PCIT Vs Elcon Pipe And Fittings Pvt. Ltd. (Bombay High Court)
The Bombay High Court dismissed the Revenue’s appeal against the order of the Income Tax Appellate Tribunal (ITAT) deleting the penalty imposed under Section 271(1)(c) of the Income-tax Act for Assessment Year 2009-10.
The case originated after the Revenue received information from the Maharashtra Sales Tax Department identifying certain entities allegedly engaged in issuing bogus purchase bills. Based on this information, a notice under Section 148 was issued to the assessee, and an assessment under Sections 144 and 147 was completed on 21 March 2014, making additions on account of non-genuine purchases. Simultaneously, penalty proceedings under Section 271(1)(c) were initiated for furnishing inaccurate particulars of income. Since the assessee did not comply with the notice issued during the penalty proceedings, the Assessing Officer levied a penalty equal to 100% of the tax sought to be evaded, amounting to Rs. 22,12,061.
The assessee challenged the assessment before the Commissioner of Income Tax (Appeals). The CIT(A) partly allowed the appeal by restricting the addition relating to bogus purchases to 12.5%, thereby granting substantial relief. Both the assessee and the Revenue appealed before the ITAT. The Tribunal dismissed the Revenue’s appeal and upheld the CIT(A)’s decision to sustain only 12.5% of the alleged bogus purchases, relying on the decision of the Gujarat High Court in Smith P. Seth.
