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TMI Blog2021 (9) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... loss or taxable income for the impugned assessment year - when the assessee has explained the entries with necessary evidences and said explanation is not found to be false, then merely for the reason that assessee had accepted addition made towards particular income is not a ground to hold that the assessee has furnished inaccurate particulars of income, which warrants levy of penalty u/s.271(1)(c) of the Act. The ld.CIT(A) without appreciating facts, has simply confirmed penalty levied by the AO. - Decided in favour of assessee. - ITA No.:2509/CHNY/2019 - - - Dated:- 3-9-2021 - Shri V. Durga Rao, Judicial Member And Shri G. Manjunatha, Accountant Member For the Appellant : Shri C.Ramesh Co, CA For the Respondent : Shri G. Johnson, Addl.CIT ORDER PER G. MANJUNATHA, AM: This appeal filed by the assessee is directed against order of learned Commissioner of Income Tax (Appeals)-15, Chennai, dated 27.02.2019 and pertains to assessment year 2014-15. 2. The assessee has raised the following grounds of appeal:- 1. As per sec 273(1)(c)(iii) penalty can be levied only when there is tax liability. But in the case of assessee there was no tax liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it are not attracted. 3. Balance Sheet Presentation : 3.1.The appellant increased the trade payables on opening balance sheet as on 01/04/2013 by ₹ 1,23,65,200 by giving credit to TRS Polymers Distributors, Subramaniam Plastics, R.S.Plastics Polymers and TS Plastics Polymers on the liabilities side of the balance sheet. Subsequently the appellant increased Stock by ₹ 1,92,13,874 and reduced trade receivables to an extent of ₹ 68 48,674. 3.2.The appellant rectified this mistake in the year 2016 financials. Hence the appellant prays to allow the appeal in view of the above ground 3. At the outset, the ld.AR for the assessee submitted that there is a delay of 109 days in filing appeal before the Tribunal for which necessary petition for condonation of delay along with affidavit has been filed explaining reasons for not filing the appeal within time allowed under the Income Tax Act, 1961 (hereinafter the Act ). The ld.AR for the assessee referring to the condonation petition, submitted that the assessee could not file the appeal in time due to ill-health of Shri A.Ramesh, Managing Director during the relevant period because he was suffe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h credit being sundry creditor in the name of M/s.Shree Krishna Polystrap Pvt. Ltd., of ₹ 1,84,54,195/-, because the assessee has shown purchases of stock-in-trade from the sister concern and passed necessary journal entries by debiting purchases into opening stock and crediting to party account under the head sundry creditors . Further, the opening stock was carried forward and shown under the head closing stock . Thus, there is no effect in the profit or loss for the impugned assessment year. Therefore, it cannot be said that the assessee has furnished inaccurate particulars of income, which attracts penalty u/s.271(1)(c) of the Act. The AO, however was not convinced with the explanation furnished by the assessee and according to him, the assessee has furnished inaccurate particulars of income in respect of stock-in-trade and corresponding sundry creditor in the name of M/s. Shree Krishna Polystrap Pvt. Ltd., which is evident from the fact that when the assessee has transferred stock during last year, the contra entry also ought to have been made at the same time. However, stock transfer was included as part of asset as on 31.03.2013, whereas no such creditor is appearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn. The assessee had increased opening stock as well as closing stock with a corresponding entry to sundry creditors. Thus, from the above, it is very clear that there is no effect into profit / loss for the year and hence, the AO as well as the ld.CIT(A) were incorrect in coming to the conclusion that the assessee has concealed particulars of its income or furnished inaccurate particulars of income. 7. The ld.DR on the other hand, supporting order of the ld.CIT(A) submitted that although the assessee claims to have purchased stock-in-trade from sister concern for the purpose of arranging bank loan, but on perusal of entries passed in books of accounts, it is clear that the assessee claims to have purchased stock-in-trade in the earlier year but no corresponding entries was passed in books of accounts to show the liability against such purchases. From the above, it is very clear that the assessee has deliberately furnished inaccurate particulars of income, so as to reduce its taxable income and thus, it is a clear case of furnishing inaccurate particulars of income which attracts penalty u/s.271(1)(c) of the Act. 8. We have heard both the parties, perused materials available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mere accepting addition made by the AO without challenging said addition before appellate authorities does not tantamount to furnishing inaccurate particulars of income, more particularly when the assessee had explained the transactions with necessary evidences and further, the explanation of the assessee is bonafide and not found to be false. In this case, on perusal of reasons given by the AO in the assessment order as well as penalty order, what we understood is the AO has completely mis-stated the facts without understanding the principles of accountancy, which is evident from the fact that although the assessee has passed entries for purchase in its books of accounts by debiting to purchase account and crediting to sundry creditors account, the AO has stated that the assessee has purchased the goods in the earlier financial year and has not recorded the same in the books of accounts of the assessee. We further noted that the AO has reproduced the ledger extract of the sundry creditors as well as stock-in-trade in the books of accounts of the assessee and as per said ledger accounts, the assessee has shown purchases from Shree Krishna Polystrap Pvt. Ltd., with a corresponding s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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