TaxTMI 
TaxTMI 
2013 (11) TMI 226
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....3) & 144 of the IT Act, dated 27/03/2000 were that a survey u/s.133A was conducted on 27.2.1997. It was noticed during survey that stock of "biddi-patti" as per books of accounts was worked out by the Accountant and the partner at 107152Kgs. However, as per physical inventory prepared during the course of survey the stock of "biddi-patti" was inventorised at 1,36,156 Kgs. Thus, the excess of stock of biddi- patti was calculated at 29004 Kgs. The cost of the said excess stock was worked out at Rs.10,73,148/-. During the course of survey proceedings, a statement of Accountant Shri Girishbhai H.Patel was recorded u/s.131 of IT Act. The said Accountant vide an answer No.11 of the statement had confirmed the detection of excess stock of 29004 Kgs. Rather, one Shri Bharat Patel, brother of the partner, present at that time, has also endorsed the statement of the Accountant. Later on, a statement of Shri Natubhai Manibhai Patel, main partner, of the firm was also recorded, on his return, on 11.3.1997 u/s.131 of IT Act. In the said statement he has mentioned that he would be able to give exact reason for the excess stock only after the verification of the books and other documents. During ....
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....rty. Those sales were already reflected in the books of accounts. The assessee was asked to produce transportation bills to authenticate the claim which was not produced. Rather, the Accountant for the Assessee had not referred any such transaction. The Respected Coordinate Bench being not convinced with the explanation of the assessee has finally decided the issue in favour of the Revenue as follows:- "5. We have heard rival submissions and perused material available on record. As the facts emerge, it is evident that at the time of survey, assessee's accountant and partner Shri Bharatbhai present both accepted the fact about excess stock and did not say a word about "MBF" or any goods lying with assessee and belonging to "MBF". Statements are voluntary and have not been retracted, therefore, there are to be relied on. Merely because subsequently a partner comes back and gives a statement, which does not change the statement of earlier two witnesses in material terms additions cannot be deleted. Besides, AO gave assessee number of opportunities to produce transport bills, which were not produced. In view of the observations of AO and CIT(A), we see no infirmity in their orders i....
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....placed. The assessee has also cited few decisions challenging the levy of penalty - viz:- Union of India vs. Rajasthan Spinning and Weaving Mills (2009) 224 CTR 1 (SC) and Union of India & Ors. Vs. Dharmendra Textile Processors & Ors. (2008) 306 ITR 277 (SC). It has also been argued that in the case of National Textiles vs. CIT (2001) 249 ITR 125(Guj.) and CIT vs. R.K.Agrawal 104 Taxation page 260, it was held that where an assessee gives an explanation and that explanation although unproved but not disproved, penalty for concealment cannot be imposed. However, ld.CIT(A) was not convinced and mentioned that the impugned addition was not merely in respect of discrepancy in stock but during the course of survey, it was also detected that the assessee had made excess payment for purchase of "biddi-patti". Placing reliance on Dharmendra Textile Processors & Ors.(supra), he has held that the penalty provisions are strictly to be applied and the assessee has not truly explained the discrepancy detected at the time of survey, therefore correctly penalised u/s.271(1)(c) of IT Act. 5. From the side of the appellant, ld.AR Mr.Aseem Thakkar appeared. The main argument was that the impugned....
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....al taxable income. Penalty is also imposable if the declared loss is more than actual loss. The reason behind incorporating section 271(1)(c) is to enforce voluntary payment of the correct tax on true taxable income and the section acts as a deterrent mechanism against evasion or even avoidance of tax liability." 3. After carefully reading and interpreting the provisions of section 271(1)(c) alongwith the explanation 1, one can hardly find a case where there is difference between assessed taxable income and returned taxable income and the assessee is not liable for penalty u/s.271(1)(c). (i) If the case of assessee is covered by main provision of section 271(1)(c), i.e. he is found to have concealed the particulars of his income or furnished inaccurate particulars of such income, there can be no difference of opinion about his liability for penalty under section 271(1)(c). The only dispute can be whether the assessee has concealed the particulars of his income or not or whether he has furnished inaccurate particulars of such income or not. In the absence of the explanation 1 there could be a lot of debate in this regard that is whether assessee has committed the default or no....
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....t. (iv) For exoneration from the default rendering him liable for penalty u/s.271(1)(c), provision of explanation 1(B) can only help the assessee if assessee can substantiate his explanation and also prove that explanation is bonafide and further prove that all the facts relating to the same and material to computation of his total income have been disclosed by him." 6.1. Ld.DR has also placed reliance on Dharmendra Textile Processors & Ors. (2008) 306 ITR 277 (SC) and Zoom Communications (2010)327 ITR 510. In the light of the said decision, ld.DR has contested that for imposition of penalty u/s.271(1)(c), the AO is not required to prove anything against the assessee except the assessee's filing of incorrect total income that had resulted into evasion of tax. By penalising the person who has furnished incorrect income, the Revenue Department in a way rendered justice towards those who have honestly filed the return of income, he has concluded. Certain other case-laws cited are K.P.Madhusudhanan vs. CIT 251 ITR 99(SC), ITO vs.R.K.Brothers (2003)87 ITD 649 (All.), Somnath Oil Mills 214 ITR 32 (Guj.). 6.2. We have heard both the sides at some length. We have examined the fact....
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....10,491 = total kg.33,471 which is included in total Sales of Kg.2,76,418/- has been already sold in earlier year i.e. asstt.yr. 1996-97. Zerox copy of Complete party-wise Sales in Asstt.yr. 1996-97 is enclosed herewith. 4.The said goods of Kg.33,471 is a part of Kg.60,660 sold to Majlis Bidi Factory of Siliguri, to whom the bill was issued on 8.11.95 (A.y. 96-97) for a total kg. of 60,660 amounting to Rs.22,29,255/- which is duly credited in sales of asst.yr. 1996- 97). Zerox copy of Sale bill dt. 8.11.95 is enclosed herewith. 5. In support, zerox copies of accounts and contra accounts of the said majlis Bidi Factory for the asst.yr. 1996-97 and 1997- 98, zerox copies of Transport vouchers in respect of goods dispatched to said party are enclosed herewith. 6. The above clear-cut facts of the case make it ample clear that, the base of survey and considering the sales on the basis of Deliver Vouchers was itself bad-in-law, which ultimately resulted in DOUBLE TAXATION of Rs.12,30,059/- (33,471 kg. x Rs.36.75 per kg.) i.e. same year, is again considered as Sales of the year under review on the basis of Delivery vouchers. 6.4. In support of the above explanation, the assesse....