2022 (1) TMI 725 - AT - Income Tax

Tribunal affirms deletion of penalties for bogus purchases, emphasizing conscious concealment requirement

The tribunal upheld the CIT(A)'s decision to delete penalties imposed by the Assessing Officer under section 271(1)(c) for all Assessment Years, related ... Penalty u/s 271(1)(c) on estimated income - estimation of income on bogus purchases - CIT-A deleted the penalty - HELD THAT:- When this was confronted to the learned Sr. DR, he could not controvert the findings of CIT(A) deleting the penalty for all the Assessment Years. Even before us now, the learned Sr. DR could not point out any concealment of income or furnishing of inaccurate particulars of income, hence, we find no infirmity in the order of CIT(A) for all these Assessment Years. All the three appeals of Revenue are dismissed. Issues:- Appeal against deletion of penalty on estimated income in regard to estimation of profit on bogus purchases.Analysis:1. The appeals of Revenue were against the order of CIT(A) deleting the penalty levied on estimated income related to the estimation of profit on bogus purchases. The re-assessments for all the Assessment Years were framed under section 143(3) read with section 147 of the Income-tax Act, 1961, and penalties were levied by ITO Ward 25(3)(4), Mumbai.2. The common issue in all three appeals of Revenue was the deletion of penalty on estimated income in regard to the estimation of profit on bogus purchases. The grounds raised by Revenue were identically worded in all three years, with respective quantum amounts involved in each appeal.3. The facts and circumstances were identical in all three years. The judgment focused on the facts from ITA No.5629/Mum/2019 for AY 2009-10. The relevant grounds raised in Assessment Year 2009-10 highlighted the arguments made by Revenue against the deletion of penalty by CIT(A).4. The Assessing Officer made disallowances for bogus purchases, which were partly confirmed by CIT(A) at a reduced rate. However, the Hon'ble ITAT, Mumbai further reduced the disallowance percentages for each Assessment Year. The penalty under section 271(1)(c) was levied by the Assessing Officer, leading to the appeals before the tribunal.5. The tribunal, after hearing both sides, noted that CIT(A) had deleted the penalty for all Assessment Years based on established legal principles. The tribunal emphasized that penalty proceedings are independent of assessment proceedings and that conscious concealment is necessary for penalty under section 271(1)(c).6. The tribunal concurred with CIT(A)'s decision to delete the penalty, as there was no evidence of concealment of income or furnishing inaccurate particulars. The tribunal dismissed all three appeals of Revenue, upholding CIT(A)'s order of deleting the penalties.7. The judgment concluded with the dismissal of all appeals of Revenue, affirming the decision to delete the penalties on estimated income related to bogus purchases. The order was pronounced in open court on 31.08.2021.