9911796707
TMI Blog2000 (5) TMI 180X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the manufacture and sale of certain safety components. For the asst. yr. 1988-89 the assessee-firm filed the return declaring a total income of Rs. 70,000. The assessment was completed on a total income of Rs. 97,070 and the enhancement was mainly on account of the addition as suppression in the closing stock account. In the course of the assessment proceedings the AO examined the purchase of raw materials and found that the purchase account showed a debit of Rs. 27,065 on the last day of the accounting year. On verification the AO came to know that the sum of Rs. 27,065 represented the purchase of aluminium sheets from Alco Metal Corporation, Bombay by invoice No. 2296 dt. 29th June, 1987. The AO found that the materials purchased on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed this appeal before the Tribunal. 5. Shri N.N. Thakur, the learned Departmental Representative, submitted before us that in the present case the Dy. CIT(A) was not justified in cancelling the penalty without considering the fact that while debiting the purchase account with the sum of Rs. 27,065 representing the invoice value of aluminium sheets purchased on 29th June, 1987, the assessee had not included the same while valuing the closing stock as on 30th June, 1987. The learned Departmental Representative pointed out that there was no dispute that the goods had been purchased from Alco Metal Corporation, Bombay, as per their invoice dt. 29th June, 1987, and that the same were in transit as on 30th June, 1987, i.e., the last day of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e correct accountancy principles the value of the goods in transit should have been included in the valuation or the closing stock, Shri Kelkar submitted that by a genuine mistake the assessee did not include the same as the materials had not reached the godown when the stock inventory was taken. The learned representative added that the assessee admitted the mistake as soon as the omission was pointed out by the AO and that according to him this clearly showed the assessee s bona fides. He also pointed out that the goods were delivered in the assessee s godown only on 1st July, 1987, i.e., after the last day of the accounting year. Shri Kelkar further stated that the assessee had in fact accounted for the raw materials purchased by the inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the closing stock, according to the assessee, was that the goods had not reached their godown when the stock inventory was taken on 30th June, 1987. Shri Kelkar submitted before us that it was the practice of the assessee to take the stock inventory every year on the last day of the accounting period and for the asst. yr. 1988-89 the stock inventory was taken on 30th June, 1987. On that day the materials under consideration were in transit and not reached the assessee s premises. The Dy. CIT(A) accepted the assessee s plea that there was a genuine mistake in not including the value of the goods in transit, while valuing the closing stock. As soon as the omission was pointed out by the AO, the assessee accepted the same and did not object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn including the value of the goods in transit. The High Court held that the Tribunal having come to the conclusion that there was a bona fide omission on the part of the assessee, it was justified in cancelling the penalty. The present case appears to be on all fours with the case decided by the Allahabad High Court. In this context, we may also refer to the following observation made by the Kerala High Court in the case of CIT vs. India Sea Foods (1997) 137 CTR (Ker) (FB) 553 : (1996) 218 ITR 629 (Ker) (FB): "Penalty proceedings are penal in nature. The elementary principles of criminal law will apply. It is a quasi-criminal proceeding. There should be conscious concealment. The provision should be construed strictly. Even after the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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