Tribunal Dismisses Revenue's Appeal, Upholds Deletion of Penalty for Inaccurate Income Details u/s 271(1)(c.

The Tribunal condoned a 33-day delay in the Revenue's appeal due to sufficient cause. It upheld the deletion of the penalty under section 271(1)(c) of the Income Tax Act, 1961, imposed for furnishing inaccurate particulars of income. The Tribunal determined that the penalty, based on an ad hoc estimation of profit from alleged bogus purchases, could not be sustained. The decision aligned with prior Tribunal rulings, dismissing the Revenue's grounds and affirming the CIT(A)'s deletion of the penalty. The appeal by the Revenue was consequently dismissed.

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Issues:
The judgment involves the condonation of delay in filing the appeal, challenge against the deletion of penalty u/s 271(1)(c) of the Income Tax Act, 1961, and the basis for levying penalty for furnishing inaccurate particulars of income or concealing particulars of income.

Condonation of Delay:
The appeal was delayed by 33 days, and the Revenue sought condonation citing internal restructuring and transfer of case records as reasons for the delay. The Tribunal found sufficient cause for the delay and thus condoned the delay in filing the appeal.

Deletion of Penalty u/s 271(1)(c):
The Revenue challenged the deletion of penalty imposed under section 271(1)(c) of the Act. The AO had treated purchases as non-genuine due to lack of vendor replies, resulting in an addition of 12.5% of suspicious purchases. However, the Tribunal held that since the assessee disclosed a Gross profit on bogus purchases of 2.55%, an estimation of profit @10% was deemed sufficient. The penalty was levied separately, but the CIT(A) deleted it based on the ad hoc nature of the addition, following the Tribunal's decisions. The Tribunal upheld the deletion, stating that the penalty could not be sustained on an ad hoc estimate basis.

Basis for Levying Penalty:
The Tribunal referred to a previous case where it was held that applying an ad hoc GP rate on alleged bogus purchases to factor in the suppression of gross profit could not be the basis for levying penalty for inaccurate particulars of income or concealing income. The Tribunal emphasized that penalty based on such ad hoc estimates cannot be sustained, leading to the deletion of the penalty in the present case. The decision was made in line with the findings of the coordinate bench, and the grounds raised by the Revenue were dismissed accordingly.

In conclusion, the Tribunal dismissed the appeal by the Revenue, upholding the deletion of the penalty u/s 271(1)(c) based on the ad hoc nature of the addition and the precedent set by previous decisions of the Tribunal.

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