of income.
On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in dismissing the appeal and confirming the penalty levied of Rs17,04,977/-u/s 271(1) (c) of the IT Act and that too without even appreciating fully and properly the facts of the case. ”
None appeared on behalf of the assessee when the case was called out repeatedly. From the case records, we noticed that summons in this case were sent by the Registry through speed post as well as email. More than one month has passed since the summons were issued at the address provided by the assessee in Form 36, therefore, drawing an inference under the General Clauses Act, it is presumed that service of summons/notice has been duly effected.
On the other hand, the Ld. DR present in the court is ready with the arguments; therefore, we have decided to proceed with the hearing of the appeal ex parte.
3 4. After hearing the Ld. DR and perusing the record, we find that penalty under Section 271(1)(c) of the Act was levied by the Assessing Officer, as the assessee had concealed the income.
5. Against the order of imposition of penalty, the assessee had preferred an appeal before the Ld. CIT(A), and the Ld. CIT(A) passed a detailed order thereby upholding the penalty imposed by the AO. It was categorically mentioned by the Ld. CIT(A) that even during the course of assessment proceedings, the assessee had failed to file any documentary evidence regarding purchases from non-genuine parties; therefore, additions were made in the case of the assessee.
We further noticed that the assessee had indulged in bogus purchases, and only the profit element of those purchases had been added, which goes to show that the assessee had concealed the income to that extent under the garb of bogus purchases. As has also been held by the Coordinate Bench of the ITAT, in the case of Sandeep Kevalchand Mehta vs. ACIT (2025) 212 ITD 229:
Where the assessee made bogus purchases from Hawala Parties and concealed income to the extent of profit element in garb of purchases, penalty u/s 271(1)(c) was leviable.
Further, in the judgment of Hon'ble High Court of Delhi in the case of CIT vs Zoom Communications 327 ITR 510 it has been ordered that - 4 "..... if an assessee makes a claim which is not only incorrect in law, but is also wholly without basis and explanation furnished by him for making such a claim is not found to be bona fide, explanation 1 to section 271(1)(C) would come into play and assessee will be liable to penalty".,
Even otherwise, no new facts, circumstances, or documents have been placed on record to controvert or rebut the findings so recorded by the Ld. CIT(A). Therefore, we see no reason to interfere with or deviate from the findings so recorded by the Ld. CIT(A). Accordingly, we dismiss the grounds raised by the assessee and uphold the order passed by the Ld. CIT(A).
In the result, the appeal filed by the assessee stands dismissed with no order as to cost.