Tribhovandas Chelaram v. Asstt. CIT

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The Tax Publishers2012 TaxPub(DT) 1034 (Ahd-Trib) : (2011) 133 ITD 0587 : (2012) 146 TTJ 0578 : (2012) 071 DTR 0294 Income Tax Act, 1961 --Penalty under section 271(1)(c)--ConcealmentNullified effect of excess stock found during the course of survey by increasing opening stock--During the course of survey excess stock of Rs. 9 lakhs was found in the premises of assessee. Assessee admitted to pay tax on the excess stock. Assessing officer submitted that assessee had deliberately filed the trading account enhancing\increasing the opening stock for assessment year under appeal, i.e., 2000-01 because the closing stock in the preceding assessment year 1999-2000 was Rs. 74,25,000 but the opening stock in the assessment year under appeal, i.e., 2000-01 was shown at Rs. 83,25,000. Thus, the assessee nullified the effect of excess stock found and admitted during the course of survey by increasing the opening stock valued at Rs. 9,00,000. Assessing officer, therefore, levied penalty under section 271(1)(c) for concealment of income. Held: Assessee made a wrong claim deliberately in the trading account by increasing the value of the opening stock, therefore, it was a fit case of levy of penalty for concealment of income. Income Tax Act, 1961 Section 271(1)(c) IN THE ITAT AHMEDABAD 'C' BENCH BHAVNESH SAINI, J.M. & A. MOHAN ALANKAMONY, A.M. Tribhovandas Chelaram v. Asstt. CIT IT Appeal No. 3809 (Ahd.) of 2008 A.Y. 2000-01 27 September, 2011 Appellant by : Urvashi Shodhan Respondent by : Vinod Tanwani ORDER *Bhavnesh Saini, J.M.* This appeal by the assessee is directed against the order of the learned Commissioner (Appeals)-V, Baroda dated 8-9-2008, for assessment year 2000-01, challenging the levy of penalty under section 271 (1)(c) of the Income Tax Act. 2. The facts as noted in the impugned order are that in this case, assessment under section 143(3)/147 of the Income Tax Act was finalized on 27-01-2005 and income was determined at Rs. 14,63,070 by making addition of Rs. 9,00,000 on account of unexplained investment in stock under section 69 of the Income Tax Act. During the course of survey action conducted under section 133A of the Income Tax Act, it had transpired on physical verification that the stock found was of Rs. 87,93,380 whereas the stock as per books of account was worked out at Rs. 78,93,380. The assessee was asked to justify its claim. However, the assessee could not do so. Since the assessee failed to substantiate its claim, the assessing officer made the addition amounting to Rs. 9,00,000 as unexplained investment by invoking the provisions of section 69 of the Act. Before the learned Commissioner (Appeals) it was argued that perusal of record of the inventories found during the course of survey and the inventory as per books of account tallied in respect of each and every item of quantity and there was only a difference in respect of valuation which was the ad-hoc basis for arriving at the valuation during the course of survey. Also it was argued that the increase in the opening stock was accepted by the assessing officer while passing the order under section 143(3) of the Income Tax Act. Also the valuation adopted for the purpose of survey is merely on ad hoc basis, The accounts of the assessee were audited accounts and since the amount of Rs. 9,00,000 was disclosed in the return of income filed, there was no concealment of particulars of income. Further it was reiterated by the learned Counsel for the assessee that the department valued the stock at the rate higher than the rate disclosed by the assessee and it could not be made the basis for making addition and on that account the value of closing stock had increased. Therefore, the Counsel for the assessee stated that since there was mere change of opinion and the penalty order passed by the assessing officer being on wrong premise, the same was not warranted and the penalty levied under section 271(1)(c) of the Income Tax Act by the assessing officer to the tune of Rs. 3,46,500 be deleted. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 1034 (Ahd-Trib) : (2011) 133 ITD 0587 : (2012) 146 TTJ 0578 : (2012) 071 DTR 0294

Income Tax Act, 1961

--Penalty under section 271(1)(c)--ConcealmentNullified effect of excess stock found during the course of survey by increasing opening stock--During the course of survey excess stock of Rs. 9 lakhs was found in the premises of assessee. Assessee admitted to pay tax on the excess stock. Assessing officer submitted that assessee had deliberately filed the trading account enhancing\increasing the opening stock for assessment year under appeal, i.e., 2000-01 because the closing stock in the preceding assessment year 1999-2000 was Rs. 74,25,000 but the opening stock in the assessment year under appeal, i.e., 2000-01 was shown at Rs. 83,25,000. Thus, the assessee nullified the effect of excess stock found and admitted during the course of survey by increasing the opening stock valued at Rs. 9,00,000. Assessing officer, therefore, levied penalty under section 271(1)(c) for concealment of income. Held: Assessee made a wrong claim deliberately in the trading account by increasing the value of the opening stock, therefore, it was a fit case of levy of penalty for concealment of income.

Income Tax Act, 1961 Section 271(1)(c)

IN THE ITAT AHMEDABAD 'C' BENCH

BHAVNESH SAINI, J.M. & A. MOHAN ALANKAMONY, A.M.

Tribhovandas Chelaram v. Asstt. CIT

IT Appeal No. 3809 (Ahd.) of 2008

A.Y. 2000-01

27 September, 2011

Appellant by : Urvashi Shodhan

Respondent by : Vinod Tanwani

ORDER

Bhavnesh Saini, J.M.

This appeal by the assessee is directed against the order of the learned Commissioner (Appeals)-V, Baroda dated 8-9-2008, for assessment year 2000-01, challenging the levy of penalty under section 271 (1)(c) of the Income Tax Act.

2. The facts as noted in the impugned order are that in this case, assessment under section 143(3)/147 of the Income Tax Act was finalized on 27-01-2005 and income was determined at Rs. 14,63,070 by making addition of Rs. 9,00,000 on account of unexplained investment in stock under section 69 of the Income Tax Act. During the course of survey action conducted under section 133A of the Income Tax Act, it had transpired on physical verification that the stock found was of Rs. 87,93,380 whereas the stock as per books of account was worked out at Rs. 78,93,380. The assessee was asked to justify its claim. However, the assessee could not do so. Since the assessee failed to substantiate its claim, the assessing officer made the addition amounting to Rs. 9,00,000 as unexplained investment by invoking the provisions of section 69 of the Act. Before the learned Commissioner (Appeals) it was argued that perusal of record of the inventories found during the course of survey and the inventory as per books of account tallied in respect of each and every item of quantity and there was only a difference in respect of valuation which was the ad-hoc basis for arriving at the valuation during the course of survey. Also it was argued that the increase in the opening stock was accepted by the assessing officer while passing the order under section 143(3) of the Income Tax Act. Also the valuation adopted for the purpose of survey is merely on ad hoc basis, The accounts of the assessee were audited accounts and since the amount of Rs. 9,00,000 was disclosed in the return of income filed, there was no concealment of particulars of income. Further it was reiterated by the learned Counsel for the assessee that the department valued the stock at the rate higher than the rate disclosed by the assessee and it could not be made the basis for making addition and on that account the value of closing stock had increased. Therefore, the Counsel for the assessee stated that since there was mere change of opinion and the penalty order passed by the assessing officer being on wrong premise, the same was not warranted and the penalty levied under section 271(1)(c) of the Income Tax Act by the assessing officer to the tune of Rs. 3,46,500 be deleted.