The Tax Publishers2020 TaxPub(DT) 4603 (Mum-Trib)

INCOME TAX ACT, 1961

Section 271(1)(c)

An income offered as an addition/disallowance by an assessee, de hors any material proving concealment or furnishing of inaccurate particulars of income on its part, cannot on such standalone basis justify levy of penalty under section 271(1)(c). Hence, the penalty levied under section 271(1)(c) would not be sustainable.

Penalty under section 271(1)(c) - Leviability - Disallowance on account of alleged inflated purchases - Revenue failed to prove that assessee concealed or furnished inaccurate particulars of its income

AO found that assessee-company inflated its purchases by procuring accommodation bills and said fact of inflation of purchases was accepted by the assessee in his statement recorded during the course of survey proceedings. Subsequently, penalty under section 271(1)(c) was imposed. CIT(A) was of the view that there might be a number of reasons on the part of the assessee in agreeing to an addition and accordingly, he concluded that merely because the assessee had not assailed the quantum assessment any further in appeal, the same would not justify levy of penalty under section 271(1)(c). He further concluded that a simplicitor disallowance of a percentage of purchases de hors any finding of concealment on the part of the assessee would not justify levy of penalty under section 271(1)(c) and hence, deleted such penalty. Held: An income offered as an addition/disallowance by an assessee, de hors any material proving concealment or furnishing of inaccurate particulars of income on its part, cannot, on such standalone basis, justify levy of penalty under section 271(1)(c). Further, as the Revenue failed to place on record any material, which could prove to the hilt that assessee concealed or furnished inaccurate particulars of its income, therefore, a simplicitor disallowance of a percentage of purchases would not justify imposition of penalty under section 271(1)(c). Hence, the penalty levied under section 271(1)(c) would not be sustainable.

REFERRED : CIT v. Upendra V. Mithani (ITA (L) No. 1860 of 2009), dated 5-8-2009 : 2013 TaxPub(DT) 2018 (Bom-HC) CIT v. U.P. State Bridge Corporation Ltd (2018) 97 Taxman.com 279 (SC) : 2018 TaxPub(DT) 5578 (SC)

FAVOUR : In assessee's favour

A.Y. : 2008-09



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