INCOME TAX ACT, 1961

Section 271AAB

Penalty under section 271AAB - Difference in stock of goods as per books and as found at the time of search - Difference due to valuation method and not in quantily -

In the statement recorded under section 132(4) partner of assessee firm surrendered a sum of Rs. 57,87,509 on account of alleged excess stock. AO treated the same as 'undisclosed income' of assessee within meaning of section 271AAB and accordingly levied penalty. Assessee's case was that amount surrendered was nothing but difference in valuation of stock and no excess stock was found during search.Held: AO has merely gone by surrender statement of partner of assessee firm where stock had been valued at market price as on date of search and had not examined the matter from perspective of determining any excess stock and the cost of such stock which was not recorded in books of accounts. There was no finding that there was any excess stock which had been physically found and which had not been recorded in books of account as on date of search. Therefore, difference was on account of valuation of stock at the market value instead of cost and same could not be a basis to hold that it represented undisclosed income so defined in explanation to section 271AAB. Therefore, penalty levied by AO was not sustainable.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

INCOME TAX ACT, 1961

Section ?????

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