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2016 (9) TMI 804 - AT - Income TaxPenalty u/s 271(1)(c) - addition u/s 68 - non-disclosure of certain shares in the closing stock - Held that:- As in the Asstt.Year 2005-06, the addition of ₹ 3.20 lakhs was made by the AO under section 68 of the Income Tax Act. The explanation of the assessee in that year was that he had withdrawn the cash from this firm, M/s.Manishkumar & Co., which was introduced in the capital account for business. This explanation of the assessee was accepted by the ld.CIT(A). According to the ld.CIT(A), the assessee has explained the source to be from the firm, M/s.Manishkumar & Co. On similar items, the explanation was not thoroughly examined by the AO in A.Y.2006-07. Thus, the explanation of the assessee was not found to be false. The assessee has given an explanation that money was withdrawn from the firm, and it was deposited in the Vijay Bank. As far as non-disclosure of certain shares in the closing stock is concerned, the stand of the assessee is that inadvertent mistake was happened at the end of the accountant. This is the item which is revenue neutral and it was not going to affect materially to the Revenue. This explanation was rejected by the Revenue authorities on the ground that it is difficult to accept as to how the accountant has committed the mistake. To my mind, this will always be a difficult question, because, there is no scientific instrument which can tests the mind of an individual as to how he has committed a particular negligence at a particular time. It is very subjective aspect, and it will always be difficult to bring demonstrative evidence of a particular state of mind while committing such mistake. But from circumstantial evidence, it can always be concluded that whether there was a mala fide intention for not including the value of particular shares in the closing tock. No such circumstance have been brought on record for falsifying the explanation of the assessee. Therefore, in view of the above discussion, it is of the view that the assessee does not deserves to be visited with penalty.- Decided in favour of assessee.
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