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2022 (2) TMI 1089 - ITAT AHMEDABADAddition made in respect of undervaluation of the closing stock - difference in valuation of closing stock of mill scale was added to the total income of the assessee which was further been confirmed by the First Appellate Authority - HELD THAT:- Closing stock of the loose mill scale was taken at rate lower than the cost price whereas as per the auditor’s report the closing stock should have been valued at cost price and, therefore, the closing stock of Mumbai was valued at cost price. The value of the stock of both Bhavnagar and Mumbai totaling ₹ 3,28,47,859/- as per the cost price whereas the appellant has shown the closing stock at ₹ 1,91,52,750/- and thus the difference amount was added. It further appears that the appellant has not controverted the specific findings given by the Ld. AO as regards the closing stock at Bhavnagar and Mumbai and, therefore, the addition was further upheld by the Ld. CIT(A) which in our considered opinion is without any ambiguity so as to warrant interference. Thus this ground of appeal filed by the assessee found to be devoid of any merit and hence dismissed. Alternative plea taken by the assessee to this effect that in the event the addition is confirmed and the closing stock is valued on higher side then addition so confirmed may be added to opening stock of succeeding year i.e. A.Y. 2011-12 as per the settled amounting principle being closing stock of A.Y. 2010-11 would be the opening stock of A.Y. 2011-12. DR has not been able to controvert such submissions made by the Ld. Senior Counsel appearing before us for the assessee. We also do not find such prayer as unjustified and hence we direct the Ld. AO to pass orders of addition to the opening stock of the succeeding year i.e. for A.Y. 2011-12. Penalty under Section 271(1)(c) - Undervaluation of closing stock - HELD THAT:- We do not find any case of conscious concealment of any income by the assessee nor furnishing any inaccurate particulars of income by the assessee. It is also apparent from the records that the appellant had valued the closing at lower of the cost price on account of deterioration of old stock. AO has not accepted such valuation made by the assessee mainly on the ground that since the assessee valuing the closing at cost method the same should have been adopted. The case of furnishing of any inaccurate particulars of income is not apparent from the record itself neither the books of account has been rejected, nor any case of creating false evidence has been made by the Revenue. On this aspect we have considered the judgment passed in the case of Durga Traders vs. Income Tax Officer [2004 (6) TMI 256 - ITAT CHANDIGARH-B] where it has been held that notwithstanding addition of assessee’s income on account of undervaluation of closing stock in the absence of any circumstances justifying the interference that assessee has consciously concealed its income, penalty under Section 271(1)(c) was not warranted. We do not find the order passed by the Ld. AO confirmed by the Ld. CIT(A) in imposing penalty for furnishing inaccurate particulars of income and thereby concealment of particulars of income of the assessee is justified. Hence, we quash the impugned order of penalty. - Decided in favour of assessee
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