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DCIT vs. Shyam K Gyanchandani, Ulhasnagar - (Income Tax Appellate Tribunal) (03 Feb 2023)

When the addition is on estimated basis, penalty cannot be levied on adhoc estimated income


Direct Taxation

The Revenue has filed the appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi / CIT(A) passed under Section 250 of the Income Tax Act, 1961 (IT Act). The revenue has raised the grounds of appeal that, the Learned CIT(A) has erred in not considering that the penalty was levied in respect of the addition made on the basis of information received from the Sales Tax Department, Maharashtra with regard to bogus purchase made by the assessee from dealers without supply of actual goods.

It is submitted that, the Learned CIT(A) has erred in deleting the penalty by not appreciating the fact that the assessee could not substantiate the genuineness of purchases from the said parties during assessment proceedings as well as penalty proceedings.

When the addition is on estimated basis, penalty under Section 271(1)(c) of the IT Act cannot be levied on such adhoc estimated income. The disallowance of purchases on ad-hoc basis does not tantamount to furnishing inaccurate particulars of income under the provisions of Section 271(1) (c) of the IT Act.

The Assessing officer has not doubted the sales and made disallowance of bogus purchases. Further the assessing officer made an addition based on the information received from Sales tax department, Maharashtra since the said information could not conclusively be proved. The Ld. DR could not controvert the findings of the CIT(A) with any new cogent evidences or information to take different view. Accordingly, present Tribunal is not inclined to interfere with the order of the Learned CIT(A) and upheld the same. The appeal filed by the revenue is dismissed.


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