ACIT, CIRCLE-9(3)(1), MUMBAI vs. FILTERATION ENGINEERS INDIA PVT LTD, MUMNBAI
In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that no penalty under Section 271(1)(c) is leviable on ad-hoc additions, affirming the CIT(A)'s decision. The Tribunal found no contrary facts or law to deviate from this established position.
What were the facts?
The Assessing Officer disallowed 12.5% of alleged bogus purchases and initiated penalty proceedings under Section 271(1)(c). The assessee contended that purchases were genuine and supported by evidence, but the AO levied penalty. The CIT(A) deleted the penalty, which the revenue appealed.
What were the issues?
Whether penalty under Section 271(1)(c) can be levied on ad-hoc disallowances made during assessment. Whether the CIT(A) was justified in deleting the penalty.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cases cited in this judgment(2)Show listHide list
Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.
- Earthmoving Equipment Service Corporation v. DCIT 22(2), Mumbai263 citing84 Taxmann.com 51 · 2017 · ITAT
- Chempure v. ITO11 citing40 SOT 164 · 2010 · ITAT
PER PAWAN SINGH, JUDICIAL MEMBER:
This appeal by revenue is directed against the order of ld. Commissioner of Income Tax (Appeals)-16, [CIT(A)], Mumbai dated 24.12.2018 for Assessment Year 2011-12. The revenue has raised the following grounds of appeal: i. “Whether on the facts and in the circumstances of the case and in law, was Ld. CIT(A) right in deleting the penalty levied by the Assessing Officer u/s. 271(1)(c) of the Income Tax Act, 1961?” ii. The appellant prays that the order of the ld. CIT(A) on the above ground be set aside and that of the AO be restored.
2. Brief facts of the case are that the assessee is a company engaged in the business of manufacturing of industrial filters. The assessment was Mum 2019-M/s Filteration Engineers India Pvt. Ltd. completed for AY 2011-12 was completed under section 143(3) r.w.s.
147 dated 17.03.2016. The Assessing Officer while passing the assessment order made addition/disallowance on account of bogus purchases. The Assessing Officer disallowed 12.5% of aggregate of alleged bogus purchases of Rs. 1,12,35,102/-. The Assessing Officer calculated the disallowance of Rs. 14,04,388/-.
The Assessing Officer while passing the assessment order initiated the penalty under section 271(1)(c) of the Act. The show-cause notice under section 271(1)(c) r.w.s 274 dated 16.05.2017 was served upon the assessee. In response to the show-cause, the assessee filed reply dated 22.05.2017. In the reply, the assessee contended that the purchases made by assessee were genuine. It was stated that the assessee made the payment through Account Payee cheques, all the evidence pertaining to the purchase bills, delivery challans and copy of ledger accounts were furnished. It was also stated that due to long gap, the assessee could not produce the vendors and aggregate for disallowance @ 12.5% out of the total purchases. The reply of assessee was not accepted by Assessing Officer. The Assessing Officer levied the penalty @ 100% of the tax sought to be evaded on disallowance of Rs. 14,04,388/-. The Assessing Officer computed the penalty of Rs. 4,66,502/- in its order dated 31.05.2017 passed under section 271(1)(c). Mum 2019-M/s Filteration Engineers India Pvt. Ltd.
On appeal before the ld. CIT(A), the entire penalty was deleted. The ld. CIT(A) while deleting the penalty followed the decision of Tribunal in M/s Chempure vs. ITO (40 SOT 164), Earthmoving Equipment Service Corporation vs. Dy.CIT [2017] 84 taxmann.com 51 (Mumbai Trib.).
Aggrieved by the order of ld. CIT(A), the revenue has filed the present appeal before us.
None appeared on behalf of assessee; the notice sent through registered post with acknowledgement due (RPAD) returned back un-served with the remark of postal authority “Left”. Thus, we left no option except to hear the submission of ld. Departmental Representative (DR) for the revenue and decide the appeal on the basis of submission of ld. DR and the material available on record. The ld. DR for the revenue supported the order of Assessing Officer. The ld. DR for the revenue submits that the assessee accepted the addition and no further appeal was filed before the First Appellate Authority in quantum assessment. The assessee furnished inaccurate particulars of income and could not substantiate the genuineness of purchases.
We have considered the submission of ld. DR and perused the order of lower authorities. There is no dispute that while passing the assessment order dated 17.03.2011 under section 143(3) r.w.s.
The Assessing Officer made the disallowance on estimated basis. The Assessing Officer disallowed 12.5% of aggregate of total alleged bogus purchases. The 3 Mum 2019-M/s Filteration Engineers India Pvt. Ltd.
Assessing Officer levied the penalty on the disallowances made while passing the assessment order. Before the ld. CIT(A), the assessee made exhaustive submission and relied upon the various case law including the decisions of M/s Chempure vs. ITO (supra) & Earthmoving Equipment Service Corporation vs. Dy.CIT (supra). The ld. CIT(A) after considering the submission of assessee concluded that no penalty under section 271(1)(c) can be levied on adhoc addition and deleted the entire penalty levied under section 271(1)(c).
We have noted that the ld. CIT(A) while passing the impugned order has followed the order of Tribunal in M/s Chempure vs. ITO (supra) & Earthmoving Equipment Service Corporation vs. Dy.CIT (supra). In our view, it is now settled position under the law that no penalty under section 271(1)(c) is leviable on adhoc addition. Therefore, we affirmed the order passed by ld. CIT(A). No contrary facts or law is brought to our notice to take other view.
In the result, appeal of the revenue is dismissed.
More judgments on Section 271(1)(c)
- Ajaybhai Dineshbhai Bagdai, Near Central… vs The Income Tax Officer, Ward-1(2)(1), New…ITA 74/RJT/2026[2013-14]Status: Disposed19 Oct 2026AY 2013-14
- Shalin Jayantbhai Desai, Vadodara vs ACIT, Circle-4(2), Vadodara Present…ITA 2569/AHD/2026[2010-11]Status: Disposed19 Oct 2026AY 2010-11
- Neo Structo Construction P. Ltd., Ahmedabad vs The Pr. CIT- 3, AhmedabadITA 1216/AHD/2026[2015-2016]Status: Disposed16 Oct 2026AY 2015-2016
- Hetal Vinodchandra Sheth, Ahmedabad vs The ITO, Ward-5(3)(1), AhmedabadITA 2370/AHD/2025[2014-15]Status: Disposed16 Oct 2026AY 2014-15
- Hetal Vinodchandra Sheth, Ahmedabad vs The ITO, Ward-5(3)(1), AhmedabadITA 2369/AHD/2025[2014-15]Status: Disposed16 Oct 2026AY 2014-15
Recent GST High Court judgments
Search GST case law →- Sukant Kumar vs. Union Of INDIA And 6 OthersAllahabad · 21 Oct 2026
- M/S New Sana Brick Field vs. Union Of INDIA And 4 OthersAllahabad · 21 Oct 2026
- M/S Shivam Tiles House vs. State Of U.P. And AnotherAllahabad · 21 Oct 2026
- Vinay Singh vs. Union Of INDIAAllahabad · 21 Oct 2026
- M/S Aaradhyam Infrabuilders PVT LTD vs. State Of U.P. And AnotherAllahabad · 21 Oct 2026