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Tribunal cancels penalty under Income Tax Act, finding purchases well-documented and payments through banking channels. The Tribunal allowed the appeal, directing the Assessing Officer to delete the penalty of Rs. 18,006 imposed under section 271(1)(c) of the Income Tax ...
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Tribunal cancels penalty under Income Tax Act, finding purchases well-documented and payments through banking channels.
The Tribunal allowed the appeal, directing the Assessing Officer to delete the penalty of Rs. 18,006 imposed under section 271(1)(c) of the Income Tax Act, 1961. The Tribunal found that the penalty imposition was not justified as the purchases were well-documented and payments were made through banking channels. It was determined that the Assessing Officer failed to substantiate the purchase entry rather than establish deliberate falsehood, leading to the deletion of the penalty.
Issues: Penalty under section 271(1)(c) of the Income Tax Act, 1961.
Analysis: The appeal pertains to the assessment year 2009-10 and challenges the penalty imposed under section 271(1)(c) of the Act amounting to Rs. 18,006. The dispute arose from purchases made by the assessee from four parties totaling to Rs. 4,66,133, which were deemed doubtful based on information from the Maharashtra Sales Tax Department. The Assessing Officer treated these purchases as bogus, adding a profit element of Rs. 58,266 to the returned income. Subsequently, a penalty of Rs. 18,006 was imposed under section 271(1)(c) for alleged income concealment.
The assessee contended that the penalty imposition was not automatic, as the purchase transactions were well-documented and payments were made through banking channels. The Tribunal noted that the Assessing Officer added only the profit element to the returned income, indicating a failure to substantiate the purchase entry rather than establishing falsity. As the sales corresponding to the purchases were accepted, the Tribunal deemed it a case of non-substantiation rather than deliberate falsehood. Given the manner of estimation used by the Assessing Officer, the Tribunal found no basis for sustaining the penalty under section 271(1)(c) and directed its deletion.
In conclusion, the Tribunal allowed the appeal, setting aside the order of the CIT(A) and directing the Assessing Officer to delete the penalty of Rs. 18,006 imposed under section 271(1)(c) of the Act. The judgment was pronounced on 10/11/2017.
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