Tribunal overturns penalty under section 271(1)(c) for AY 2009-10. No penalty on adhoc disallowance.

The Tribunal allowed the appeal, setting aside the penalty imposed under section 271(1)(c) for Assessment Year 2009-10. The penalty was deleted based on the legal principle that no penalty is leviable on adhoc disallowance.

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Issues:
- Appeal against penalty order under section 271(1)(c) for Assessment Year 2009-10.
- Alleged concealment of income and imposition of penalty.
- Disallowance of purchases based on information from Sales Tax Department.
- Adhoc disallowance and penalty under section 271(1)(c).

Analysis:

Issue 1: Appeal against penalty order under section 271(1)(c) for Assessment Year 2009-10
The appeal was directed against the order of the Commissioner (Appeals) dated 09.11.2017, arising from the penalty order under section 271(1)(c) dated 26.09.2014. The appellant contested the imposition of penalty and raised various grounds challenging the confirmation of the penalty.

Issue 2: Alleged concealment of income and imposition of penalty
The Assessing Officer re-opened the assessment based on information from the Sales Tax Department, suspecting the appellant of receiving accommodation entries from hawala dealers. The appellant's purchases were disallowed, leading to the imposition of penalty under section 271(1)(c). The appellant argued that there was no deliberate concealment of income and that the penalty was unjustified.

Issue 3: Disallowance of purchases based on information from Sales Tax Department
The assessment was completed under section 144 r.w.s. 147, with the disallowance of purchases made based on information from the Sales Tax Department regarding hawala transactions. The appellant's appeal to the Commissioner (Appeals) resulted in a partial sustenance of the disallowance, which was further confirmed by the Tribunal.

Issue 4: Adhoc disallowance and penalty under section 271(1)(c)
The Assessing Officer levied the penalty at 100% of the tax sought to be evaded, but the Commissioner (Appeals) restricted the penalty to the extent of the addition confirmed in the appeal. The Tribunal, considering the legal position that no penalty is leviable on adhoc disallowance, directed the deletion of the entire penalty levied under section 271(1)(c) based on the peculiar facts and circumstances of the case.

In conclusion, the Tribunal allowed the appeal of the assessee, setting aside the penalty imposed under section 271(1)(c) for the Assessment Year 2009-10. The decision was based on the legal principle that no penalty is leviable on adhoc disallowance, leading to the deletion of the penalty in this case.

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