Penalty for stock valuation difference fails absent mala fide under-valuation or lack of bona fides.

Penalty for furnishing inaccurate particulars of income was held unsustainable where the assessee valued closing stock of deshi khand at a rate lower than that adopted by the Income-tax Officer. The valuation was supported by contemporaneous sale fluctuations, and the record did not show mala fide conduct or a wholly baseless explanation. A mere difference of opinion on the proper valuation rate, or rejection of the assessee's explanation by the authorities below, was insufficient to justify penalty. The penalty was therefore cancelled because deliberate under-valuation and absence of bona fides were not established on the facts.

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Issues: Whether penalty for furnishing inaccurate particulars of income was leviable where the assessee valued closing stock of deshi khand at a rate lower than that adopted by the Income-tax Officer.

Analysis: The assessee's valuation was based on contemporaneous sale fluctuations, and the record did not show that the adopted rate was mala fide or wholly without basis. A mere difference of opinion as to the proper valuation rate, or the fact that the explanation was not accepted by the authorities below, was held insufficient to sustain penalty. The imposition of penalty required a finding of deliberate under-valuation or absence of bona fides, which was not established on the facts.

Conclusion: Penalty was not sustainable and was cancelled.

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