ITAT Upholds Penalty for Bogus Purchases Due to Lack of Evidence

The Tribunal upheld the penalty because the assessee failed to prove that the disputed purchases were genuine.

The present appeal has been filed by Piyush Amrital Mehta against the Income Tax Officer, challenging the impugned order passed under section 250 of the Income Tax Act, 1961, by NFAC.

Background of the case

The assessing officer imposed a penalty on the grounds that the assessee had concealed income by claiming bogus purchases. According to the tax department, the purchases were made from non-genuine parties, and only the profit element from such transactions was added back to income during assessment.

The assessee then contested the penalty before the CIT(A), but the appeal was dismissed. The CIT(A) noted that the assessee failed to provide documentary evidence to support the purchases during assessment proceedings.

Tribunal’s Decision

Being aggrieved by the CIT(A) decision, the assessee then approached the tribunal. But no one appeared on behalf of the assessee despite notices being sent through speed post and email. The Tribunal presumed that proper notice had been served and proceeded to hear the case ex parte, based on arguments made by the departmental representative.

The bench relied on previous court decisions, including a decision of the tribunal and a ruling of the Delhi High Court, which held that a penalty is justified where claims are not bona fide and lack proper explanation.

The Tribunal found no new evidence or arguments to challenge the findings of the lower authority. As a result, it upheld the penalty and dismissed the appeal.