TaxTMI 
TaxTMI 
2024 (6) TMI 409
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....d to appreciate that the Assessing Officer has to give a clear finding as to whether the case is that of concealment of income or that of furnishing inaccurate particulars of income. In the absence of such specific finding, the penalty order was bad in law. iii) In the facts and in the circumstances of the appellant's case, the Ld. CIT(A) has erred in upholding the levy of penalty of Rs. 10,69,141/-. 2.1 The Ld. CIT(A) ought to have appreciated that i) The appellant had provided all the necessary facts and working of closing stock of work-in-progress before the Assessing Officer and the Assessing Officer had taken a different working ii) The increase in the value of closing stock would result into increase in value of opening stock of next year and thus, it tax neutral addition, particularly when the appellant is being assessed at maximum marginal rate. iii) The appellant's contentions for increase of the value of the opening stock in the next year are accepted by the CIT (A) in quantum appeal. iv) Thus, the appellant had given a bonafide explanation and the said explanation has not been found to be false v) Thu....
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....o, which addition as per his own admission, was deleted by the ld.CIT(A). This fact emanates from para 1 to 4 of the penalty order passed under section 271(1)(c) of the Act, wherein at para-4, the AO clearly mentions that he has reasons to believe that the assessee has furnished inaccurate particulars of income pertaining to the valuation of closing stock amounting to Rs. 24,53,100/-. The same is reproduced hereunder: "4. As brought out in the assessment order, the assessee has not worked out valuation of closing stock accordingly, addition of Rs. 24,53,100/- was made on this ground to the total income of the assessee. The CIT(A) confirmed the addition of Rs. 24,53,1000/- I have therefore reason to believe that the assessee has furnished inaccurate particulars of income and thereby concealed the particulars of Its Income. Therefore, it clearly emerges that the particulars filed in the Return of Income by the Assessee is found to be inaccurate, erroneous or false and which has an impact on total income returned by the assessee and therefore, it attracts liability for penalty u/s. 271(1)(c) for concealment of particulars of income. Here, it is pertinent to discuss the ....
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....) confirming the addition on accountof valuation of stock in quantum proceedings, which is evident from the order of the ld.CIT(A) at para 5.1 which is reproduced above. Therefore, the basis for arriving at the finding that the addition on account of valuation of closing stock tantamounted to furnishing inaccurate particulars of income for the levy of penalty under section 271(1)(c) of the Act, is completely absent both in the assessment order and even in the ld.CIT(A)'s order. 14. It appears that both the authorities have proceeded on the assumption that the addition made to the income of the assessee automatically tantamount to concealment/furnishing of inaccurate particulars of income, which is contrary to the law, which has been settled by the Hon'ble Apex Court in the case of CIT Vs. Reliance CIT Vs. Reliance Petro Products Pvt. Ltd. [322 ITR 158]. 15. To sum up there is, we find, total non-application mind both by the AO and the ld.CIT(A) while levying and confirming the levy of penalty, • levying penalty partlyon addition to income which admittedly was deleted by Ld.CIT(A) and • stating neither the facts of the addition to the income on whi....
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....ect completed on actual basis and the remaining cost incurred during the year had been added to the valuation of WIP, and hence the difference in the valuation adopted by the assessee and the department. This submission of the assessee finds mention at para 6.1 of the CIT(A)'s order. The ld. CIT(A) however without finding any infirmity in the explanation of the assessee, confirmed the addition made by the AO and his finding is at para 6.2 of his order. 19. What transpires, therefore, is that the addition on account of valuation of closing stock is merely on account of difference in the basis of valuation of WIP adopted by the department and that adopted by the assessee. The assessee's justification for the method adopted by it, has not been countered or found fault in the same by the Revenue. We have noted that the assessee's explanation was that it had allocated actual cost, while the department's stand was that it ought to have allocated cost on estimate basis. The explanation of the assessee appears to be bona fide to us regarding the valuation of closing stock adopted by it. Therefore, in these facts and circumstances, merely because the addition on account of valuation of c....
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....come (RS 50,66,286) (-)Rs 85,26,291 3 Concealed Income (Sr. No. 1-2) 4 Tax on Assessed income 5 Tax on other than concealed Income Rs 34,60,005 RS, 15,65,,483 Rs 26,34,624 6 Tax evaded on Concealed Income (Sr. No. 4-5) RS. 10,69,141 7 Minimum Penalty leviable @100% of the tax at RS. 10,69,141 Sr.No.6 above Document 2 5.1 The Ld. CIT (A)-9 Ahmadabad at para 6.2 of his order dated 30.11.2018 for AY 2015-16 has recorded as under while upholding addition of Rs.24,53,100/-: "6.2 I have carefully considered the rival contentions, case law relied upon as well as the observations made by the AO. From perusal of the details, it is noticed that the appellant has developed 4 schemes during the relevant period, however, sales had taken place only in one scheme i.e. 'Radhe Serene'. It is also observed by the AO that the appellant is following sale deed execution method for recognition of review in the said scheme. Total saleable area available was 32664 sq. yds as against which only 2915 sq. yds was sold till the end of the financial year in this particular scheme. Based on the details provided by the appellant, the....
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.... facts relating to the same and material to the computation of his total income have disclosed by him. 5.4 In this context, it is worthwhile to draw support from the decision of the Supreme Court in the case of Union of India vs. Dharmendra Textile Processors (2008) 166 Taxman 65 (SC) wherein the Apex Court held that penalty u/s 271(1)(c) is a civil liability and for attracting such civil liability even willful concealment is not an essential ingredient as in the case of prosecution (306 ITR 277, it was inter alia asserted by the Supreme Court that in order to invoke the provisions of Sec. 271(1)(c), existence of dishonest intention, deliberate failure to give correct particulars etc., is not necessary. The Explanation appended to Sec. 271(1)(c) indicates the element of strict liability of the assessee for concealment. It also indicates that the same is enacted to remedy the loss of revenue and willful concealment is not an essential ingredient. 5.5 I also rely on the decisions of the Hon'ble Supreme Court in the case of CIT vs. Gold Coin Health Food Pvt. Ltd. [2008] 304 ITR 308 (SC) wherein Hon'ble Apex Court has held that amendme....