SHRI. SALIM E PETIWALA,MUMBAI vs. ITO 17 (3)(2), MUMBAI

PDF · subscribers
ITA 6922/MUM/2019Status: DisposedITAT Mumbai15 March 2021AY 2010-113 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) cannot be levied on an addition made on an estimated basis. The estimated profit from alleged grey market purchases does not necessarily imply conscious concealment of income.

What were the facts?

The Assessing Officer levied penalty under Section 271(1)(c) on an addition made for bogus purchases. The Tribunal had previously restricted this addition to 12.5% of the purchase value in quantum proceedings.

What were the issues?

Whether penalty under Section 271(1)(c) is justified on an addition made on an estimated basis for bogus purchases.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘E‘ BENCH

Before: SHRI C.N. PRASAD, JM & SHRI M.BALAGANESH, AM Shri Salim E Petiwala

For Appellant: Shri Vijay Kumar Menon
For Respondent: Shri Vijay Kumar Menon
Hearing: 15/03/2021Pronounced: 15/03/2021

आदेश / O R D E R PER M. BALAGANESH (A.M):

1.

This appeal in A.Y.2010-11 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-28, Mumbai in appeal No.CIT(A)-28/ITBA-10002/ITO-17(3)(2)/2018-19 dated 13/04/2018 (ld. CIT(A) in short) in the matter of imposition of penalty u/s.271(1)(c) of the Income Tax Act, 1961.

2.

The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in upholding levy of penalty levied u/s.271(1)(c) of the Act in respect of estimated addition sustained on account of bogus purchases in the facts and circumstances of the case.

3.

None appeared on behalf of the assessee. We have heard the ld. DR and perused the materials available on record. We find that in the quantum proceedings, this Tribunal vide order dated 29/02/2017 had restricted addition made on account of bogus purchases to 12.5% of value thereon by taxing the profit to the tune of Rs.5,87,155/-. We find that the ld. AO had levied penalty of Rs.1,81,431/- u/s.271(1)(c) of the Act in respect of this sustained addition. Even though this Tribunal had sustained the quantum addition to the extent of 12.5% of value of tainted purchases, it cannot be brushed aside that the said addition had been made on an estimated basis on the possible premise that assessee could have made purchases in the grey market in order to have some savings in indirect taxes and incidental profit element thereon. Such profit element had been estimated @12.5% of value of tainted purchases and brought to tax in the quantum proceedings. There could not be any conscious concealment of income or filing of inaccurate particulars of income that could be attributed to the assessee in this regard, warranting levy of penalty u/s.271(1)(c) of the Act. It is trite law that no penalty u/s.271(1)(c) of the Act could be levied on an addition which has been made on an estimated basis. Hence, we hereby direct the ld. AO to delete the penalty u/s.271(1)(c) of the Act. Accordingly, the grounds raised by the assessee are allowed.

4.

In the result, appeal of the assessee is allowed.

Order pronounced in the open Court on 15/03/2021.

More judgments on Section 271(1)(c)

All 25,141 judgments and leading authorities on Section 271(1)(c) →

Recent GST High Court judgments

Search GST case law →