TaxTMI 
TaxTMI 
2021 (6) TMI 970
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.... under consideration has filed its return of income on 10th September 2009, declaring total income of Rs. 2,55,220. Thereafter, scrutiny assessment was made under section 143(3) of the Act assessing income at Rs. 6,18,610. Subsequently, the case was re-opened under section 148 of the Act and the assessment was completed under section 143(3) r/w section 147 of the Act computing assessed income at Rs. 68,08,234, after making ad-hoc addition of Rs. 63,53,010 on account of bogus purchases made from six parties. The Assessing Officer initiated penalty proceedings under section 271(1)(c) of the Act, for furnishing inaccurate particulars of income. The assessee being aggrieved by the quantum assessment order passed by the Assessing Officer filed a....
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....under section 271(1)(c) of the Act. The assessee being aggrieved, is in appeal before the first appellate authority. 4. The learned Commissioner (Appeals) deleted the penalty so imposed by the Assessing Officer under section 271(1)(c) of the Act. The relevant observations of the learned Commissioner (Appeals) deleting the penalty are as follows:- "5. I have carefully considered the facts of the case, findings of the A.O. submissions of the AR of the appellant and material placed on record. In the quantum appeal, the then CIT(A)-2, Nashik has restricted the disallowance @ 10% of bogus purchases of Rs. 61,90,074/-. Against the order of the CIT-(A)-2, Nashik, appeal filed by the Revenue was dismissed by the Hon'ble ITAT 'L' Benc....
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....C) it was held as under:- "'We do not agree, as the assessee had furnished all the details of its expenditure as well as income in its Return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the Return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under section 271(1)(c). If we accept the contention of the Revenue then in case of every Return where the claim made is not accepted by ao for any reason, the ass will invite penalty u/s. 271(1)(c). That is clearly not ....
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....y under section 271(1)(c) of the Act is liable to be imposed only where the assessee has concealed its particulars of income or furnished inaccurate particulars. Action of making addition on ad-hoc basis does not result into imposition of penalty u/s. 271(1)(c) of the Act and hence cannot be termed as either concealment or furnishing of inaccurate particulars of income. We find support from the series of decisions by different High Courts as well the decision of the Co-ordinate Benches of the Tribunal, wherein it was held that when addition is made on estimate basis, penalty is not sustainable in the eyes of law. In support of this contention, following case laws are relied upon:- i) CIT v/s. Norton Electronics Systems (P) Ltd. [2014] 41 ....