Case law - imposing penelty u\s 271(1)C, Income Tax

[GYAN JAIN]

The AO treat 25% of unverifible purchases as Income and trading addiion was made . Whether the AO can imposed penelty u\s 271(1)C or not . if not provide suitable case laws if any available

Posts / Replies

[Surender Gupta]

When the addition is being made only of technical ground, AO should not impose any penalty. In case he imposes the penalty,you would get the relief at appropriate level. But, if the transaction is found to be bogus one, certainly this case is of a penalty. Therefore, the facts and nature of the unverifiable purchase would be a major factor for determining the levy of penalty under section 271(1)(c).

[DEV KUMAR KOTHARI]

Whether it is case of 'unverifiable purchase' or 'unverifible suppliers'. If purchase is verified by book entries in stock record as goods in, consumption and/ or sale of those goods as goods out or as clsong stock in quantity, then addition as well as penalty cannot be made. If it is a simple case of supplier parties not available, the A.O. must trace them and tax them and not assess, harrass and panalize the buyer