Tribunal upholds penalty under Income Tax Act for inaccurate income particulars

M/s. Morakhia Copper and Alloys Pvt. Ltd. Versus A.C.I.T., Tax, Circle-2 (1) (2), Ahmedabad.

M/s. Morakhia Copper and Alloys Pvt. Ltd. Versus A.C.I.T., Tax, Circle-2 (1) (2), Ahmedabad. - TMI Issues Involved:
1. Confirmation of penalty order under section 271(1)(c) of the Income Tax Act, 1961 by the Appellate Tribunal.
2. Justification of penalty imposition on inaccurate particulars of income.
3. Assessment of penalty based on estimated basis.
4. Consideration of legal precedent in penalty imposition cases.
5. Challenge to the penalty order on grounds of specific charge, limitation, and document consideration.

Issue 1: Confirmation of Penalty Order:
The appeal was filed by the Assessee against the order of the Commissioner of Income Tax (Appeals) confirming the penalty under section 271(1)(c) of the Act for the Assessment Year 2011-12. Despite the Assessee's absence during the hearing, the Tribunal proceeded to adjudicate the appeal after hearing the Revenue's representative.

Issue 2: Imposition of Penalty on Inaccurate Particulars:
The Assessee, a private limited company engaged in manufacturing, faced penalty proceedings for inaccurate income particulars due to bogus purchases. The Assessing Officer (AO) levied a penalty of Rs. 1,01,75,518/-, representing 100% of the tax sought to be evaded. The Assessee's contention that the penalty was unjustified was based on the reduction of the addition by the Tribunal to Rs. 15,29,625/-, arguing against a penalty for the estimated amount.

Issue 3: Assessment Based on Estimated Basis:
The Tribunal confirmed the penalty on the estimated profit embedded in the bogus purchases, rejecting the Assessee's argument against penalty imposition based on estimates. Legal precedent, including the case of ACIT vs. Chandravilas Hotel, supported the penalty based on estimated additions.

Issue 4: Legal Precedent in Penalty Cases:
The Tribunal referred to the judgment in ACIT vs. Chandravilas Hotel, emphasizing the legal fiction under section 271(1)(c) where the Assessee is deemed to have concealed income or furnished inaccurate particulars. The burden to prove lack of fraud or neglect falls on the Assessee, even in cases of estimated income determination.

Issue 5: Challenge to Penalty Order:
The Assessee challenged the penalty order on grounds of a lack of specific charge, limitation, and failure to consider available documents. However, the Tribunal upheld the penalty under section 271(1)(c) for furnishing inaccurate particulars of income, dismissing the Assessee's grounds for appeal.

In conclusion, the Tribunal dismissed the appeal, upholding the penalty order against the Assessee for inaccurate income particulars related to bogus purchases, based on legal provisions and precedents. The decision was pronounced on 20/12/2021 at Ahmedabad.