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

Debate on Penalties Under Sec 271(1)(c): Should Penalties Apply to Unverifiable Purchases or Focus on Tracing Suppliers? In a discussion about imposing penalties under section 271(1)(c) of the Income Tax Act, a user questioned whether an Assessing Officer (AO) can impose a penalty when 25% of unverifiable purchases are treated as income. One response suggested that penalties should not be imposed if the addition is based on technical grounds, but if the transaction is found to be bogus, penalties are justified. Another response emphasized verifying purchases through stock records, suggesting that penalties should not be imposed if purchases are verified, and that the AO should focus on tracing suppliers rather than penalizing buyers.