Case Law Details
Shri Poonam K.Prajapati Vs ITO (ITAT Mumbai)
ITAT Mumbai held that penalty under section 271(1)(c) of the Income Tax Act not imposable when the addition on account of bogus purchases is done on adhoc/ estimated basis. As, adhoc/ estimated based addition doesn’t tantamount to furnishing of inaccurate particulars of income.
Facts- Based on information from DGIT(Inv), AO re-opened the assessment alleging that assessee had obtained accommodation entries/ bogus purchases bills from 6 parties. Accordingly, AO made addition of Rs. 63,52,693/-.
Subsequently, the AO has issued notice for levy of penalty but there was no compliance to notice by the assessee in penalty proceedings u/s 271(1)(c) of the Act. The A.O. found that the assessee has entered into bogus purchase transactions and relied on the findings in the assessment as the assessee has not filed the reply/explanations in the penalty proceedings. Finally, the A.O has levied penalty based on the additions of bogus purchases which worked out to Rs.21,13,920/- and passed the order u/s 271(1)(c) of the Act.
Aggrieved by the penalty order, the assessee has filed an appeal with the CIT(A). CIT(A) confirmed the action of AO. Being aggrieved, the present appeal is filed by the assessee.
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