INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Estimation of income - Quantum additions made on account of bogus purchases -

Assessee filed its return of income and thereafter case of assessee was reopened on the basis of information received from Investigation Wing of Department in which it was conveyed that assessee had taken the bogus purchase entry from eight entities. Thereafter, AO made the addition to the extent of 12.5% of the bogus purchase. Penalty proceeding was initiated and after the notice, penalty was levied. CIT(A) deleted the penalty under section 271(1)(c). Held: CIT(A) had deleted the penalty on the basis of this fact when profit was estimated, then no penalty was leviable. CIT(A) had relied upon decision of High Court in the case of Naresh Chand Agarwal v. CIT (2013) 357 ITR 0514 (All) : 2013 TaxPub(DT) 2457 (All-HC) and decision of ITAT in the case of Dy. CIT, Cir 4(2)(2) v. Manoharmanak Alloys Pvt. Ltd. in ITA. No. 5586/Mum/2015, dated 16-1-2017, wherein it was held that penalty was not leviable when profit was estimated on estimation basis. Thus, CIT(A) had decided matter of controversy judiciously and correctly.

Relied:Naresh Chand Agarwal v. CIT (2013) 357 ITR 0514 (All) : 2013 TaxPub(DT) 2457 (All-HC), CIT v. Arjun Prasad Ajit Kumar (2008) 214 CTR (All) 355 : 2008 TaxPub(DT) 1419 (All-HC), National Textiles v. CIT (2001) 164 CTR 2009 (Guj) : 2001 TaxPub(DT) 677 (Guj-HC), Shruti Fastners Ltd. v. DCIT (2017) 49 CCH 183 (Del-Trib), Mr Rakeshkumar M. Gupta v. ITO (2017) 49 CCH 66 (Mum-Trib), Dy. CIT v. Manohar Manak [I.T.A. No. 5586/M/2015, dated 16-1-2017] and Yash Raj Films (P) Ltd. v. Asst. CIT [ITA No. 7519/Mum/2013, dated 8-7-2015].

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2010-11

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