The Tax Publishers2021 TaxPub(DT) 0573 (Mum-Trib)

INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) cannot be levied when the income has been estimated and Revenue could not controvert the observations of CIT(A) with any cogent evidence, except relying on the AO's order, accordingly, AO was directed to delete the penalty.

Penalty under section 271(1)(c) - Estimation of income - Bogus purchases - CIT(A) sustained the addition at 12.5% of the bogus

Assessee was engaged in the business of manufacturing of steel. Assessment was reopened based on the information received from DGIT that assessee indulged in obtaining the bogus purchase bills and accounted in the financial statements. Therefore, AO had reason to believe that the income had escaped assessment and issued notice under section 148. AO called for the information in respect of bogus purchases and confirmation from the parties. Since AO was not satisfied with the information and made addition of alleged bogus purchases and accordingly penalty under section 271(1)(c) was imposed. CIT(A) restricted the addition to 12.5% of the alleged bogus purchases. Held: Penalty under section 271(1)(c) cannot be levied when the income has been estimated. Revenue could not controvert the observations of CIT(A) with any cogent evidence, except relying on the AO's order. Accordingly, no interference could be made with the order of CIT(A) and AO was directed to delete the penalty.

Relied::MAK Data P. Ltd. v. CIT-II 2013 TaxPub(DT) 2358 (SC), CIT & Ors. v. Manjunatha Cotton & Ginning Factory & Ors. (2013) 359 ITR 565 (Karn-HC) : 2014 TaxPub(DT) 202 (Karn-HC) and Harigopal Singh v. CIT (2002) 258 ITR 85 (P&H) : 2002 TaxPub(DT) 1625 (P&H-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :



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