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TMI Blog1991 (2) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... rence in shengdana was very much material. In the assessment, the ITO made the addition in respect of the discrepancy found. It was confirmed in appeal by the fist appellate authority. No second appeal has been filed by the assessee on the ground that the tax effect was small. 3. Pursuant to the assessment, the ITO levied penalty on the ground that the shengdana found at the time of survey was not explained satisfactorily by the assessee. The reply to the question No. 3 by a partner clearly established the excess shengdana which was not supported by any stock register. According to the ITO it tantamount to admission of excess stock of shengdana. The explanations offered by the assessee time and again were not considered to be clinching and, therefore, were rejected. In particular, in para 8 of his order, the ITO pointed out the absurdity of the explanation offered regarding 6,345 kgs of shengdana. He also considered the explanation offered by the assessee as an afterthought and concluded that the assessee has deliberately concealed the particulars of income. Consequently, he imposed penalty of Rs. 11,932 which is equal to 100% of the tax sought to be evaded. 4. On appeal, the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee did maintain stock register for shenga, groundnut oil and oil cake, a fact which is not disputed. The disputed fact relates to shengdana and the maintenance of stock register therefor. The assessee maintained time and again that no stock register was maintained for shengdana as it was intermediary product while the ultimate product is groundnut oil and groundnut cake for which daily stock register has been maintained by the assessee. Nowhere, it has been brought on record by the authorities that the stock register has been maintained in respect of shengdana and if so what is the stock shown therein on 8th Sept., 1982 when survey was conducted. In the quantum order of the AAC the stock position of shengdana on 8th Sept., 1982 was taken at Nil with the result the entire shengdana found, i.e., 6,345 kgs was treated as excess stock which was assessed as unexplained stock. On the other hand, in para 8 of the penalty order, the ITO admits that the assessee had not maintained stock register for shengdana. Before the AAC Shri A.M. Agarwal, Chartered Accountant and authorised representative of the assessee pleaded that there was no stock maintained in respect of shengdana and the stock o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the ITO has specifically pointed out the excess stock of shengdana of 6,435 kgs and no explanation was called therefor. In other words, the survey Officer had not enquired into the discrepancy or the excess stock of shenga found at the time of survey. However, the ITO proceeded to levy penalty assuming such statement of fact to be admission of excess stock. In para 3 of the penalty order, it has been stated that, however, no detailed list, item-wise or thappi-wise of the goods had been prepared during the survey operation. In the same para 3, in his letter dt. 27th March, 1985, the assessee maintained that the stock admitted was as per stock register and there was no discrepancy. In the same para and also in para 5 of the assessment order, the assessee maintained that there was no difference in stock of groundnut and groundnut seeds taken together for the purposes of finding out the discrepancy of stock. In the assessee's letter dt. 3rd Feb., 1987 it has been reiterated that no excess stock of seeds was there because stock was not weighed or counted. The assessee also explained that it had not purchased shengdana as it is and this proved that shengdana found at the time of surv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime of survey. Apart from the reconciliation given above by the assessee, the assessee also had furnished overall quantitative tally of shenga, purchases upto 8th Sept., 1982 and arrived at the quantity of shengdana of 2,882 quintals utilised for production taking the yield at 75 per cent of shenga. The possible yield of oil and oil cake out of the aforesaid quantity of groundnut seeds was adopted with the actual production of oil and oil cake as per the stock register which shows the difference 83 quintals out of which 64 quintals of seeds were found at the item of survey leaving the balance of 19 quintals as due to loss of manufacture, dryage, etc. The assessee also furnished month wise purchases of groundnut in quintals, production of oil in quintals and production of oil cake in quintals, over which there appear to be no comments made by the ITO. These particulars stated above are enclosed as annexure to the appellate order of the CIT(A). In the facts and circumstances of the case stated above, we agree with the reasons and conclusions of the CIT(A) and, therefore, uphold his order cancelling the penalty imposed by the ITO. The Supreme Court in the case of CIT vs. Khoday Eswars ..... X X X X Extracts X X X X X X X X Extracts X X X X
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