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TMI Blog2020 (1) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... udes the consideration of the value of closing stock. 3. The CIT (A) failed to appreciate that it was only an inadvertent error that the appellant had not included the value of the closing stock in the sale deed. The CIT (A) erred in upholding the addition even after the appellant had proved beyond doubt that the sale consideration of Rs. 1,60,00,000 includes value of closing stock. 4. The CIT (A) failed to appreciate that the appellant had produced confirmation letter from the purchasers and had also produced the purchasers on summons. It is submitted making addition by merely disregarding such evidences is bad in law. 5. The CIT (A) failed to appreciate that the appellant had sold his tea factory as a going concern including closing stock for a consideration of Rs. 1,60,00,000/-. The CIT (A) erred in confirming the addition of Rs. 53,84,394/- in respect of closing stock by considering the books of accounts of the purchaser merely based on books of the purchaser. 6. The CIT (A) failed to appreciate incorrect accounting in the books of the purchaser will not amount to addition in the hands of the appellant. 7. The CIT (A) failed to appreciate merely because the purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Contention of the assessee was that assets were sold on slump sale basis or going concern basis. Therefore, no specific consideration was assigned towards sale of closing stock. This contention of the assessee was rejected by the Assessing Officer and brought to tax. 6. Being aggrieved, an appeal was preferred before the ld.CIT(A) who vide impugned order confirmed the action of the Assessing Officer. 7. Being aggrieved, the appellant is in appeal before us in the present appeal. It is contended that assets were sold on going concern, slump sale basis and no consideration was assigned towards sale of closing stock. It is further contended that no stock was lying with the assessee and the stock should be deemed to have lost value and no addition can be made. 8. On the other hand, the ld. Sr. Departmental Representative placed reliance on the orders of lower authorities. 9. We heard the rival submissions and perused the material on record. Admittedly, stock was lying with the assessee on the date of sale of other fixed assets. Assessee ceased to carry on the business. The contention of the assessee that asset was sold on slump sale as going concern cannot be accepted in view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. 11. The return of income for the assessment year 2013-14 was filed on 25.03.2015 disclosing total income of Rs. 18,78236/-. Against the said return of income, the assessment was originally completed by the Assessing Officer vide order dated 30.11.2015 passed u/s. 143(3) of the Income Tax Act, 1961 (for short 'the Act') at total income of Rs. 20,05,530/-. Subsequently, the ld. Pr. Commissioner of Income Tax, Pondicherry exercising his powers vested with him u/s.263 of the Act had set aside the assessment since the Assessing Officer had failed to examine the issue of sale of closing stock. Pursuant to the order passed u/s.143(3) r.w.s. 263 of the Act the assessment was completed vide order dated 18.09.2018 bringing into tax the value of closing stock of Rs. 53,84,394/-. 12. Even in appeal before the ld. Commissioner of Income Tax (Appeals), the Commissioner of Income Tax (Appeals) addition was confirmed and in further appeal before the Tribunal, the Tribunal in ITA No.1841/CHNY/2019 had confirmed the addition. 13 While the matter stood thus, the Assessing Officer initiated penalty proceedings u/s.274 r.ws. 271 (1) ( c) of the Act . Accordingly, show cause notice was issued for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Om Prakash vs. CIT, [1987] 163 ITR 440 had held that wherever the assessee had failed to rebut the factual position on the basis of which addition was made, the levy of penalty u/s.271(1) (c) of the Act was justified. Thus, it is clear case of concealment and Assessing Officer had rightly levied penalty u/s.271 (1) (c) of the Act. The contention of the assessee that in show cause notice, the Assessing Officer had not struck off the relevant limb has no relevance, since he had filed explanation in response to show cause, which means that assessee very well understood the show cause notice, and therefore the ratio of the decision of Hon'ble Karnataka High Court in the case of Manjunatha Cotton and Ginning Factory (supra) cannot be applied as the assessee understood the show cause and filed explanation. The Bangalore Bench of the Tribunal, to which one of us i.e. the Accountant Member is the author of the order, in the case of P.M.Abdulla vs. ITO (in ITA Nos.1223 & 1224/Bangalore/2012, dated 17.10.2016) had held that this cannot be a valid reason for deletion of the penalty u/s.271(1) (c) of the Act by holding as under:- ''9. We heard rival submissions and perused material on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 (Kar) while dealing with the validity of notice u/s.148 of the Act as valid and responded to it in letter and spirit and participated in the proceedings and in light of the provisions of Section 292B, notice issued u/s.148 was held to be valid. The relevant paragraph of judgment is extracted below:- 9. In the present case, as observed earlier, the assessee not only responded to the notice under Section 148 of the Act within one month, but on the basis of the return filed earlier, participated in the proceedings till the matter reached the FAA and was disposed of. A glance at Section 292B of the Act, shows that under this provision, certain Acts are not to be treated as invalid, may be by reason of any mistake, defect or omissions, either in return of income, assessment, notice, summons or other proceedings. In other words, a notice cannot be invalidated by reason of any mistake, such as the one occurred in the present case, namely, the period of filing return of income was not specified as contemplated by Section 148 of the Act. If such a defect is not allowed to be cured, or treated as invalid so as to declare the notice invalid, despite the fact that assessee had taken that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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