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2016 (6) TMI 939 - ITAT MUMBAIPenalty levied u/s. 271(1)(c) - provision for loss of stock claimed - Held that:- Explanation filed by the assessee, about the disputed amount plays a vital role in deciding the justification of levying concealment penalty. In the matter before us, the assessee had disclosed all the necessary details. In our opinion, explanation filed by the assessee in that regard was bona fide. Secondly, it is an accepted principle of tax-jurisprudence that additions made during assessment proceedings cannot result in automatic levy of penalty. A patent wrong and inadmissible claim, made against the clear cut provisions of the Act, falls under the category of filing of inaccurate particulars of income resulting in concealment. In the matter before us, no wrong claim was made. The assessee had made entries in the books of accounts as per the mandate of AS-2. So, it cannot be held that it had concealed its particulars of income. It is not the case of the AO that the assessee had not disclosed the fact of obsoleteness of the stock or notice from the state government authorities. Therefore, there was no justification of invoking the provisions of section 271(1)(c)of the Act. Making additions or disallowing certain expenses during the assessment proceedings is totally different from invoking penal provisions. There is no provision in the Act of automatic levy of penalty for the additions/disallowances made. So, we are of the opinion that there was no furnishing of inaccurate particulars and that the explanation given by the assessee was bonafide. - Decided in favour of the assessee.
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