2012 (2) TMI 232 - AT - Income Tax

Stock - Difference in Valuation of Rs 2,35,983 - Held That - When the difference in stock has been accepted by assessee and the same is not appealed, levy of penalty is justified.

Summary

Issues:
Penalty imposition under section 271(1)(c) of the IT Act based on the difference in stock valuation between trading account and bank statement.

Analysis:
The appeal was against the penalty imposed by the Ld. Commissioner of Income Tax (Appeals) under section 271(1)(c) of the IT Act, 1961. The Assessing Officer discovered a significant difference in the valuation of the assessee's stock between the trading account and the bank statement, leading to the initiation of penalty proceedings. The Ld. Commissioner of Income Tax (Appeals) reduced the addition made by the Assessing Officer but confirmed the penalty. The Department's appeal against the reduction was dismissed by the ITAT. The penalty was computed at Rs. 92,505 and imposed on the assessee. The Ld. Commissioner of Income Tax (Appeals) upheld the penalty, noting that the Assessing Officer had directed the initiation of penalty proceedings in the assessment order under section 143(3).

The Ld. Commissioner of Income Tax (Appeals) observed that the difference in stock valuation had been confirmed and accepted by the assessee. The explanation provided by the assessee was deemed not bona fide, as the discrepancy was discovered only after the Assessing Officer's investigation. The Ld. Commissioner of Income Tax (Appeals) relied on legal precedents to uphold the penalty, emphasizing the assessee's failure to disclose accurate particulars. The Tribunal, after considering the submissions, upheld the penalty, stating that the difference in stock valuation was accepted by the assessee and that there was clear evidence of inaccurate particulars and concealment of income. The Tribunal found no merit in the argument that there was no satisfaction for the penalty imposition and concluded that the penalty was rightly sustained by the Ld. Commissioner of Income Tax (Appeals).

In conclusion, the Tribunal dismissed the appeal filed by the assessee, upholding the penalty imposed under section 271(1)(c) of the IT Act. The decision was based on the significant difference in stock valuation, the assessee's acceptance of the discrepancy, and the failure to prove accurate particulars, leading to the penalty imposition being deemed appropriate.