INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Assessee obtained bogus purchase bills from 'Hawala' dealers - Estimation of income -

Assessee was engaged in the business of construction, repairs and engineering. On the basis of information received from the Sales Tax Deptt, that assessee had obtained bogus purchase bills from 'Hawala' dealers, AO passed assessment order under section 143(3) read with section 147 determining the total income of the assessee after making addition on account of bogus purchases shown by the assessee. CIT(A) restricted the disallowance to 12.5% of the total amount of bogus purchases. AO thereafter initiated proceedings under section 271(1)(c) and levied penalty for furnishing inaccurate particulars of income. Held: AO made addition of the total amount of bogus purchases. However, CIT(A) restricted the addition to 12.5% of the questioned purchases, which was confirmed by Tribunal in further appeal. Addition on estimation basis in this case does not amount to concealment of income or furnishing of inaccurate particulars of income. Bench had decided the identical issue in case of Ajay Loknath Lohia [ITA No. 2998/Mum/2017, Assessment Year 2009-10 : 2018 TaxPub(DT) 7823 (Mum-Trib)] in favour of the assessee. Since the facts of present case were similar to the facts of cases relied upon by assessee and the issues involved are identical, order passed by CIT(A) was set aside and AO was directed to delete the penalty levied under section 271(1)(c).

Followed:Ajay Loknath Lohia v. ITO ITA No. 2998/Mum/2017, Assessment Year 2009-10 : 2018 TaxPub(DT) 7823 (Mum-Trib), Sameer D. Punjabi ITA No. 1564/M/2017 and ETCO Telecom Ltd. v. ITO ITA No. 5243/M/2012, Elcon Pipe & Fittings Pvt. Ltd. v. ITO ITA No. 496/Mum/2018, assessment year 2009-10 and Deepak Gogri v. ITO ITA No. 1396/Mum/2017, assessment year 2011-12.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2011-12

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