ITO v. Sachin Engineering Work

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The Tax Publishers2021 TaxPub(DT) 1437 (Mum-Trib)

INCOME TAX ACT, 1961

Section 271(1)(c)

Where penalty was imposed under section 271(1)(c) on account of addition made towards non-genuine purchases, which was accepted by assessee, just because assessee accepted the assessment order and for buying peace if the assessee agreed to face the disallowance so made by AO, it did not mean that the assessee had concealed inaccurate particulars of income which should result in levying penalty under section 271(1)(c).

Penalty under section 271(1)(c) - Validity - Addition made towards non-genuine purchases, were accepted by assessee to buy peace -

Assessee-firm was engaged in the business of fabrication and manufacturing of pharmaceutical packaging materials. Issue was as regards validity of penalty imposed under section 271(1)(c) on account of addition made towards non-genuine purchases, which was accepted by assessee. Held: Because assessee accepted the assessment order and for buying peace if the assessee agreed to face the disallowance so made by AO, it did not mean that the assessee had concealed inaccurate particulars of income which should result in levying penalty under section 271(1)(c). AO failed to meet the conditions of imposing penalty under section 271(1)(c) and therefore, penalty levied, was not sustainable in the case when the income was enhanced, based on estimation.

Followed:CIT v. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC) : 2010 TaxPub(DT) 1683 (SC) Dilip N. Shroff v. JCIT & Another (2007) 291 ITR 519 (SC) : 2007 TaxPub(DT) 1247 (SC) Sir Shadilal Sugar And General Mills Limited & Another v. CIT (1987) 168 ITRT 7051 (SC) : 1987 TaxPub(DT) 1625 (SC) CIT & Ors. v. Manjunatha Cotton And Ginning Factory & Oths. [2013] 35 taxmann.com 20) (Kar.) : 2013 TaxPub(DT) 2014 (Karn-HC) and Earthmoving Equipment Service Corporation v. DCIT ITA no. 6617/Mum./ 2014 (Mum.) : 2017 TaxPub(DT) 1242 (Mum-Trib).

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2009-10

IN THE ITAT, MUMBAI BENCH