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Issues Involved: Confirmation of levy of penalty u/s.271(1)(c) of the I.T. Act, 1961 of Rs. 7,67,140.
Summary: The appeal pertains to the confirmation of penalty u/s.271(1)(c) of the I.T. Act, 1961. The appellant raised a legal argument regarding the applicability of Explanation-4 to Section 271(1)(c). The Assessing Officer found discrepancies in the yield of finished product and consumption of raw material by the assessee-company. It was revealed that the company had inflated purchases from non-existent concerns. The ITAT Ahmedabad Bench affirmed the addition of bogus purchases. The appellant argued for relief in penalty computation based on certain precedents. The Tribunal held that the purchases were conclusively held as bogus and upheld the penalty imposition. A legal question arose regarding the computation of penalty in cases of concealed income. The Tribunal directed the Assessing Officer to recompute the penalty on the income assessed. The Tribunal considered various decisions and concluded that the penalty should be calculated based on the income assessed by the AO. The appeal of the Assessee was partly allowed, and the Assessing Officer was directed to recompute the penalty on the income assessed. The judgement was signed, dated, and pronounced in the Court on 31/12/2010.
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