Orient Fabritech Pvt. Ltd. Vs ITO (ITAT Mumbai)
The case of Orient Fabritech Pvt. Ltd. vs. ITO (ITAT Mumbai) involves an appeal by the assessee against the imposition of a penalty under section 271(1)(c) of the Income Tax Act, 1961 (the Act) for the Assessment Year 2009-10. The dispute centers around the alleged bogus purchases made by the assessee, which were estimated at 12.5% of the total alleged bogus purchases. The appeal challenges the penalty imposed by the Assessing Officer (AO) and upheld by the Commissioner of Income Tax (Appeals) – National Faceless Appeal Centre, Delhi (CIT(A)).
Key Arguments:
1. Estimate-Based Additions: The AO had initially made an addition of the entire alleged bogus purchases, which the Tribunal later reduced to 12.5% of the total. The appellant argued that penalty under section 271(1)(c) cannot be levied when additions are made based on estimates, citing various legal precedents.
2. Defect in Notice: The appellant contested the validity of the notice issued under section 274 r.w.s. 271(1)(c) of the Act. The argument focused on the notice’s ambiguity, as the AO failed to strike off the irrelevant clause, and the subsequent notice issued in 2019 mentioned both limbs of section 271(1)(c).
3. Legal Precedents and Jurisdictional High Court Decision:
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