ITAT Deletes Penalty of ₹96,010 on Alleged Bogus Brick Payment after Department Confirms No Pending Supplies [Read Order]
The AO treated it as a bogus liability, but the assessee submitted departmental certificates confirming that no bricks were pending against the payment, along with ledger extracts showing supplies were made in subsequent years.
ITAT - deletes - penalty- Taxscan
ITAT - deletes - penalty- Taxscan
The Amritsar Bench of Income Tax Appellate Tribunal ( ITAT )allows the appeal of the assessee and deletes the penalty of ₹96,010 on an alleged bogus brick payment after the department confirms no pending supplies
RPK Bricks Manufactures,appellant-assessee, was engaged in the brick kiln business and received a cheque of ₹1,87,786 from the Lining Division, Faridkot, for the supply of bricks, which was recorded in the financial statements.
The Assessing Officer (AO )treated this amount as a bogus liability, stating that a government department would not make advance payments without receiving the bricks. The tribunal initially upheld the addition, and a penalty of ₹96,010 was levied under section 271(1)(c).
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During the penalty proceedings, the assessee submitted that the liability was settled by supplying bricks between FYs 1982-83 to 1986-87, but the AO rejected the explanation. The tribunal later sent the matter back to the AO for fresh examination, directing the assessee to provide evidence from the concerned department confirming the supply of bricks.
In the fresh proceedings, the AO again confirmed the penalty, noting that no new evidence was produced. The assessee explained that the department had closed or merged and that records from 23–24 years ago were unavailable, as confirmed by the department.
During the appeal, the assessee submitted certificates from the department dated 28-05-2006 and 31-08-2007, confirming that no bricks were pending against the payment. However, the CIT(A) still upheld the penalty, leading to the present appeal before the Tribunal.
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The two member bench comprising Udayan Das Gupta (Judicial Member) and Manoj Kumar Aggarwal (Accountant Member) noted that the assessee had submitted certificates from the concerned department confirming that no bricks were pending against the payments made in FY 1981-82. The assessee also provided ledger extracts from 01-04-1981 to 31-03-1987, showing that the supplies were made in subsequent years.
As there was no adverse material against the assessee, the appellate tribunal deleted the penalty of ₹96,010 and allowed the appeal. The other grounds were treated as academic and were not considered.
Accordingly the appeal was allowed.
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