Penalty for excess stock addition restricted to the minimum prescribed level after the Tribunal found maximum levy unwarranted.

Penalty under section 271(1)(c) for an addition relating to excess gold stock was considered in light of the assessee's failure to fully substantiate the stock discrepancy. Although the quantum addition had been sustained, the Tribunal viewed the penalty as excessive on the facts and found that the maximum levy was not warranted. It therefore confined the penalty to the minimum prescribed level, namely 100% of the tax sought to be evaded.

---

---

Issues: Whether the penalty levied under section 271(1)(c) of the Income-tax Act, 1961 for the addition relating to excess stock of gold should be sustained in full or restricted to 100% of the tax sought to be evaded.

Analysis: The addition on account of excess gold stock had been sustained in the quantum proceedings, and the assessee could not fully substantiate the stock discrepancy with evidence. However, the Tribunal noted that the quantum of penalty imposed was on the higher side and that the circumstances did not warrant imposition of the maximum penalty. Considering the facts as a whole, the Tribunal found that restriction of the penalty to the minimum prescribed level would meet the ends of justice.

Conclusion: The penalty was directed to be restricted to 100% of the tax sought to be evaded, and the assessee succeeded to that extent.

---