TaxTMI 
TaxTMI 
2011 (9) TMI 370
X X X X Extracts X X X X
X X X X Extracts X X X X
....to justify its claim. However, the assessee could not do so. Since the assessee failed to substantiate its claim, the AO made the addition amounting to Rs. 9,00,000/- as unexplained investment by invoking the provisions of section 69 of the Act. Before the learned CIT(A) it was argued that perusal of record of the inventories found during the course of survey and the inventory as per books of account tallied in respect of each and every item of quantity and there was only a difference in respect of valuation which was the ad-hoc basis for arriving at the valuation during the course of survey. Also it was argued that the increase in the opening stock was accepted by the AO while passing the order under section 143(3) of the IT Act. Also the valuation adopted for the purpose of survey is merely on ad-hoc basis, The accounts of the assessee were audited accounts and since the amount of Rs. 9,00,000/- was disclosed in the return of income filed, there was no concealment of particulars of income. Further it was reiterated by the learned Counsel for the assessee that the department valued the stock at the rate higher than the rate disclosed by the assessee and it could not be made the ba....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nce to justify the above claim. It has also been pointed out by the appellant's representative that the rates adopted by the learned AO during the course of survey were incorrect. However, in this regard also, no evidence has been brought to show as to how correct rates have not been adopted while valuing the stock at the time of survey. Further as mentioned above, the appellant had admitted the excess stock of Rs. 9,00,000/- found during the course of survey. The appellant had also included the income of Rs. 9,00,000/- in the trading account for the period ending on 31.03.2000. Therefore, the appellant has not been able to explain the difference in stock of Rs.9,00,000/- as mentioned above. Since excess stock of Rs. 9,00,000/- was found during the course of survey operation conducted under section 133A of the I.T. Act, 1961, the AO was justified in making the addition of Rs. 9,00,000/- as unexplained investment in stock under section 69 of the Act and accordingly the action of the AO was upheld by the then CIT(A)-V vide his order in Appeal No. CAB/V-280/04-05, dated 08.09.2005. Accordingly, the levy of penalty u/s 271(1)(c) by the AO is also justified for the reasons mentioned bel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....itted that survey was conducted on 02-02-2000 and during the course of survey excess stock was found which was accounted for in the books of account of the assessee by mentioning the excess stock in the trading account in a sum of Rs. 9,00,000/-. PB-20 is copy of the trading account. The learned Counsel for the assessee also referred to PB-23 which is the original assessment order dated 30-03-2001 in which the original return of income was filed at Rs. 4,23,103/- and the AO has referred to the difference of valuation of stock of Rs. 9,00,000/- and accepted the contention of the assessee by computing the total income at Rs. 5,63,070/-. The learned Counsel for the assessee further submitted that the AO later on reopened the assessment u/s 147/148 of the IT Act and vide reasons dated 03-01-2005, the reassessment proceedings were initiated in which the fact of escapement of income on account of Rs. 9,00,000/- as above were recorded. PB-33 is the reply filed before the AO to explain the discrepancy in which it was explained that during the course of survey the details recorded in the inventory as well as books of accounts tallied with each other item of quantity and there was only diffe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... authorities below in valuing the stock. The assessee did not offer any proper explanation on the issue, therefore, Explanation (1) to section 271 (1) (c) of the IT Act is clearly attracted in the matter. The learned Counsel for the assessee in the rejoinder submitted that since the assessee filed explanation to the penalty notice, therefore, Explanation (1) to section 271 (1) (c) of the IT Act would not apply in the matter. 6. We have considered the rival submissions and material on record and do not find any justification to interfere with the orders of the authorities below. The learned CIT(A) properly appreciated the facts and circumstances of the case while confirming the penalty. The facts noted above are not in dispute. Before proceeding further, we would like to note certain decisions which would be relevant for disposal of the issue. 6.1 The Hon'ble Bombay High Court in the case of Jyoti Laxman Konkar v. CIT [2007] 292 ITR 163 held as under: "The assessee had filed a return for the assessment year 1999-2000 declaring an income of Rs. 7,40,510. Not satisfied therewith, the Assessing Officer carried out a survey under section 133A of the Income-tax Act, 1961, and during t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r compulsion being cornered by the Assessing Officer. Penalty had to be imposed." 6.4 The Hon'ble Punjab and Haryana High Court in the case of Smt. Ram Piari v. CIT [2010] 327 ITR 318 held as under: "Held, that mere disclosure of agreement to sell in the application for clearance certificate in Form 34-A could not be equated to disclosure in the income-tax return. The assessee failed to file a revised return in spite of notice under section 148 of the Act. The assessee was also convicted for concealment. The contention that the penalty was liable to be set aside on account of Commissioner (Appeals) describing the action of the assessee as "showing inaccurate particulars, while the Assessing Officer described it as "concealing the particulars" could not be upheld. The observations of the Commissioner (Appeals) were also in the context of concealing and mere fact that mention of inaccurate particulars was also made, did not make any difference. It was clear that the assessee had concealed the particulars of income as well as given inaccurate particulars. The penalty provision was to provide remedy for loss of revenue for which the element of "willful" concealment was not essential.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ises of the assessee. The assessee admitted the excess stock and admitted to pay the tax thereon but the assessee did not do so. It was found by the AO that the assessee had increased the opening stock of assessment year under appeal 2000-01 by Rs.9,00,000/-. Therefore, the assessee had nullified the effect of excess stock found and admitted by the assessee. PB-20 is the trading account of the assessment year under appeal in which the opening stock is shown by the assessee at Rs.83,25,000/- despite the closing stock of the preceding assessment year 1999-2000 was Rs.74,25,000/-. The increase of the opening stock of the assessment year under appeal was thus without any justification and reasons i.e. why the assessment was reopened and addition of Rs.9,00,000/- was made on account of excess stock found during the course of survey. It, therefore, appears that the assessee increased the value of the opening stock in the assessment year under appeal deliberately in order to defraud the revenue department. It is a clear case of act of concealment of income. Thus, the assessee fabricated the trading account in the assessment year in question because showing Rs.9,00,000/- as excess stock a....