2019 (2) TMI 359

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....law and on facts in confirming penalty of Rs. 1,89,589/- levied by the ld. AO u/s 271(1)(c) of the Income Tax Act, 1961. Relief may kindly be given by deleting the same." 2. The assessee is an individual engaged in the business of manufacturing of Pulses (Dal) and trading of Gemstones and assessee is also earning rental income. During the course of assessment proceedings U/s 143(3) of the Act the AO made an addition on account of undervaluation of closing stock of various Dals by taking the value at cost instead of the valuation adopted by the assessee at market rate. Thus, the AO made an addition of Rs. 6,80,767/-. The assessee did not challenge the said addition made by the AO. Subsequently the AO initiated the proceedings for levy ....

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....sed its opening stock of the subsequent year based on the valuation done by the AO, hence, the assessee has not taken the benefit of the enhanced valuation of the closing stock made by the AO. In support of his contention, he has relied on the order of the Coordinate Bench dated 29.08.2018 in case of Janta Construction Co. vs ACIT in ITA No. 578/JP/2018. Thus, the ld. AR of the assessee has submitted that an identical issue was considered by this Tribunal where the penalty was levied by the AO against the addition made on account of valuation closing stock. 4. On the other hand, the ld. DR has referred to the order of the Assessing Officer and submitted that the AO clearly mentioned that the assessee in his audit report has mentioned tha....

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.... effect it will be Revenue neutral as the closing stock of preceding year is taken as opening stock of the subsequent year. Apart from applying a different method the AO did not find any other discrepancy or deficiency in the closing stock of the assessee. We note that the Coordinate Bench of this Tribunal in case of M/s Janta Construction Co. vs. ACIT (supra) while considering the issue of penalty U/s 271(1)(c) against the addition on account of valuation of closing stock has held in para 4 as under:- "4. We have considered the rival submissions as well as the relevant material on record. There is no dispute that the addition made by the AO of Rs. 14,25,059/- on account of suppression of closing work in progress has attained th....

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....e a discrepancy in the information obtained by the AO and analyzing the same when the assessee has already declared the total receipts more than the total receipts as per the information furnished by the departments, then in considering the totality of the facts and circumstances of the case, we find that all these explanations of the assessee would constitute a bonafide explanation though the same may not be accepted for the purpose of addition in quantum proceedings. Hence in the facts and circumstances of the case, we delete the penalty levied under section 271(1)(c) of the Act." The assessee before us has also not taken the benefit of the higher valuation of closing stock by revising its opening stock of the subsequent year, therefor....