Size Control Gauges And Tools Pvt. Ltd. Vs DCIT (ITAT Pune)
Penalty on Estimated Bogus Purchases Unsustainable: ITAT Pune Deletes 271(1)(c) Penalty
The Pune Bench of the ITAT deleted penalties levied under section 271(1)(c) for AYs 2007-08 to 2011-12 where additions on account of alleged bogus purchases were sustained only on an estimated profit element. Although the Assessing Officer had imposed fresh penalties after giving effect to an earlier ITAT order that merely re-computed the disallowance (restricting it to 10% of the alleged bogus purchases), the Tribunal held that such estimated additions cannot form the basis for concealment penalty.
Relying on the jurisdictional Bombay High Court decision in PCIT v. Colo Colour Pvt. Ltd. (16.09.2025) and consistent jurisprudence (including Vijay Proteins Ltd.), the ITAT observed that where income is assessed on pure estimation/guesswork, there is no clear finding of concealment or furnishing of inaccurate particulars. Consequently, penalty proceedings are not sustainable. The Tribunal directed deletion of the penalty for AY 2007-08 and applied the same reasoning mutatis mutandis to AYs 2008-09 to 2011-12. All five appeals were partly allowed.
FULL TEXT OF THE ORDER OF ITAT PUNE
The above captioned five appeals filed by the assessee are directed against the separate orders dated 10.07.2025 passed by Ld. CIT(A)/NFAC for the assessment years 2007-08 to 2011-12 respectively.
