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

[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

[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

AI Summary

Penalty under section 271(1)(c) should not follow mere technical additions; bogus transactions justify penalty.
Whether a penalty under section 271(1)(c) is leviable depends on the factual nature of unverifiable purchases: technical additions despite corroborative stock records should not attract penalty, whereas fabricated or bogus transactions justify penalty; mere non-availability of suppliers requires the Assessing Officer to trace and assess suppliers rather than penalise the purchaser.