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2014 (11) TMI 280 - AT - Income TaxRejection of books of accounts u/s 145(3) – Valuation of closing stock of paddy basmati – Held that:- The assessee had given detailed reasoning before AO for adopting the market rate at ₹ 1841/- per qtl. in respect of valuation of paddy basmati stock - Assessee had duly explained that it used to purchase Poosa basmati and pure basmati but the entire stock was entered into stock register without making any such distinction - The assessee had also pointed out that the market rate of Pusa Basmati was ₹ 1500/- whereas pure basmati was ₹ 2040/- per qtl. But assessee had adopted rate of ₹ 2133/- per qtl. in respect of pure basmati – the AO has adopted the rate from the last bill - The assessee's contention that it is in respect of only one variety of pure basmati and, therefore, could not be taken as the basis for valuing the entire stock, which included the Pusa basmati - purchase bills clearly showed that the assessee was making purchases of Pusa basmati as well as pure basmati, the estimation made by assessee of market rate for valuation of stock, could not be faulted and invocation of penal provisions was not justified as the assessee's explanation could not be branded with any mala fide – relying upon COMMISSIONER OF INCOME-TAX Versus RELIANCE PETROPRODUCTS PVT. LTD. [2010 (3) TMI 80 - SUPREME COURT] – the order of the CIT(A) is set aside. Confirmation of penalty u/s 271(1)(c) - Genuineness of assessee’s explanation - Held that:- The bill is dated 23-9-2006 and that is also one of the reasons given by the AO for making disallowance, observing that GR is pre-dated - This cannot be a basis for arriving at any adverse conclusion - Thus, there is overwhelming evidence to come to the conclusion that the supply to the assessee was made on 23-9-2006 - it cannot be lost sight of that the goods were supplied from Delhi to Karnal, which is not very far so as to take a period of one month for delivery of goods - on account of non-furnishing of evidence of installation of transformer, a vie could be taken against the assessee in assessment proceedings but when it comes to levy of penalty, there has to be a concrete evidence on record, establishing that assessee made a false claim, to saddle the assessee with penalty, demonstrating that the explanation furnished by the assessee was false – thus, the order of the CIT(A) levying penalty u/s 271(1)(c) is to be set aside – Decided in favour of assessee.
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