9911796707
TMI Blog1976 (5) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee offered an explanation for the fall in the profit. The Income-tax Officer found on a test check of the day-to-day stock account maintained by the assessee that there were certain discrepancies. Here also the assessee s explanation was not accepted by the Income-tax Officer. On an examination of the accounts the ITO further found that there were a number of credits in the personal account of the partners, the total of which came Rs. 90,200. The assessee explained that the peak amount invested by the partners, the total of which came of Rs. 90,200. The assessee explained that the peak amount invested by the partners only Rs. 26,050, that they were getting rental income of Rs. 8,000 per annum from properties and that such rental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me returned. 1. Understatement of profit and unexplained credits in partner s account Rs. 50,000 2. Salary disallowed as excessive under s. 40 A-(2)-(a) Rs. 17,806 3. Excess debit to purchase account Rs. 551 The Inspecting Assistant Commissioner agreed with the assessee s submission that the disallowance of salary cannot be considered for the purpose of levy of penalty. However, the Inspecting Assistant Commissioner did not agree with the assessee's explanation regarding the excess debit to the purchase account of Rs. 551. The Inspecting Assistant Commissioner also did not agree with the explanation offered by the assessee in regard to the various items of stock discrep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods. He further submitted that since the assessee had its head office and two branches and dealing in variety of goods on hire purchase, such minor discrepancies had occurred and the same did not constitute concealment or gross or wilful negligence. He further submitted that having regard to the huge turnover of Rs. 66 Lakhs, the discrepancies that are alleged in respect of the items of goods and which discrepancies totalled to a small sum of Rs. 6,000 are negligible and there was no concealment involved in that having regard to the explanations offered. As regards the credits in the accounts of the partners, he pointed out that merely because the explanation of the assessee is not accepted, no penalty is exigible and more particularly whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame would not justify the levy of penalty for concealment of income. We have also perused the detailed explanation offered by the assessee with reference to each one of the eight items of discrepancies in stock and the items of sales of easy chairs. Apart form the discrepancies in regard to the noting of the dates of receipts and the dates of sales, there is no materiel to hold that the assessee had either suppressed the purchases or sales. We are, therefore, of the view that there is no justification to hold that the assessee is guilty of concealment of income or deliberately furnishing gross or inaccurate particulars of income or of wilful negligence, As regards the cash credits in names of partners the assessee has offered and explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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