TaxTMI 
TaxTMI 
2025 (3) TMI 2213
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....ing the penalty of Rs. 1,17,670/- u/s 271(1)(c) of Income Tax Act on account of undisclosed investment under section 69 of the IT. Act, and dismissing the appeal on this issue; 3. The Appellant craves leave to add, to alter, amend or modify substitute delete and/or rescind all or any ground of Appeal on or before the final hearing, if necessary so arises. 3. Succinctly, the fact as culled out from the record is that assessee had e-filed her Income Tax Return for the A.Y 2015-16 on 28.11.2015 declaring total income of Rs. 2,82,19,510/-. Thereafter, the case was completed u/s 143(3) of the IT Act, 1961 on 20.12.2017 at assessed income of Rs. 2,85,82,171/- making a addition u/s 69 of the IT Act 1961 for an amount of Rs. 3,62,661/-. That order of the assessment was challenged in an appeal which was disposed off on 25.01.2019 confirming the addition by the ld. CIT(A)-2, Jaipur. Since, the penalty proceeding were initiated in the assessment proceeding and upon confirmation of that addition by ld. CIT(A) ld. AO proceeded for levy of penalty as per provision of section 271(1)(c) of the Act. In that proceeding the ld. AO issued notices which were not attended except for seeki....
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....ing, whereas the assessee is maintaining stock on actual weigh basis. The appellant has made this claim regarding the/valuation during the course of survey however the appellant has not furnished any documents. The appellant has also not furnished the order of the learned CIT Appeal by which the quantum appeal of the appellant was dismissed. The appellant has also not submitted the survey statements and the assessment order etc. It was specifically requested from the appellant during the appellate proceedings to furnish the submissions made before the assessing authority however the same are also not been furnished. On the basis of material available on record of the appeal, it is undisputed that excess stock of Rs. 3,62,661 was found and the appellant failed to substantiate and explain the difference during the survey proceedings and also during the assessment proceedings and also during the quantum appeal proceedings. Further the appellant has apparently not filed appeal before the honourable Tribunal in the quantum proceedings. In the case of Commissioner of Income-tax v. Md. Warasat Hussain [1987] 35 Taxman 227 (Patna)/[1988] 171 ITR 405 (Patna)/[1988....
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....eceipts are of an assessable nature." To put it differently, where the nature and source of a receipt, whether it be of money or of other property, cannot be satisfactorily explained by the assessee, it is open to the revenue to hold that it is the income of the assessee and no further burden lies on the revenue to show that that income is from any particular source. vide Commissioner of Income-tax v. Devi Prasad Vishwanath Prasad [1969] 72 ITR 194 (SC) Here, in the present case, the assessee introduced in the books of account of its business on 30th March, 1948, capital of Rs. 3,33,414 which consisted of gold rawa, gold ornaments, stones and cash. The burden of accounting for the receipt of these assets was clearly on the assessee and if the assessee failed to prove satisfactorily the nature and source of these assets, the revenue could legitimately hold that these assets represented the undisclosed income of the assessee....." (emphasis supplied) In the case of Kale Khan Mohammad Hanif v. Commissioner of Income-tax [1963] 50 ITR 1 (SC)[08-02-1963] it is held by the Hon'ble Supreme Court as under- "It seems to us that the answer to this ques....
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....ing under normal circumstances, without negligence or inaction or want of bona fide from furnishing the return in time." The assessee is required to "prove" the reasonable cause. This onus has not been discharged by the assessee by leading any cogent evidence. Despite of the opportunities provided, it is evidently clear that the assessee failed to furnish any evidence supported explanation substantiating and justifying the circumstances and reasons leading to application of incorrect facts and law as applied by the assessee. In [2002] 255 ITR 258 (SC) Assistant Director of Inspection v. Kum. A.B. Shanthi, regarding the onus on the assessee to "prove the reasonable cause, the Hon'ble Supreme Court has held as under- 19. It is important to note that another provision, namely, section 2738 of the Act was also incorporated which provides that notwithstanding anything contained in the provisions of section 271D, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provision if he proves that there was reasonable cause for such failure and if the assessee proves that there was reasonable ca....
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....In this case the SLP against the order of Hon'ble Delhi High Court in the case of Commissioner of Income-tax v. NG Technologies Ltd. [2015] 57 taxmann.com 389 (Delhi) was dismissed by Hon'ble Supreme Court. In this regard relevant para of the order of Hon'ble Delhi High Court in the case of Commissioner of Income-tax v. NG Technologies Ltd. [2015] 57 taxmann.com 389 (Delhi) is extracted below:- "20. Therefore, it is clear to us that the assessee had not filed revised return voluntarily but had filed the revised return after the Assessing Officer confronted the assessee and they were asked to explain how and why the loss on account of sale of fixed assets was claimed in the profit and loss account. The said loss, capital in nature and could not have been claimed in the profit and loss account. 21. In view of the aforesaid discussion, we answer the substantial question of law in favour of the Revenue and against the respondent-assessee. We uphold levy of penalty by the Assessing Officer under section 271(1)(c) of the Act. The appeal is disposed of. No costs." (Emphasis Supplied) The above judgements are applicable to the facts of the case. In....
