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Issues involved: Application filed by Revenue u/s 256(2) of the Income-tax Act, 1961 regarding penalty imposition on addition of Rs. 4,52,485 made by Assessing Officer u/s 271(1)(c) for the assessment year 1986-87.
Summary: The High Court of Bombay heard the application filed by the Revenue under section 256(2) of the Income-tax Act, 1961, regarding the penalty imposed on the addition of Rs. 4,52,485 made by the Assessing Officer under section 271(1)(c) for the assessment year 1986-87. During the assessment proceedings, it was found that the assessee had introduced bogus purchase bills amounting to Rs. 4,52,484.85. The Assessing Officer accepted the additional income declared by the assessee and levied a penalty under section 271(1)(c) of the Act. The Commissioner of Income-tax (Appeals) upheld the penalty, but the Tribunal later deleted it. The Tribunal's decision was based on the grounds that certain individuals were not cross-examined and that the Department failed to prove certain statements. The High Court noted that the Tribunal's decision to delete the penalty raised a question of law. The respondent-assessee argued that the penalty could not be sustained due to differences in gross profit calculations in different assessment years. The High Court allowed the application, directing the Tribunal to forward the statement on the questions of law raised. The High Court's judgment emphasized the importance of addressing the legal grounds on which the penalty was deleted by the Tribunal. The Court noted the discrepancies in gross profit calculations between different assessment years and highlighted the need for findings on this aspect. The decision to allow the application and request a statement from the Tribunal indicates a focus on ensuring a comprehensive review of the legal issues involved in the penalty imposition case.
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