2021 (2) TMI 126 - AT - Income Tax

ITAT Mumbai Upholds Deletion of Penalty under Income Tax Act 1961

The ITAT Mumbai dismissed the Revenue's appeal against the deletion of a penalty under section 271(1)(c) of the Income Tax Act 1961 for AY 2009-10. The ... Penalty levied u/s 271(1)(c) - disallowance being 12.5% of the Bogus purchases - HELD THAT:- In the instant case, in response to the show cause notice during the course of penalty proceedings, the assessee filed a reply stating that they had submitted copy of the ledger account, bills of the concerned parties along with delivery challans, bank statements where payments had been reflected to prove the genuineness of the purchases. It was stated before the AO that raw materials were purchased from the concerned parties who were having TIN number and were registered dealers. It was stated that during the year under consideration, the assessee had no transaction with the said parties and therefore, it was not able to produce them before the AO. In view of the facts and circumstances of the case, we are persuaded by the judgment of the Hon’ble Punjab & Haryana High Court in Harigopal Singh [2002 (8) TMI 65 - PUNJAB AND HARYANA HIGH COURT] instead of the order of the Tribunal in the case of Bhansali Trading Corporation [2015 (9) TMI 997 - ITAT JAIPUR] We are of the considered view that the Ld. CIT(A) has rightly followed the judgment of the Hon’ble Punjab & Haryana High Court in Harigopal Singh (supra) and deleted the penalty - Decided against revenue. Issues Involved:Appeal against penalty u/s 271(1)(c) of the Income Tax Act 1961 for AY 2009-10.Detailed Analysis:1. Non-appearance of Assessee:The appeal was filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) for AY 2009-10 regarding a penalty u/s 271(1)(c) of the Income Tax Act 1961. Despite the case being fixed for hearing, neither the assessee nor its representative appeared. Consequently, the appeal was disposed of based on available records and the submissions of the Departmental Representative.2. Assessment and Penalty Imposition:The assessee initially declared a total income of Rs. 5,86,344 for AY 2009-10, which was later revised by the Assessing Officer (AO) to Rs. 10,93,521 due to an addition on account of bogus purchases. Subsequently, a penalty of Rs. 19,590 was imposed by the AO under section 271(1)(c) on the income sought to be concealed, which was based on an estimate.3. Appeal and CIT(A) Decision:The assessee appealed against the penalty before the Ld. CIT(A), who deleted the penalty based on the grounds that the AO failed to provide concrete evidence to prove that the amount represented actual concealed income. The CIT(A) referenced a similar case law to support the decision. The Ld. DR relied on a different Tribunal order to restore the penalty, but the ITAT relied on the judgment of the Hon'ble Punjab & Haryana High Court in a specific case and upheld the CIT(A)'s decision to delete the penalty.4. Judicial Precedents and Decision:The ITAT considered the facts of the case, where the assessee submitted evidence to prove the genuineness of purchases, but could not produce the concerned parties before the AO. The ITAT favored the judgment of the Hon'ble Punjab & Haryana High Court over the Tribunal's decision in a different case, emphasizing the importance of concrete evidence in penalty imposition cases. Consequently, the ITAT dismissed the Revenue's appeal and upheld the deletion of the penalty.In conclusion, the ITAT Mumbai, in its judgment, emphasized the significance of concrete evidence in penalty imposition cases under section 271(1)(c) of the Income Tax Act 1961. The decision highlighted the importance of following judicial precedents and ensuring that penalties are imposed based on substantiated facts rather than estimates or assumptions.