Proceedings u/s 271(1)(c) on account of furnishing inaccurate particulars of income

IN THE INCOME TAX APPELLATE TRIBUNAL,
‘’ B’’ BENCH, AHMEDABAD
(CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD)
BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT
And
SHRI WASEEM AHMED, ACCOUNTANT MEMBER

ITA No. 161/AHD/2019

Asstt. Year: 2011-12

M/s. Morakhia Copper and Alloys Pvt.
Ltd.,
12, 2nd Floor, B Wing,
Mardia Plaza,
C.G. Road,
Ahmedabad-380006.
PAN: AAACM3439J

vs

A.C.I.T.,
Tax, Circle-2(1)(2),
Ahmedabad.

Assessee by : None
Revenue by : Shri R.R. Makwana, Sr.D.R

Date of Hearing : 15/11/2021

Date of Pronouncement: 20/12/202 1

O R D E R

The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax(Appeals)-2, Ahmedabad, dated 24/12/2018 arising in the matter of penalty order passed under s. 271(1)(c) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2011-12.

2. When the matter was called for hearing it was noticed that there was none appeared on behalf of the assessee despite the fact that case has been listed for hearing for more than 3 times. On the previous occasion the notice intimating the date of hearing was sent to the address of the assessee which was duly served. It is the trite law that assessee after filing the appeal should be vigilant enough to prosecute the same. But, we find that the assessee is not serious in pursuing the appeal filed by it. In the absence of any co-operation from the side of the assessee, we don’t find any reason to keep the matter pending before us. Accordingly, we decide to proceed to adjudicate the appeal after hearing the learner DR appearing on behalf of the Revenue.

3. The facts in brief are that the assessee in the present case is a private limited company and engaged in the activity of manufacturing of Ferrous and Ferrous metal. The AO in the assessment framed under section 143(3) of the Act vide order dated 27th March 2014, inter-alia, made addition of ₹ 3,06,32,999/- on account of bogus purchases shown by the assessee. The assessee during the assessment proceedings initiated the penalty proceedings under section 271(1)(c) of the Act on account of furnishing inaccurate particulars of income. However, the assessee has not made any reply in response to the penalty notice issued upon the assessee. In the absence of any reply, the AO concluded that the assessee has furnished inaccurate particulars of income under explanation 1 to section 271(1)(c) of the Act and levied the penalty of ₹ 1,01,75,518/- being 100% of the amount of tax sought to be evaded.

4. Generally, the assessee adopts the practice for taking the bogus bills from the market when it makes purchases of the goods from the grey market in cash and without the bills which cannot be accounted in the books of accounts. Accordingly the assessee to bring such purchase of goods in accounting form arranges the bogus bills from the market. Accordingly, the entire amount of bogus purchases shown by the assessee cannot be treated as income of the assessee. What should be brought to tax is the income earned by the assessee whether it was from legal or illegal source. Accordingly the ITAT estimated the amount of profit embedded in such
purchases. But the estimation of profit does not lead to draw that the assessee cannot be held under the charge of furnishing the inaccurate particular of income. The percentage of profit is one of the method of determining the income in respect of which the inaccurate particulars of income was furnished.

5. In the result, the appeal of the assessee is dismissed. Order pronounced in the Court on 20/12/2021 at Ahmedabad.

Please find attached the enclosed file for the full judgement