ITAT upholds CIT(A) decision deleting penalty under section 271(1)(c) (A)

The ITAT dismissed the revenue's appeal, upholding the CIT(A)'s decision to delete the penalty under section 271(1)(c) in both issues based on the lack of evidence of concealment or inaccurate particulars and the absence of independent inquiry by the assessing officer.

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Issues:
- Whether penalty u/s. 271(1)(c) should be deleted for furnishing inaccurate particulars of income in the original return filed by claiming bogus purchases.
- Whether penalty u/s. 271(1)(c) should be deleted for filing a revised return after the department was already aware of the bogus purchases.

Analysis:
Issue 1:
The case involved the appeal by the revenue against the order of the CIT(A) pertaining to the assessment year 2009-10. The assessee, engaged in construction business, filed a return of income declaring an amount. The AO received information from Sales Tax Authorities regarding Hawala transactions involving the assessee. Subsequently, a notice u/s 148 was issued, and the assessee filed a revised return offering the amount of bogus purchases for taxation. The AO imposed a penalty u/s 271(1)(c) amounting to the tax sought to be evaded. The assessee explained that purchases were made through brokers, and bills were obtained from non-genuine parties without their knowledge. The CIT(A) deleted the penalty, noting that the revised return was not a voluntary act after concealment was detected, and no evidence was presented to show inaccurate particulars or concealment.

Issue 2:
The assessing officer did not conduct any independent inquiry into the nature of transactions but imposed the penalty based on the revised return filed after receiving the notice of reopening. The ITAT upheld the CIT(A)'s decision to delete the penalty, emphasizing that the sales were not doubted, and a hundred percent disallowance for bogus purchases was not justified. The absence of any inquiry by the assessing officer and the precedent of disapproving such additions in similar cases led the ITAT to conclude that the penalty under section 271(1)(c) was unwarranted in the absence of evidence of concealment or inaccurate particulars.

In conclusion, the ITAT dismissed the revenue's appeal, upholding the CIT(A)'s decision to delete the penalty under section 271(1)(c) in both issues based on the lack of evidence of concealment or inaccurate particulars and the absence of independent inquiry by the assessing officer.

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