Stock valuation difference cannot by itself trigger penalty under Section 271AAB when no quantity discrepancy is found.

Penalty under Section 271AAB was held unsustainable where the addition arose only from a departmental valuation of stock and not from any discrepancy in the quantity of stock found during search. The Tribunal accepted the first appellate authority's finding that a mere valuation difference does not constitute undisclosed income for penalty purposes, and therefore the Revenue's appeal failed.

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Issues: Whether penalty under Section 271AAB of the Income-tax Act, 1961 was leviable where the addition arose only from valuation of stock by the departmental valuer and there was no discrepancy in the quantity of stock found during search.

Analysis: The penalty was deleted by the first appellate authority on the finding that the controversy related solely to valuation of stock and not to any difference in actual stock found. The Tribunal found no reason to interfere with that reasoned conclusion and accepted that the amount based only on the departmental valuation could not be treated as undisclosed income for the purpose of the penalty provision.

Conclusion: The penalty under Section 271AAB was not sustainable and the Revenue's appeal failed.

Ratio Decidendi: Where an addition arises only from a valuation difference in stock and not from any discrepancy in quantity or concealment of stock, such amount does not constitute undisclosed income for the purposes of penalty under Section 271AAB of the Income-tax Act, 1961.

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