2014 (12) TMI 750 - HC - Income Tax

Penalty u/s 271(1)(c) Penalty imposed because of difference in the stock between the stock statements - No concealment made by assessee - Held that - The Tribunal rightly directed to delete the penalty while relying upon CIT v. Bharat Minerals Sales Corpn. 2001 (8) TMI 72 - CALCUTTA High Court - there was as such no concealment by the assessee and the stock statement given to the Bank was purely for the purpose of accommodating existing bank finances and the assessee was required to submit stock statement showing a particular value of the stock in order to continuously enjoy overdraft facility and whatever was submitted before the Bank was disclosed before the authority and therefore as such there was no concealment, to impose the penalty imposed u/s 271(1)(c) thus, as such no substantial question of law arise for consideration and the order of the Tribunal is upheld Decided against revenue.

Summary

Issues:
Challenge to order imposing penalty under section 271(1)(c) of the Income Tax Act, 1961 for difference in stock valuation.

Analysis:
The appeal was filed by the Revenue against the judgment of the Income Tax Appellate Tribunal regarding the penalty imposed under section 271(1)(c) of the Income Tax Act for a stock valuation discrepancy. The Tribunal had allowed the appeal by the assessee, setting aside the orders of the CIT(A) and Assessing Officer. The penalty was imposed due to a difference in stock valuation between statements given to the bank and the books of account. The assessee had appealed to the CIT(A), which upheld the penalty. Subsequently, the Tribunal overturned this decision, leading to the current appeal.

The Tribunal based its decision on precedents, including a case from the Calcutta High Court and another from the Madras High Court. Additionally, a previous decision by the Gujarat High Court was cited. The Tribunal found that there was no concealment by the assessee, as the stock statements submitted to the bank were for financial accommodation purposes and were disclosed to the authorities. It was argued that there was no intent to conceal information, as the stock valuation was necessary for maintaining the overdraft facility.

The High Court agreed with the Tribunal's reasoning and decision to delete the penalty under section 271(1)(c) of the Act. It was concluded that no substantial question of law arose from the appeal, leading to the dismissal of the Revenue's challenge. The judgment emphasized the lack of concealment and the legitimate reasons behind the stock valuation differences, ultimately supporting the deletion of the penalty.