9911796707
TMI Blog1984 (11) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... ock records, was extracted and valued and the fact that the copper belonging to the company was issued for extrusion, was overlooked. This resulted in omission of copper from the stocks. This mistake was detected by the company only during the course of assessment proceedings for the assessment year 1971-72. The accounting years of the company ended on 31-12-1969 and 31-12-1970 for the assessment years 1970-71 and 1971-72, respectively. The ITO was explained that there was no deliberate attempt on the part of the assessee not to include the stocks. The omission was made as stock was excluded from the stock register, which showed nil balance. The same was included in the stock register for the assessment year 1971-72 by mistake on the part of the stores department. Had there been any deliberate intention to exclude the stocks, why would any entry be made in the next year's stock records ? Mr. Borad questioned. He further relied on CIT v. Khoday Eswarsa Sons [1972] 83 ITR 369 (SC), Addl. CIT v. Sadiq Ali Bros. [1973] 92 ITR 276 (J K) and CIT v. Meghraj Ramchandra [1974] 97 ITR 559 (Pat.), for the proposition that it is by genuine mistake that the stocks were excluded in the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issions. This important distinction must always be borne in mind while deciding an issue as to whether it is an omission or concealment. The term omission has been defined as something that has been left out or something that has been neglected, while concealment means to place something out of sight. In the instant case, the stock had been omitted due to (a) stock being valued as per balance shown in the stock records ; (b) neglect of making an entry in the stock register of the processed copper, when it was received in January 1970 ; (c) lack of proper care by stores in not comparing the physical stocks into the balance as per stock register ; (d) care not being exercised by the accounts department properly by making a financial entry of the goods having been issued for conversion ; (e) care not being taken for examining and comparing the income earned with the materials purchased and issued. Had the accounts department been more vigilant by recording a financial entry in respect of goods which are issued to outsiders for conversion, this omission could have been avoided. The omission could have come to light, had the company made a financial adjustment entry in the year when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undisclosed source Rs. 42,820 (sic). (b) In the penalty appeal, the Commissioner (Appeals) observed that : (i) Excise authorities had conducted a search of the premises and have found that the records maintained by the assessee as not reliable. (ii) Since the assessee had not appealed to the Tribunal against the addition made to trading account and having promptly conceded to gross profit rate being adopted at 14 per cent for fear of further enhancement, it is thus obvious that the rate applied by the ITO is very reasonable. Since income assessed being more by 20 per cent than the returned incomes, the Explanation to section 271(1)(c) gets attracted, and the assessee having not discharged his onus that the difference is not due to any fraud, etc., he confirmed the penalty of Rs. 1,04,950, which is equal to trading addition made. (iii) For the excess stock found, the assessee has stated that burning loss, etc., has not been considered, which explanation was found to be incorrect as the stock was in excess and not short. The amount added as undisclosed sources of Rs. 42,820 was also held as concealed and the penalty to that extent was also upheld. (iv) Thus, the total penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement of discount provided to buyers, would have shown (a) additional discount provided on the same quantity of sales as of last year ; and (b) and discount provided due to additional sales in the year. The sum total of (a) and (b) again would have indicated the amount by which gross profit stands reduced. The assessee, instead of carrying out its duties of putting the facts properly either during the course of assessment proceedings or the penalty proceedings, points out the legal proposition that penalty cannot be levied in respect of routine trading additions. It is beyond our comprehension that the non-acceptance of results, as per accounts duly audited, could be termed as routine addition. The trading addition cannot be a routine addition at all in the present case especially when the addition has been conceded to by the assessee. This tantamounts to acceptance of concealment or furnishing of inaccurate particulars of income. We, therefore, uphold the penalty levied on this account. 9. As regards the excess stock, we observe from the order of the Tribunal as well as of the ITO that the total quantity of opening stock and purchases are as under : Kgs. Opening stock ..... X X X X Extracts X X X X X X X X Extracts X X X X
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