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.....Y. 2014-15, relevant to A.Y. 2015-16; 3. Discrepancy found in the valuation of stock during the course of survey proceedings of 8.399 MT excess stock which was valued at Rs. 3,62,661/- (approximate) at the time of stock taken physically as compared to stock as per books of account. In response to the queries raised vide order sheet noting dated 11.12.2017, the assessee filed a detailed reply which is reproduced starting from page 2 of the assessment order. The Assessing Officer then went on to state in the assessment order as under: "9. Thus in view of the elaborate factual and legal matrix amount of Rs. 3,62,661/- on account of excess stock found during the course of survey proceedings is held as undisclosed investment of the assessee and an addition of Rs. 3,62,661/- is made to the total income of the assessee u/s 69 of the I.T. Act, 1961. 10. Since I am satisfied that the assessee has concealed his income, penalty proceedings under section 271(1) (c ) are being initiated separately. 11. With these remarks income of the assessee is computed as under:- Returned Income as disclosed by the assessee: Rs. 2,82,19,510/- ....
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....ion 93.480 95.124 1.644 1.72 Total 1962.910 1971.309 8.399 0.426 Therefore, the difference in weight based on which the addition was made, and penalty has been levied is a mere 0.426% of the total weight. It is widely known, and even the accounting world states so, that valuation of a closing stock is an approximation especially since valuation can be arrived at in the following 4 ways: 1. FIFO method; 2. LIFO method; 3. Weighted Average method; and 4. Specific Identification method. In fact, the assessee in his written submissions, reproduced at page 3 of the assessment order,has very categorically pointed this out, in these words: "You have asked reason for difference in finished goods of 8.399 MT, it is submitted that you have taken physical stock on standard weigh, where as in physical stock there are difference in std. size, due mouth cutting for making goods marketable, which reduce actual size in length. Hence, the std. weight of finished goods is higher from actual weight recorded in books. At the time of physical stocking weight was calculated at sectional weight whereas in t....
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....ition cannot be sustained. (iii) Imposition of Penalty: The penalty u/s 271(1)(c) is premised on the perception of concealment. In the case of CIT vs. Reliance Petro Products Pvt. Ltd. (2010), 322 ITR 158 (SC). The Supreme Court ruled that mere making of an incorrect claim in the return does not, by itself, amount to concealment of income. Assessee failure to maintain documentary evidence was inadvertent and not intentional, and thus, does not warrant imposition of penalty. (iv) Cooperation with the Assessing Officer: Throughout the assessment proceedings, assessee has cooperated with the Assessing officer and have provided all the information available to him. The decision of CIT vs. Rajesh Kumar (2007), 288 ITR 519 (Delhi), emphasizes the need for assessing officers to show reasonable grounds for dismissal of an explanation provided by the taxpayer. (v) CIT vs. Ashok Kumar Raut (2006) 281 ITR 93 (Gauhati) The Hon'ble High court held that merely because the assessing officer finds discrepancies or misstatements doesn't automatically lead to an assumption of concealed income. The onus is on the department to prove that t....
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.... weighing process, or natural difference in different weighing scales. Moreover, there is no mens rea or deliberate attempt to suppress profits, and no evidence has been placed on record to prove so, by the Assessing Officer. In the absence of deliberate & wilful attempt to conceal income, penalty u/s 271(1)(c) is not justified. The penalty, therefore, deserves to be deleted/quashed. 6. The contention so raised in the written submission were supported by a paper book having following evidence / records: Sr. No. Particular Page No. 1 Written submissions 1-8 2 Documents:- Annexure-A- Copy of the order dated 05.11.2024 passed by Ld. CIT(A)-04, Jaipur 9-23 3 Annexure-B Assessment order dated 20.12.2017 24-28 4 Annexure-C Order of penalty u/s 271(1)(c) dated 06.03.2020 29-34 5 Annexure-D- written submissions before CIT(A) 35-38 6 Annexure-E- Statement of assessee dated 09.10.2014 39-53 7. The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that the assessee there was stock of around 1962.910 MT stock which was taken by the survey team. Looking to the vo....
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....in actually. In addition thereto, it is common knowledge that no two weighing scales give exactly the same weight. In fact, the same weighing scale may differ slightly even for the same goods. The difference of 0.426% is so minor that it can easily be overlooked as because of human error. The AO himself, in the assessment order says that the value of the excess stock is an approximation. Therefore, if the value of stock is an estimation, then, it follows, as a consequence, that the addition is based on an estimation. Even when the statement recorded during survey proceedings on 09.10.2014 vide answering to Q.25, the assessee stated that there is no difference in stock. Thus, we are of the considered view that there is no clear finding that the in fact the assessee accepted that there exist a excess stock. The bench noted that the survey proceeding the stock quantity taken within the short time and the considering the quantity measure the difference of 0.426 % cannot establish that there exist an unexplained excess stock in the hands of the assessee. Merely the assessee has not challenged that addition it cannot be reason to levy the penalty. Penalty proceedings are quasi criminal p....