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Facts
The assessee filed its return of income declaring Rs.21,58,132/-. The AO made an addition of Rs. 60,17,257/- on account of profit on alleged bogus purchases, estimated at 12.5%. The Tribunal later reduced the estimated addition to 4.6%, amounting to Rs.22,14,350/-. The penalty was levied on this reduced amount.
Held
The Tribunal held that the appeal should be dismissed for want of tax effect, as the penalty imposed was only Rs. 6.85 Lakhs and hit by CBDT Circular No. 09/2024. Furthermore, on merits, no penalty is leviable under section 271(1)(c) when profit is estimated.
Key Issues
Whether the penalty levied under section 271(1)(c) is sustainable on an estimated profit after the addition was reduced by the Tribunal and whether the appeal is maintainable due to lack of tax effect as per CBDT circular.
Sections Cited
271(1)(c), 143(1), 148
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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, HON’BLE & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE
O R D E R
PER NARENDRA KUMAR BILLAIYA, AM:
This appeal by the revenue is preferred against the order of the NFAC, Delhi, dated 25/06/2024, pertaining to AY 2010-11.
The solitary grievance of the revenue is that the ld. CIT(A) erred in deleting the penalty levied u/s 271(1)(c) of the Act. 3. Briefly stated the facts of the case are that the assessee filed its return of income 09/09/2010 declaring total income at Rs.21,58,132/-. The return was processed u/s 143(1) of the Act and subsequently reopened by issue of notice u/s 148 of the Act and re-assessment proceedings were completed vide order dated 14/03/2016 in which the AO made addition of Rs. 60,17,257/- on account of profit on alleged bogus purchases of Rs.4,81,38,057/-. The addition was made on the estimated profit of 12.5%.