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TMI Blog2002 (10) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... tated that the discrepancy admitted was wrong as the entire goods were received from outsiders. The assessee's one of the submissions was that 277.40 quintal paddy pertained to M/s. Atul Rice which was laying in the premises of the assessee to be delivered to M/s. Bhagyodaya Rice and Pulses Mills for milling. During the course of survey, the assessee was given an opportunity to reconcile the stock register and to point out if any quantity or quality with alternative ownership was lying with the assessee. The assessee having been fully aware of the purpose of physical verification of the stock did not mention that there was any stock of anybody else lying in the premises. The Assessing Officer observed that the stock of the assessee, in fact, was found lying at one place and the AO himself was present at the time of survey. He, therefore, observed that there was no stock of 277.40 quintal of paddy lying separately which could even remotely be presumed to be belonging to somebody else. He also observed that when the assessee claimed that he received paddy on 18-12-1991 why he did not point out the same when he was asked to reconcile the stock position on the date of survey i.e. 20-12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, he levied the penalty. 4. The CIT (A) upheld the penalty. Before him, the assessee filed a copy of the reply dated 26-2-1994 stated to be in response to show-cause notice but filed after the order of penalty. It was submitted in this letter that the assessee was not bound by the statement of Shri Vinodbhai M. Patel. The following are the extract of this letter: "(1) The assessment is finalised in the case of Hasmukhbhai M. Patel, Prop. of Ashish Corporation and no statement of Hasmukhbhai was recorded at all at the time of survey or thereafter. (2) Even at the time of assessment proceedings or at any time my statement under section 131 or otherwise is not at all recorded and I have never confessed, stated or confirmed of offering any income and that too outside the book at all. (3) The statement recorded on 20th December, 1991 was of one Shri Vinodbhai M. Patel, who is in no way connected of concerned with my case. As in the reply to Question No. 2 he stated that I am his cousin brother and I am the owner of Ashish Corporation and he is not the owner of the same. In fact he is the owner of one Mitesh Corporation and he is separately assessed to tax. (4) Please note that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difference." 5. The CIT(A) was not satisfied with the reply and he upheld the penalty by observing at paras 8 to 10 in his order as under: "8. I find that, on the facts of the case, it is not open for the assessee to contend that the statement of Shri Vinodbhai M. Patel recorded on 22-12-1991 during the course of survey of the premises of the assessee has to relevance. The assessee has himself faithfully acted upon the statement of Shri Vinodbhai M. Patel in paying advance tax of Rs. 86,912 on 15-3-1992. The liability to pay this advance tax had arisen precisely on account of the disclosure of the additional income as a result of excess stock found during the course of survey. This evidence clearly establishes that all sorts of explanations given in the course of assessment proceedings were prepared sometime after the payment of advance tax on 15-3-1992. If the assessee had any grievance with the disclosure of additional income during the course of survey, he could have objected to the matter and declined to pay the advance tax. By payment of appropriate advance tax on 15-3-1992, so far as the assessee was concerned, the matter stood concluded in respect of excess stock found in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars of income". The ld. counsel for the assessee, therefore, submitted that the levy of penalty was not justified and the same ought to have been deleted by the CIT(A). 8. The ld. Departmental Representative on the other hand submitted that the sequence of events and conduct of the assessee coupled with the Act of filing of the revised return including therein income on account of difference in valuation of stock found during the course of survey operation was sufficient to prove the Act of concealment of income by the assessee, that the disclosure made by the assessee after detection of concealment by the Department as a result of inquiries conducted during the course of survey cannot be held to be voluntary, irrespective of the fact that the assessee came forward with the revised return. He placed reliance on the decision of the Tribunal in the case of LMP Precision Engg. Co. Ltd. v. Dy. CIT [1997] 58 TTJ 704 and submitted that filing of revised return disclosing the extra income is clear admission of concealment at the stage of the original assessment. In this connection, reference is invited to the decision of the Hon'ble Supreme Court in G.C. Agarwal v. CIT [1990] 186 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iling the revised return of income on his repeated failure to reconcile the difference and explain the excess stock in the either survey proceedings or in the assessment proceedings in spite of numberous opportunities given to the assessee from time to time. In assessment, proceedings the assessee attempted to explain the stock of 277.40 quintal of paddy by alleging that it was received from M/s. Atul Rice to be delivered to M/s. Bhagyodaya Rice & Pulse Mills, but it was found to be unsubstantiated as the bill for the same quantity of paddy was prepared by them on 31-3-1992. His further attempt before the CIT(A) to explain another 91 quintal of paddy alleged to have been received in the morning of the date of survey to which entries was made on the subsequent day also remained a bald statement without any support. No explanation at all was given to the balance of 56.600 [425 - 277.40 - 91] of paddy and of the difference in other items. 11. On these facts and circumstances, it is a clear case of concealment of income and also furnishing inaccurate particulars of income. The conclusion is further strengthened by the fact that assessee admitted the difference, offered to disclose the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars of income". 15. We do not find much force in this contention of the assessee. It is true that their lordship of the Hon'ble Gujarat High Court has observed that when no clear cut finding was reached by the I.A.C. and on that ground alone an order of penalty was liable to be struck off, but these observations are to be seen in the context of the facts and circumstances prevailing in that case. An addition of Rs. 21,691 was made by the ITO on the ground that the gross profit was not acceptable because of certain defects in the books of account maintained by the assessee and in view of the difference between the assessed income and returned income he initiated the proceedings. As the jurisdiction at that time to levy the penalty, lay with the I.A.C. because the minimum penalty leviable exceeded Rs. 1,000, the IAC treated the non-disclosure of double debiting of Rs. 25,770 in the profit and loss account in the relevant year as concealment of income or a case of furnishing inaccurate particulars thereof. This double addition was found by the A.A.C. in appeal, but he did not initiate any penalty for the same. Thus, the IAC has levied penalty on an altogether change. 16. In the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X
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