TaxTMI 
TaxTMI 
2018 (10) TMI 280
X X X X Extracts X X X X
X X X X Extracts X X X X
....That the ld CIT(A) has wrongly confirmed the penalty levied u/s 271(1)(c) of the Income Tax Act on addition made on difference in closing stock of Rs. 6,82,062/-. 2. That the CIT(A) has wrongly concluded that as there was under statement of income shown due to under valuation of the closing stock, the penalty should be levied. In fact there is no difference in closing stock of Rs. 6,82;062/- as wrongly ascertained by ACIT although all material facts were produced before ACIT at the time of assessment vide it's letter dated 14-07-2011 and the same is pressed here to be considered. 3. That there is no material or circumstances leading to the reasonable conclusion that the amount does represent the income. Therefore there....
X X X X Extracts X X X X
X X X X Extracts X X X X
....closing stock, the assessee accepted the undervaluation of closing stock. Accordingly, the AO made the addition of Rs. 6,82,062/- and added to the total income of the assessee. 4.4 The AO in the assessment order framed u/s 143(3) r.w.s. 147 of the Act vide order dated 30-11-2012 initiated the penalty proceedings u/s 271(1)(c) of the Act on account of concealment of income and furnishing inaccurate particulars of income. 4.5 Subsequently, the AO issued the notice for the penalty u/s 274 r.w.s. 271(1)(c) of the Act. The assessee in compliance to it submitted that there was no mistake in the quantity of stock as declared in the financial statement as on 31-03-2007. The assessee also submitted that a detailed reply was already filed befor....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... closing stock during the assessment proceedings. Therefore, the Assessee is liable to pay the penalty u/s 271(1)(c) of the Act. The ld CIT(A) in support of his claim has relied on the following judgments: Sr No. Name of the courts Details of the case Citation 1. Gujarat High Court A.M. Shah & Co. vs. CIT reported in 108 taxman 137 2. Delhi High Court CIT vs. Zoom Communication P. Ltd. Reported in 191 taxman 179 3. Hon'ble Apex Court MAK Data Pvt. Ltd. vs. CIT Civil Appeal No.9772 of 2013 5.2 In view of the above, the ld CIT(A) confirmed the order of AO by levying the penalty u/s 271(1)(c) of the Act. 5.3 Being aggrieved by the order of ld CIT(A) assessee is in the second appeal befor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ck @ 4009 kg instead of 3103 kg shown by the appellant. Appellant in return tiled in response to notice u/s 148 appended note [P/B pg 4] '(2) The total income of Rs. 6,82,062/- for closing stock valuation is added to income in order to buy peace of mind and to avoid unnecessary litigation. But in/act there is no such difference as alleged by I.T. Authority* The appellant filed return at total loss at Rs. 34,39,146/- & therefore to buy peace of mind by not challenging proceedings u/s 148 added both the amounts to the income which even after addition remained at a loss. Appellant neither furnished inaccurate particulars of income nor concealed income as alleged by the authorities. Appellant gave explana....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the subsequent year. Thus, it can be inferred that if the assessee has shown less amount of closing stock then the assessee will carry forward the same to the next year at lesser value which shows there will be no effect on the tax liability of the assessee except the fact that the tax liability of one year will shift to another year. Moreover, we also note that the assessee cannot be benefited by showing less amount of closing stock as it will become opening stock of the subsequent year. Therefore we are of the view that the act of the assessee for showing less closing stock cannot be said as deliberate. We also note that closing stock for the year under consideration was shown less as pointed out by the AO. Thus, the assessee ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... bearing only on factor No. (ii). The explanation does not make the assessment order conclusive evidence that the amount assessed was in fact the income of the assessee. No penalty can be imposed if the facts and circumstances are equally consistent with the hypothesis that the amount does not represent concealed income as with the hypothesis that it does. If an assessee gives an explanation which is unproved but not disproved, i.e., it is not accepted but circumstances do not lead to the reasonable and positive inference that the assessee's case is false, the Explanation cannot help the department because there will be no material to show that the amount in question was the income of the assessee." 8.3 The case law i.e. A.M. Shah & Co. ....