2021 (6) TMI 313 - AT - Income Tax

Penalty deleted under Income Tax Act for assessment year 2011-12. Penalty separate from assessment.

The Income Tax Officer, Ward-5 (2) (3), Mumbai Versus M/s Mutta Steelage Pvt. Ltd.

The Tribunal upheld the CIT(A)'s decision to delete the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year ... Penalty u/s 271 (1) (c) - Bogus purchases - CIT(A) has deleted the penalty levied by the AO holding that penalty proceedings are different from the assessment proceedings and addition of income during assessment proceedings does not ipso facto make the assessee liable u/s 271(1)(c) - HELD THAT:- Since in the present case, the addition has been made on estimation basis it cannot be concluded that the assessee has either concealed his income or furnished inaccurate particulars of his income to initiate proceedings u/s 271(1)(c) CIT(A) has also based his findings on the decision of the coordinate Bench of the Tribunal in the case of SHRI DEEPAK GOGRI [2017 (11) TMI 1857 - ITAT MUMBAI]wherein the Tribunal deleted the penalty levied u/s 271(1)(c) of the Act on the basis of addition on account of profit made on estimation basis, holding that the addition made on estimation basis does not amount to concealment of income or furnishing of inaccurate particulars of income. Thus findings of the Ld. CIT(A) are well reasoned and based on the decisions of the Tribunal discussed above. Hence, do not find any reason to interfere with the decision of the Ld. CIT(A) and direct the AO to delete the penalty levied u/s 271(1)(c) 0f the Act. - Decided against revenue. Issues:Appeal against penalty order u/s 271(1)(c) of the Income Tax Act, 1961 for assessment year 2011-12.Detailed Analysis:1. Background and Assessment Proceedings:The appeal was filed by the revenue against the order passed by the Commissioner of Income Tax (Appeals) for the assessment year 2011-12. The assessee had declared a total income of Rs. 9,89,683, which was processed under section 143(1) of the Act. Subsequently, based on information regarding bogus purchase bills, the Assessing Officer (AO) reopened the case and determined the total income at Rs. 20,66,590 after making additions. The AO initiated penalty proceedings u/s 271(1)(c) and imposed a penalty of Rs. 3,32,764.2. Challenge Before CIT(A):The assessee challenged the penalty order before the CIT(A), who set aside the penalty after hearing the assessee. The revenue then appealed to the Tribunal against this decision.3. Grounds of Appeal by Revenue:The Revenue challenged the CIT(A)'s decision, arguing that the assessee failed to establish the genuineness of the purchases, leading to inaccurate particulars of income. The Revenue sought restoration of the penalty imposed by the AO.4. Tribunal's Analysis and Decision:During the appeal hearing, as the assessee did not appear, the Tribunal proceeded based on the material on record. The Tribunal noted that penalty proceedings are distinct from assessment proceedings. It was observed that the addition made on an estimation basis during assessment does not automatically attract penalty u/s 271(1)(c) of the Act.5. Precedent and Rulings Considered:The Tribunal cited the decision of a coordinate Bench in a similar case where penalty was deleted under comparable circumstances. The Tribunal also referred to another case where penalty was deleted based on an addition made on estimation basis, emphasizing that such additions do not constitute concealment of income or furnishing inaccurate particulars.6. Decision and Rationale:The Tribunal upheld the CIT(A)'s decision to delete the penalty, stating that the findings were well-reasoned and aligned with precedents. The Tribunal dismissed the revenue's appeal and directed the AO to delete the penalty levied under section 271(1)(c) of the Act.This comprehensive analysis covers the issues involved, the background of the case, the arguments presented by both parties, the Tribunal's analysis of the legal provisions and precedents, and the final decision rendered in the matter.