Tribunal deletes penalty under Income Tax Act, finding appellant's explanation plausible. No concealment of income.

The Tribunal deleted the penalty imposed under section 271(1)(c) of the Income Tax Act, amounting to Rs. 5.74 lakhs, as the appellant's explanation for alleged bogus purchases was deemed plausible. Despite facing a quantum addition of Rs. 16.62 lakhs, the Tribunal found no concealment of income and noted the active TIN of the suppliers at the time of purchase. The penalty imposition was unjustified based on the appellant's conduct, leading to the deletion of the penalty.

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Issues Involved:
1. Confirmation of penalty under section 271(1)(c) of the Income Tax Act.
2. Justification of penalty imposition for alleged purchase.
3. Validity of the notice for levying penalty under section 271(1)(c) of the Act.

Issue 1: Confirmation of Penalty under Section 271(1)(c) of the Income Tax Act:
The appeal contested the order of the Ld. Commissioner of Income-Tax (Appeals) confirming the penalty under section 271(1)(c) of the Act, amounting to Rs. 5,74,340, in relation to an alleged addition of Rs. 16,62,119. The appellant argued that there was no concealment of income or furnishing of inaccurate particulars. The assessing officer imposed the penalty despite the appellant submitting all details and evidence, and agreeing to offer the amount for taxation. The Tribunal had consistently upheld GP/estimated additions in cases of bogus purchases from Hawala dealers. The Ld. DR supported the penalty imposition, and the appeal was disposed of ex-parte as the AR sought withdrawal of Vakalatnama.

Issue 2: Justification of Penalty Imposition for Alleged Purchase:
The facts leading to the penalty imposition involved the appellant facing a quantum addition of Rs. 16.62 lakhs due to alleged bogus purchases. The appellant claimed the purchases were made in good faith under the belief that the suppliers were genuine, as they regularly visited the appellant's shop to supply goods. However, the Ld. AO did not accept this explanation and initiated penalty proceedings under section 271(1)(c) for concealment of income. The appellant ultimately faced a penalty of Rs. 5.74 lakhs, which was challenged before the Tribunal. The Tribunal found the appellant's explanation plausible, noting the active TIN of the suppliers at the time of purchase, and deleted the penalty, allowing ground nos. 1 & 2. The penalty imposition was not justified based on the conduct of the assessee.

Issue 3: Validity of the Notice for Levying Penalty under Section 271(1)(c) of the Act:
The appellant contended that the notice for levying penalty under section 271(1)(c) was bad in law and not sustainable. However, the Tribunal found no evidence to suggest any irregularity in the notice for levying the penalty. As a result, ground no. 3 was dismissed. The appeal was partly allowed by the Tribunal, with the penalty under section 271(1)(c) being deleted based on the appellant's plausible explanation and conduct.

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