Whether penalty u/s 271(1)(c) is attracted where addition is on estimate basis for bogus purchases?

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Short note of today's case law for quick reference:

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[2024] 114 ITR (Trib) 146 (ITAT[Mum])

[BEFORE THE INCOME-TAX APPELLATE TRIBUNAL — MUMBAI "G" BENCH]

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INCOME-TAX OFFICER

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SUNIL BHAGWANDAS VORANI (HUF)

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MS. PADMAVATHY S. (Accountant Member) and RAJ KUMAR CHAUHAN (Judicial Member)

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July 22, 2024.

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1. The assessee was in the business of trading in iron and steel. For A.Y. 2010-11, the assessee’s case was re-opened u/s 147 on account of information received by the sales-tax department that certain persons were providing bogus entries from bogus purchase bills to the taxpayers.

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2. The assessment order was passed levying tax after adding 25% of total sales value to the total income over and above the assessee’s declared income.

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3. The A.O. levied penalty u/s 271(1)(c) on the ground that CIT(A) upheld the order of A.O.

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4. The A.O. alleged that assessee had concealed the particulars of income on account of non-genuine and unexplained purchases.

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5. Assessee challenged the order of penalty before CIT(A) who deleted the penalty.

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6. On department appeal, Tribunal held that:

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7. The additions were made on estimation of total turnover after rejecting books of account.

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8. Notices u/s 133(6) issued to various purchase parties were all returned by the postal authority and the assessee had not produced the party in confirmation.

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9. The revenue failed to establish that the assessee had concealed the particulars of income or had submitted inaccurate particulars of income so as to attract penalty.

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10. Since, the addition was made on estimate basis, penalty was not sustainable and rightly deleted by CIT(A).