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TMI Blog2024 (6) TMI 409X X X X Extracts X X X X X X X X Extracts X X X X ..... y of penalty imposed by the AO under section 271(1)(c) of the Act pertaining to Assessment Year 2015-16. 2. The grounds raised by the assessee are as under: i) In the facts and in the circumstances ui me case, the Ld. CIT(A) has erred in rejecting the appellant's plea that the penalty order u/s. 271(1)(c) passed by the Assessing Officer was bad in law. ii) The Ld. CIT(A) has failed to appreciate that the Assessing Officer has to give a clear finding as to whether the case is that of concealment of income or that of furnishing inaccurate particulars of income. In the absence of such specific finding, the penalty order was bad in law. iii) In the facts and in the circumstances of the appellant's case, the Ld. CIT(A) has erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additions were made to the income of the assessee, and in the penalty proceedings, wherein penalty u/s 271(1)(c) of the Act was levied for concealing/furnishing inaccurate particulars of income with respect to the additions so made and confirmed in the quantum proceedings. We have also heard contentions of both the parties before us. 5. As transpires from the orders of the Revenue authorities in penalty proceedings, the impugned penalty was levied by the AO on account of addition made to the income of the assessee for short valuation of closing stock to the tune of Rs. 24,53,100/-. We hold the penalty so levied not sustainable in law for various reasons, which are being dealt with by us, hereinafter. 6. The most glaring aspect, which com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is ground to the total income of the assessee. The CIT(A) confirmed the addition of Rs. 24,53,1000/- I have therefore reason to believe that the assessee has furnished inaccurate particulars of income and thereby concealed the particulars of Its Income. Therefore, it clearly emerges that the particulars filed in the Return of Income by the Assessee is found to be inaccurate, erroneous or false and which has an impact on total income returned by the assessee and therefore, it attracts liability for penalty u/s. 271(1)(c) for concealment of particulars of income. Here, it is pertinent to discuss the legal position on the issue: 8. However, at para-5.3 of the same order, wherein he levied penalty at the rate of 100% of the tax sought t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs/concealment of the income related to the same. 12. On going through the order of both the AO and the Ld.CIT(A), we are unable to understand what the addition exactly pertained to in relation to the valuation of the closing stock. The penalty order passed by the AO makes no mention either of the facts or the basis for the addition made. Therefore, there is no method for understanding as to how he arrived at the conclusion that the addition made on account of valuation of closing stock tantamounted to furnishing inaccurate particulars of income for the levy of penalty under section 271(1)(c) of the Act. 13. Even the ld.CIT(A)'s order does not throw any light on this aspect except for reproducing the portion of the order of the ld.CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing stock, the same were gone into by us from the assessment order and the order of the ld.CIT(A) in quantum proceedings. We find, on going through the same, that even on merits there is no case for charging the assessee with having concealed/furnished inaccurate particulars of income with regard to the valuation of the closing stock addition made so as to justify the levy of penalty under section 271(1)(c) of the Act. 17. What transpires from the orders of the authorities below in quantum proceedings is that the Revenue authorities found that the assessee's basis of valuation of its WIP was incorrect and adopting a different method the Revenue arrived at a different valuation of WIP resulting in addition to the income of the assessee to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the department. This submission of the assessee finds mention at para 6.1 of the CIT(A)'s order. The ld. CIT(A) however without finding any infirmity in the explanation of the assessee, confirmed the addition made by the AO and his finding is at para 6.2 of his order. 19. What transpires, therefore, is that the addition on account of valuation of closing stock is merely on account of difference in the basis of valuation of WIP adopted by the department and that adopted by the assessee. The assessee's justification for the method adopted by it, has not been countered or found fault in the same by the Revenue. We have noted that the assessee's explanation was that it had allocated actual cost, while the department's stand was that it ought t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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