Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (6) TMI 409 - AT - Income TaxLevy of penalty u/s 271(1)(c) - addition on account of addition of closing stock - allegation of lack of clear finding on concealment of income or furnishing inaccurate particulars - HELD THAT - CIT(A) confirmed the addition only on account of addition of closing stock. He thereafter goes on to levy penalty on account of addition confirmed by the CIT(A) but in the calculation of the penalty levied which forms part of the order of the AO the AO levies penalty on other addition made u/s 36(1)(iii) of the Act also which addition as per his own admission was deleted by the CIT(A) However at para-5.3 of the same order wherein he levied penalty at the rate of 100% of the tax sought to be evaded he calculated concealed income at Rs. 34, 60, 005/- which includes the addition made under section 36(1)(iii) of the Act which stood deleted by the CIT(A) -This clearly shows the total non-application of mind by the AO while levying the penalty. This fact of addition made by the AO in quantum proceedings and confirmed by the CIT(A) has been corroborated by the orders of the AO and the ld.CIT(A) in quantum proceedings which were placed before us. Other glaring aspect which comes out from the assessment order is that both the AO and the CIT(A) have not given any reasons as to how the mere addition on account of valuation of closing stock made to the income of the assessee tantamounted to furnishing inaccurate particulars/concealment of the income related to the same. On going through the order of both the AO and the CIT(A) we are unable to understand what the addition exactly pertained to in relation to the valuation of the closing stock. The penalty order passed by the AO makes no mention either of the facts or the basis for the addition made. Therefore there is no method for understanding as to how he arrived at the conclusion that the addition made on account of valuation of closing stock tantamounted to furnishing inaccurate particulars of income for the levy of penalty under section 271(1)(c) of the Act. Thus basis for arriving at the finding that the addition on account of valuation of closing stock tantamounted to furnishing inaccurate particulars of income for the levy of penalty under section 271(1)(c) of the Act is completely absent both in the assessment order and even in the CIT(A) s order. It appears that both the authorities have proceeded on the assumption that the addition made to the income of the assessee automatically tantamount to concealment/furnishing of inaccurate particulars of income which is contrary to the law which has been settled in the case of CIT Vs. Reliance CIT Vs. Reliance Petro Products Pvt. Ltd. 2010 (3) TMI 80 - SUPREME COURT Therefore we hold the penalty is not sustainable. Even otherwise despite the AO and the CIT(A) making no effort to bring out the facts of the case leading to the addition made on account of valuation of the closing stock the same were gone into by us from the assessment order and the order of the ld.CIT(A) in quantum proceedings. Addition on account of valuation of closing stock is merely on account of difference in the basis of valuation of WIP adopted by the department and that adopted by the assessee. The assessee s justification for the method adopted by it has not been countered or found fault in the same by the Revenue. We have noted that the assessee s explanation was that it had allocated actual cost while the department s stand was that it ought to have allocated cost on estimate basis. The explanation of the assessee appears to be bona fide to us regarding the valuation of closing stock adopted by it. Therefore in these facts and circumstances merely because the addition on account of valuation of closing stock has been confirmed by the ld.CIT(A) the assessee cannot be said to have concealed or furnished inaccurate particulars of income - Decided in favour of assessee.
|