2015 (9) TMI 1660 - AT - Income Tax

Levy of penalty u/s. 271(1)(c) - addition on account of excess shortage - exparte appeal - HELD THAT - We have heard the Ld. Departmental Representative at length and carefully perused the orders of the authorities below. In so far as the addition on account of excess shortage is concerned, the Tribunal has deleted the said addition, therefore, to this extent, no penalty is leviable. On the addition on account of valuation of closing stock is concerned, we find that even in the quantum appeal, the Tribunal has categorically denied to accept the additional evidence which were not relevant in the case of the assessee. The relevant portion of the Tribunal s order is exhibited at page-3 4 of CIT(A) s order, based on which the Ld. CIT(A) has confirmed the penalty. We, therefore, do not find any error or infirmity in the findings of the Ld. CIT(A). Order of the Ld. CIT(A) is confirmed.

Summary

Issues:
Levy of penalty under section 271(1)(c) of the Act for disallowances made on account of valuation of closing stock and shortage.

Analysis:
1. Valuation of Closing Stock Disallowance:
- The assessee, engaged in fabric business, faced scrutiny assessment for the year, resulting in disallowances on closing stock valuation and shortage.
- The Assessing Officer (AO) requested detailed stock valuation, but the assessee failed to provide adequate quantitative/qualitative details, leading to discrepancies in stock figures.
- Despite multiple requests, the assessee did not provide satisfactory explanations for discrepancies, which led to the imposition of penalty under section 271(1)(c).
- The Ld. CIT(A) upheld the penalty on closing stock valuation, citing potential concealment of income if not scrutinized, and referred to relevant judicial decisions to support the penalty imposition.

2. Excess Shortage Disallowance:
- The AO noted abnormal shortage claims by the assessee, deviating from the figures reported in the Tax Audit Report.
- The penalty was levied for excess shortage claims, which was later deleted by the Tribunal in quantum appeal, resulting in no penalty liability for this aspect.

3. Appellate Tribunal's Decision:
- The Appellate Tribunal reviewed the case, acknowledging the deletion of penalty liability for excess shortage but upheld the penalty on closing stock valuation.
- The Tribunal's refusal to accept additional evidence, as seen in the CIT(A)'s order, supported the confirmation of penalty by the Ld. CIT(A).
- Despite no representation from the assessee, the Tribunal found no error in the Ld. CIT(A)'s decision and confirmed the penalty imposition on closing stock valuation.

4. Conclusion:
- The appeal by the assessee was dismissed, and the penalty under section 271(1)(c) for closing stock valuation was upheld, while the penalty for excess shortage was deleted based on the Tribunal's decision in the quantum appeal.

This detailed analysis of the judgment highlights the issues, proceedings, and decisions made regarding the penalty imposition under section 271(1)(c) of the Act, providing a comprehensive understanding of the case.