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TMI Blog2018 (10) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... y levied u/s 271(1)(c) of the Income Tax Act on addition made on difference in closing stock of Rs. 6,82,062/-. 2. That the CIT(A) has wrongly concluded that as there was under statement of income shown due to under valuation of the closing stock, the penalty should be levied. In fact there is no difference in closing stock of Rs. 6,82;062/- as wrongly ascertained by ACIT although all material facts were produced before ACIT at the time of assessment vide it's letter dated 14-07-2011 and the same is pressed here to be considered. 3. That there is no material or circumstances leading to the reasonable conclusion that the amount does represent the income. Therefore there is no conscious concealment or act of furnishing inaccurate pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and added to the total income of the assessee. 4.4 The AO in the assessment order framed u/s 143(3) r.w.s. 147 of the Act vide order dated 30-11-2012 initiated the penalty proceedings u/s 271(1)(c) of the Act on account of concealment of income and furnishing inaccurate particulars of income. 4.5 Subsequently, the AO issued the notice for the penalty u/s 274 r.w.s. 271(1)(c) of the Act. The assessee in compliance to it submitted that there was no mistake in the quantity of stock as declared in the financial statement as on 31-03-2007. The assessee also submitted that a detailed reply was already filed before the AO vide letter dated 14-07- 2011 reconciling the difference of the stock as discussed above. 4.6 The difference as observed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) in support of his claim has relied on the following judgments: Sr No. Name of the courts Details of the case Citation 1. Gujarat High Court A.M. Shah & Co. vs. CIT reported in 108 taxman 137 2. Delhi High Court CIT vs. Zoom Communication P. Ltd. Reported in 191 taxman 179 3. Hon'ble Apex Court MAK Data Pvt. Ltd. vs. CIT Civil Appeal No.9772 of 2013 5.2 In view of the above, the ld CIT(A) confirmed the order of AO by levying the penalty u/s 271(1)(c) of the Act. 5.3 Being aggrieved by the order of ld CIT(A) assessee is in the second appeal before us. 6. The Ld AR before us submitted as under: It is respectfully submitted that the appellant in response to penalty notice submitted that there was no difference i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mind and to avoid unnecessary litigation. But in/act there is no such difference as alleged by I.T. Authority* The appellant filed return at total loss at Rs. 34,39,146/- & therefore to buy peace of mind by not challenging proceedings u/s 148 added both the amounts to the income which even after addition remained at a loss. Appellant neither furnished inaccurate particulars of income nor concealed income as alleged by the authorities. Appellant gave explanation during quantum as Well penalty proceedings supported by documentary evidence that is not rebutted by authorities. Just to avoid further litigation if addition made is accepted it should not lead to levy of penalty automatically. It is therefore prayed that penalty levied be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability of one year will shift to another year. Moreover, we also note that the assessee cannot be benefited by showing less amount of closing stock as it will become opening stock of the subsequent year. Therefore we are of the view that the act of the assessee for showing less closing stock cannot be said as deliberate. We also note that closing stock for the year under consideration was shown less as pointed out by the AO. Thus, the assessee has to bear more burden of tax in the year under consideration. 8.2 On a question from the bench to the counsel for the assessee whether any effect has been given in the books of accounts on account of adjustment in the closing stock of the subsequent year. The counsel for the assessee denied maki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncealed income as with the hypothesis that it does. If an assessee gives an explanation which is unproved but not disproved, i.e., it is not accepted but circumstances do not lead to the reasonable and positive inference that the assessee's case is false, the Explanation cannot help the department because there will be no material to show that the amount in question was the income of the assessee." 8.3 The case law i.e. A.M. Shah & Co. relied on by the ld CIT(A) cannot be applied to the instant facts of the case. It is because in that case there was not the only undervaluation of closing stock but also underreporting of sales. In the instant case on hand, there was no allegation of underreporting of sales. Therefore, we are reluctant to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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