ITAT Ahmedabad: Penalty under IT Act SS271(1)(c) deleted for bogus purchases.

The Appellate Tribunal ITAT Ahmedabad allowed the appeal and deleted the penalty of Rs. 99,320 imposed under section 271(1)(c) of the Income Tax Act for Assessment Year 2006-07, based on related quantum additions for bogus purchases. The decision was in line with a precedent set by a Division Bench in a materially identical case for a previous year, where the penalty was also deleted. The Accountant Member emphasized the variance in income estimation across forums and granted relief to the appellant accordingly.

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Issues: Challenge to correctness of penalty under section 271(1)(c) for Assessment Year 2006-07 based on related quantum additions for bogus purchases.

The judgment by the Appellate Tribunal ITAT Ahmedabad involved an appeal challenging the correctness of a penalty imposed under section 271(1)(c) of the Income Tax Act for Assessment Year 2006-07. The appellant argued that a Division Bench had restricted quantum additions to 20% of alleged purchases for a previous year and deleted the penalty for a similar case in another Assessment Year. The Departmental Representative contended that since the Tribunal confirmed the quantum addition for bogus purchases, the penalty should also stand. The Accountant Member considered the arguments, noting that a Division Bench had deleted the penalty in a materially identical case for a previous year, emphasizing that the estimation of income varied across forums. Consequently, following the precedent set by the Division Bench, the Accountant Member decided to delete the penalty of Rs. 99,320 imposed on the appellant, granting relief accordingly. The appeal was allowed, and the decision was pronounced on July 7, 2016.

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