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TMI Blog2012 (12) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... of diamond however small it may be, can be determined. In such circumstances there should not be any difficulty in arriving at the value of closing stock in hand. When the facts being so, the assessee has grossly erred and defied by not maintaining stock register in such a fashion so as to arrive at the correct value of the closing stock, or, did not produce the same before the Revenue, but has proceeded to value the closing stock in some method to suit its convenience. The learned AO had also made a clear finding that the assessee was valuing the closing stock every year based on different methods. Penalty levied for furnishing inaccurate particulars by invoking proceedings u/s 271(1)(c) is justifiable and therefore we uphold the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned AO for the above shortcomings, the assessee stated as under: (a) The stock was valued at the average rate as per the same method followed right from the inception of the business. (b) The aspect of rejection of stock was also to be considered in determining the closing stock. (c) Old stock cannot be valued at the cost because such stocks are low in demand. (d) The method of valuation of stock followed by the assessee was cost price or market price whichever is less. The assessee adopted the cost method by arriving at the average cost. 4. The learned AO rejected the above arguments of the assessee and levied penalty with the further finding that in the audit report it was mentioned that the valuation of diamonds was do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the statute. As per the rule of evidence there is a distinction between a set of facts not proved and facts disapproved and facts proved. Benefit of the principle that were non-satisfactory nature of the explanation furnished cannot amount to proof of falsity of the explanation furnished can apply in the case fact-finding authority reaches a stage where it can only conclude that the fact alleged is not proved which would mean that except rejection of the explanation furnished by the assessee, there is no material to sustain the plea of concealment. But, on the other hand, if the state of affairs reveals a stage where one can positively reach a conclusion that the fact alleged is proved or disproved, the principle that mere reje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence on record which indicates concealment of income or furnishing of inaccurate particulars of income. In my opinion the confirmation of an addition to income by any higher authority or court does not give any liberty to the A. O. to levy the penalty automatically unless the basis of addition is such that it conclusively proves that the assessee has either concealed his income or has furnished inaccurate particulars of income. The A. O. has to prove by way of further evidences during the penalty proceedings that the assessee has either concealed his income or has furnished in accurate particulars of income. Many Hon ble Courts have held that the penalty being harsher in nature should not be levied in a mechanical manner. Here what h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additions are made on estimate basis, penalty cannot be levied. 9. We have heard the both the sides and carefully perused the materials placed before us. We are not in agreement with the submission of the learned AR. As contended by the learned AO, diamonds are precious commodity and it is meticulously weighed, stored and carefully processed and the details of the same are recorded. Every lot of diamond is expensive and unless and until the stocks are dealt with care and accuracy one cannot arrive at the profit or loss gained out of such purchases and sales. It is pertinent to note with regard to the diamonds, however small in size it may be, it has a value. It is very much possible to list out all the pieces of diamonds purchased in a l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made on a scientific basis by the Ld.AO on his wisdom due to the gross negligence and willful default on the part of the assessee in not maintaining proper books of accounts as per provisions of the Act. Therefore the decisions relied upon by the Ld. AR and the Ld. CIT(A) will not apply to the facts of this case. At this juncture it is worthwhile to be reminded of the decision in the case of (a) Union of India Others Vs Dharmendra Textiles Processors and others, 306 ITR 277 (SC) and (b) CIT Vs Zoom Communication Pvt. Ltd., 191 Taxman 179 wherein it has been held as under: (a) Union of India Others Vs Dharmendra Textiles Processors and others, 306 ITR 277 (SC) It was held that The Explanations appended to section 271(1) (c) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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