2010 (9) TMI 1271 - AT - Income Tax

Summary

Issues involved: Appeal against penalty u/s 271(1)(C) for alleged furnishing of inaccurate particulars of income regarding under valuation of stocks and disallowance of sales tax u/s 43B for A.Y 2004-05.

Summary:

Issue 1 - Disallowance of sales tax and service tax u/s 43B:
The AO disallowed &8377; 2,81,533 for non-payment of statutory dues as per the tax audit report, which the assessee had not added back to the total income. The AO initiated penalty proceedings u/s 271(1)(C) for alleged concealment of income. The CIT(A) upheld the penalty, stating the assessee's failure to include these amounts in the income return constituted inaccurate particulars. However, the ITAT Pune held that when relevant information is disclosed in the return and its enclosures, the concealment of income cannot be attributed to the assessee. Citing a previous Pune Bench decision, the ITAT allowed the appeal on this issue.

Issue 2 - Valuation of inventories:
The AO added &8377; 10,108 to the total income due to the assessee's failure to consider excise duty and freight in the closing stock valuation. The penalty u/s 271(1)(C) was imposed for alleged inaccurate particulars. The CIT(A) confirmed the penalty, rejecting the assessee's explanation that the omission was due to clerical errors. The ITAT noted that the assessee had disclosed relevant information in the return, and the clerical mistake did not warrant a penalty. Relying on the principle that disclosure in the return precludes concealment, the ITAT allowed the appeal on this issue.

Conclusion:
The ITAT Pune allowed the assessee's appeal against the penalty u/s 271(1)(C) for both issues, emphasizing that disclosure of relevant information in the return prevents the imposition of penalties for alleged concealment of income.