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2016 (5) TMI 866 - AT - Income TaxPenalty levied u/s.271(1)(c) - undervaluation of WIP - Held that:- Merely because the assessee company in the instant case has accepted the addition in the quantum assessment proceedings which had attained finality , will not make the assessee automatically liable for penalty u/s 271(1)(c) of the Act whereby proper and bonafide explanations backed by sound reasoning and declarations as set out above are furnished by the assessee company , and more-so the revenue impact in quantum additions is tax neutral as the closing WIP of relevant previous year shall be opening WIP of immediately succeeding financial year and any adjustment to closing WIP has to be necessarily followed by corresponding adjustment to opening WIP of immediately succeeding financial year making it tax neutral whereby no prejudice is caused to the Revenue. Moreover, the claim of the assessee company is being made by following Accounting Standard AS-2 which requires closing inventory to be valued at cost or net realizable value whichever is lower and the closing WIP being valued on net realizable value which was lower than the cost in the instant case . The ratio of the decision of Hon’ble Supreme Court in the case of Reliance Petro products Private Limited [2010 (3) TMI 80 - SUPREME COURT ] is squarely applicable in the instant case. We do not find any infirmity in the well reasoned and detailed order dated 04-01-2013 passed by the learned CIT(A) deleting the penalty levied by the A.O. and we uphold the same. - Decided in favour of assessee
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