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2005 (3) TMI 385 - ITAT AMRITSARLevy Of Penalty u/s 271(1)(c) - concealment or furnishing of inaccurate particulars of income - Sale of copper wire added u/s 41(2) - trading addition made on account of excess wastage - HELD THAT:- It is not in dispute that the said copper wire was installed about 15 to 20 years before, i.e., the years 1955 to 1965. The assessee had given reasons that the old wire could not be retrieved because of heavy cost involved in the recovery of the same and the reason that the removal thereof might cause damage to the building and flooring. This was a plausible explanation. Even during the visit of the AO to the factory, no such copper wire was found in the store. The assessee had shown sale of old copper wire at Rs. 16,000 and the same was duly reflected in the miscellaneous income under the head "sale of discarded stores and machinery". There is no evidence available with the Department which could show that the assessee had, in fact, sold such copper wire at higher amount than what was reflected in the books of account. Therefore, in any case, the addition has been made because the explanation has not been found satisfactory. But such explanation could not be considered as false or mala fide. Moreover, addition has been made on estimate basis only, by assuming the quantity of wire, quantity of irrecoverable wire or the quantity realised by the assessee. There is no definite information with the AO that actually old wire sold was more than worth Rs. 16,000. Similar is the position with regard to wastage shown in the worsted division. There is no denying the fact that the assessee had maintained complete quantitative details indicating the consumption and yield of the same. It is also a fact that the wastage shown in the woollen division was much less as compared to worsted division in comparison to earlier assessment years. If the assessee had intention of manipulating trading results, it could have easily done in the woollen division also. Further, addition was made purely on estimate basis as discussed in the preceding paragraphs and the addition has been made on the ground that the explanation of the assessee is not found to be satisfactory. But this does not automatically lead to the conclusion that the assessee had concealed the income with a view of evade tax or conduct of the assessee was mala fide. Thus, here also, penalty u/s 271(1)(c) could not be levied merely because the explanation has been found unsatisfactory. In the present case also, the additions have been made and sustained purely by rejecting the explanation of the assessee. There is no material or evidence on record that the explanation furnished by the assessee was either false or dishonest. In fact, in the earlier assessment years, much higher percentage of wastage shown in the worsted division was accepted by the Department. There is also no material or evidence to show that assessee had made sales outside the books of account. Not even a single defect has been pointed out by the AO in the books of account. Therefore, mere fact that additions have been made and sustained would not justify levy of penalty u/s 271(1)(c). Thus, we do not find any justification to interfere with the order of the CIT(A). The same is upheld and all the grounds of appeal of the Revenue are rejected. In the result, the appeal filed by the Revenue is dismissed.
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