1999 (8) TMI 706 - AT - Income Tax

Summary

Issues:
1. Appeal against penalty imposed under section 271(1)(c) of the Income-tax Act, 1961.
2. Technical point raised in filing the appeal by the Revenue.
3. Addition of Rs. 10,76,413 on unexplained cash credits.
4. Addition of Rs. 1,21,000 on stock sold outside the books of account.
5. Typographical error in the appeal filed by the Revenue.
6. Validity of the penalty imposed on the amount of Rs. 1,21,000 for sale of stock outside the books of account.

Analysis:

1. The appeal and cross-objection were directed against the order of the CIT(A) restricting the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961, from Rs. 4,87,737 to Rs. 1,21,000. The assessee challenged the imposition of penalty, citing ongoing disputes over certain additions to the income. The CIT(A) upheld the penalty on the stock sold outside the books of account, leading to the appeal by the Revenue.

2. A technical point was raised regarding a typographical error in the appeal filed by the Revenue, which was corrected later. However, the cross-objection pointed out that the Revenue had not challenged the deletion of penalty on a specific amount, questioning the maintainability of the appeal.

3. The addition of Rs. 10,76,413 on unexplained cash credits was contested by the assessee, arguing that the matter had been referred back to the Assessing Officer for further scrutiny. The CIT(A) deleted the penalty on this amount, stating that fresh penalty proceedings could be initiated if deemed necessary.

4. Regarding the addition of Rs. 1,21,000 on stock sold outside the books of account, the CIT(A) upheld the penalty, emphasizing that the assessee furnished inaccurate particulars. The Tribunal confirmed the addition, leading to the cross-objection by the assessee against the penalty.

5. The Tribunal found that the penalty on the stock sold outside the books of account was unjustified. The assessee's historical claims of wastage and burning loss were considered, and it was noted that the Department had accepted higher loss percentages in previous years. The Tribunal concluded that no concealment of facts occurred, leading to the cancellation of the penalty.

6. Ultimately, the Tribunal allowed the appeal, canceling the penalty imposed under section 271(1)(c) on the amount of Rs. 1,21,000 for the sale of stock outside the books of account.