AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (11) TMI 727
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....sis of synopsis submitted by appellant are that appellant partnership firm is engaged in the business of manufacturing processing and trading of various types of precious and semi-precious stones. The appellant has been maintaining complete books of accounts including stock register, quantity wise and weight wise separately for each type of stone. It has been valuing its closing stock of the stones consistently following the same system and method of valuation as accepted by the revenue in earlier years at cost or market price whichever is less. The value of the stone being subjective satisfaction of the buyer is dependent on their liking or disliking or suitability in this line of trade. The saleable stock of superior quality are purchased first by the customers, after assortment of find items as per buyer's choice; and at the end of the year, only the inferior quality of the stones remained in stock having minimal value even less than the cost price. Accordingly, the appellant valued its stock at the end of the year as per their ability, experience and commercial expediency, deducting the cost of the sold stock from the total stock of the particular stone. In order to ascertain t....
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....for an addition of Rs. 15 lacs in trading results.The assessee does not want to enhance in closing stock to cause of unnecessary carry forwarding and adjusting the value of closing stock. The assessee is agreeing to the addition to put an end to the matter and to purchase peace of mind as he does not want to enter into unnecessary litigation with the Department." I have considered the facts of the case and submission of the assessee. On the facts discussed above it is found that provisions of section 145(3) is clearly applicable in this case. Therefore, trading addition of Rs. 15 lakh is made and added to the income of the assessee. 6. Considering the above, he has taken us to the order of CIT(A) which reads as under:- "2.3 I have carefully considered relevant facts and circumstances, in the light of the rival stands of the AO and Ld. AR, viz. The issue under consideration. From the above, it can be seen that the concealment penalty was imposed by the AO, primarily, for the reasons and findings discussed in the assessment order only. The addition in the present case is made towards the valuation of closing stock of Emerald Cut Stock, on the agreed basis, u/s. 1....
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....eeding by way of written submissions filed before the AO, CIT(A) and ITAT. The appellant categorically stated that the valuation of stock was as per cost and market price whichever less is. And further stated that the better quality of stones are purchased by the customers at first after assortment and only the inferior quality of stones remains in stock at the end of the year which in any way does not fetch the same cost price that of better quality of stones sold. The AO sought to value the closing stock as per historical cost method which is practicable not possible in this line of trade in view of the modus operandi explained and stated in para-3 supra. Otherwise, in the instant case there was no attempt to evade the tax inasmuch as, valuation of stock at the end of the year would have direct impact on the value of opening stock of the next year and the increase of the valuation of closing stock in this year would have reduced in the income of the next year resulting to no tax impact finally. In the instant case, the revenue has failed to detect any evasion of tax like the case of Mak Data. Unlike the Mak Data case, in the instant case, the agreed addition was not for the conce....
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.... "8. A glance at this provision would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. Present is not the case of concealment of the income. That is not the case of the Revenue either. However, the Learned Counsel for Revenue suggested that by making incorrect claim for the expenditure on interest, the assessee has furnished inaccurate particulars of the income. As per Law Lexicon, the meaning of the word "particular" is a detail or details (in plural sense); the details of a claim, or the separate items of an account. Therefore, the word "particulars" used in the Section 271(1)(c) would embrace the meaning of the details of the claim made. It is an admitted position in the present case that no information given in the Return was found to be incorrect or inaccurate. It is not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee cannot be held guilty of furnishing inaccurate particulars. The Learned Counsel argued that "submitting an incorrect claim in law for t....
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....as pointed out that the term "inaccurate particulars" was not defined anywhere in the Act and, therefore, it was held that furnishing of an assessment of the value of the property may not by itself be furnishing inaccurate particulars. It was further held that the assessee must be found to have failed to prove that his explanation is not only not bona fide but all the facts relating to the same and material to the computation of his income were not disclosed by him. It was then held that the explanation must be preceded by a finding as to how and in what manner, the assessee had furnished the particulars of his income. The Court ultimately went on to hold that the element of mens rea was essential. It was only on the point of mens rea that the judgment in Dilip N. Shroff v. Joint Commissioner of Income Tax, Mumbai and Anr. was upset. In Union of India v. Dharamendra Textile Processors (cited supra), after quoting from Section 271 extensively and also considering Section 271(1)(c), the Court came to the conclusion that since Section 271(1)(c) indicated the element of strict liability on the assessee for the concealment or for giving inaccurate particulars while filing Return, there ....
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....re would be no question of inviting the penalty under Section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the Return cannot amount to the inaccurate particulars. 13. In this behalf the observations of this Court made in Sree Krishna Electricals v. State of Tamil Nadu and Anr. MANU/SC/0628/2009MANU/SC/0628/2009 : (2009) 23VST 249 (SC) as regards the penalty are apposite. In the aforementioned decision which pertained to the penalty proceedings in Tamil Nadu General Sales Tax Act the Court had found that the authorities below had found that there were some incorrect statements made in the Return. However, the said transactions were reflected in the accounts of the assessee. This Court, therefore, observed: "So far as the question of penalty is concerned the items which were not included in the turnover were found incorporated in the appellant's account books. Where certain items which are not included in the turnover are disclosed in the dealer's own account books and the assessing authorities include....
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....trast, a fact is said to be 'proved' when after considering the mailer before it, the court either believes it to exist or considers its existence so probable that a prudent man ought under the circumstances in particular case, to act upon the supposition that it exists. In juxta position, the expression 'not proved' denotes a fact is said to be 'not proved' when it is neither proved nor disproved. With this, it is of significance that while with the addition of income or disallowance of expenses is attached, the presumption about non-disclosure or concealment of particulars of such additions or expenses, no such presumption about existence of lack of 'bona fide' of the assessee is raised in a case falling under clause (B) of the Explanation. On the contrary, on finding an explanation as was existent or disproved, a reasonable inference of lack of bona fide can be drawn, mere failure to substantiate the explanation as a fact not proved, can not raise a presumption about deliberate concealment and lack of bona fide. In such events, question of bona fide has to be proved as a fact like any other fact on preponderance of probability uninfluence....
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....stimating the yield of super phak as well as of chhilka and also the price of chhilka, that addition was reduced by the Commissioner of Income-tax (Appeals). However, the penalty levied by the Assessing Officer was deleted by the Commissioner of Income-tax (Appeals). The order of the Commissioner of Income-tax (Appeals) was confirmed by the ITAT and the appeal filed by the Revenue against the said order of the ITAT was dismissed by this court, on the ground that the Assessing Officer had made the additions on the basis of the estimate of the yield of phak and chhilka and an estimate of the price and that the estimate would not ipso facto lead to penalty." 12. Counsel for the respondent has contended that the view taken by the Tribunal is just and proper. He has relied upon the decision of the Supreme Court in Mak Data's case (supra) which reads as under:- "7. The AO, in our view, shall not be carried away by the plea of the Assessee like "voluntary disclosure", "buy peace", "avoid litigation", "amicable settlement", etc. to explain away its conduct. The question is whether the Assessee has offered any explanation for concealment of particulars of income or furnishing in....