Sphere vs. Income Tax Officer

Parties Involved

Facts Summary

The assessee-firm, engaged in the business of diamond, filed a return for assessment year 2008-09. The case was reopened for assessment based on information collected by tax authorities in a search conducted upon 'Rajendra Jain Group'. The assessing officer observed that the assessee made bogus purchases of Rs. 30,53,137/-. The assessee carried the matter in first-appeal, whereupon the Commissioner of Income Tax (Appeals) reduced the rate of addition from 100% to 5%. The assessee then filed an appeal challenging the penalty imposed by the assessing officer and upheld by the Commissioner of Income Tax (Appeals).…

Legal Issues

• 1. Penalty of Rs. 9,43,420/- imposed by Ld. AO u/s 271(1)(c) and upheld by Ld. CIT(A).
• 2. Whether the penalty u/s 271(1)(c) can be imposed on adhoc/estimated addition.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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