ITO Vs In Coach Builders (ITAT Mumbai)
In ITO vs In Coach Builders, the Income Tax Appellate Tribunal held that penalty under Section 271(1)(c) of the Income-tax Act cannot be levied when the quantum addition itself is made purely on an estimated basis. The assessee’s reassessment was initiated based on information alleging bogus purchases, and the Assessing Officer added 20% of such purchases under Section 69 as unexplained expenditure. The addition was upheld by the CIT(A) but later reduced to 15% by the Tribunal in quantum proceedings, reflecting its estimated nature. Despite this, the AO imposed penalty for concealment. The CIT(A) deleted the penalty, and the Revenue appealed. The Tribunal upheld the deletion, observing that the addition represented only an estimated profit element without concrete evidence of deliberate concealment. Relying on settled judicial precedents, it reiterated that estimated additions do not automatically justify penalty under Section 271(1)(c). Accordingly, the Revenue’s appeal was dismissed.
Factual Background
1. The assessee filed return on 23.09.2009 declaring income of ₹9,18,450.
2. Based on information from DGIT (Inv.) and Sales Tax Department, reassessment proceedings were initiated alleging bogus purchases.
3. Assessment completed u/s 143(3) r.w.s. 147 on 13.03.2014.
4. AO treated purchases as bogus and made addition of ₹98,103, being 20% of total purchases, under section 69 (estimated basis).
