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TMI Blog2019 (2) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... uation. Further, the AO has not pointed out any inconsistency in the method adopted by the assessee in comparison to the earlier years and in the subsequent years. Thus, once the assessee has been consistently valuing its closing stock of foodgrains (Dal) at market price then, effect it will be Revenue neutral as the closing stock of preceding year is taken as opening stock of the subsequent year. Apart from applying a different method the AO did not find any other discrepancy or deficiency in the closing stock of the assessee. The assessee before us has also not taken the benefit of the higher valuation of closing stock by revising its opening stock of the subsequent year, therefore, the addition made by the AO in the year under considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stead of the valuation adopted by the assessee at market rate. Thus, the AO made an addition of ₹ 6,80,767/-. The assessee did not challenge the said addition made by the AO. Subsequently the AO initiated the proceedings for levy of penalty U/s 271(1)(c) of the Act and levied the penalty of ₹ 1,89,589/- @ 100% of tax sought to be evaded. The assessee challenged the action of the AO before the ld. CIT(A) and contended that the valuation of the closing stock does not affect profit of the business of the assessee as it becomes opening of stock of the next year and therefore, it cannot be treated as furnishing of inaccurate particulars of income. The ld. CIT(A) was not impressed with the explanation of the assessee and confirmed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition made on account of valuation closing stock. 4. On the other hand, the ld. DR has referred to the order of the Assessing Officer and submitted that the AO clearly mentioned that the assessee in his audit report has mentioned that the closing stock is valued at cost, however, the AO has found that the closing stock in respect of foodgrains (Dal) is undervalued and consequently there is an addition on account of undervaluation of the closing stock. Thus, it is a clear case of under reporting of the income which amounts to furnish inaccurate particulars of income or concealment of income. He has relied on the orders of the authorities below. 5. We have considered the rival submissions as well as relevant material on record. The Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - "4. We have considered the rival submissions as well as the relevant material on record. There is no dispute that the addition made by the AO of ₹ 14,25,059/- on account of suppression of closing work in progress has attained the finality. However, the said addition was made by the AO on the basis of details obtained from the departments for which the assessee has carried out the work contract and received the payments. As per the details given by the AO, the total receipts during the year was shown at ₹ 4,26,84,832/- whereas the assessee declared the total receipts in its books of accounts at ₹ 4,61,66,265/- . The AO after analyzing the purchases made by the assessee during the month of March and measurement of the wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances of the case, we delete the penalty levied under section 271(1)(c) of the Act." The assessee before us has also not taken the benefit of the higher valuation of closing stock by revising its opening stock of the subsequent year, therefore, the addition made by the AO in the year under consideration will not ipso facto amount to furnishing of inaccurate of income or concealment of particulars of income. Even otherwise when it is a regular and consistent method applied by the assessee and not a case of any change of method for valuation of closing stock during the year under consideration then, the mere addition on account of valuation of closing stock by adopting a different method will not attract the penalty U/s 271 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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