Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (12) TMI 1241 - ITAT MUMBAIPenalty levied u/s 271(1)(c) - undervaluation of value of closing stock of diamond by applying average rates - assessee applied rates based on value of grade/variety of diamonds in stock by applying cost or market value which ever is lower of the relevant grade/variety of diamond - Held that:- Keeping in view the facts and circumstances of the case, average rate cannot be applied in the manner as applied by Revenue and no cogent adverse material has been brought on record by the Revenue to disprove the basis of valuation adopted by the assessee for valuing stock of diamond based on variety/grade of diamond. No enquiries or examinations have been conducted by the Revenue to value the closing stock of diamonds based on grades/variety of diamond , and merely applied the average rates knowing well that there are as many 6000-8000 grades/varieties of diamond wherein price of diamond substantially varies from one grade to the other, hence, the additions as made by the AO in quantum itself are not prima-facie not sustainable. In any case, the assessee did not file second appeal with the Tribunal with respect to quantum assessment and accepted the appellate order of learned CIT(A) partly allowing the appeal in quantum assessment, owing to the reason that the partner of the assessee Mr Sameer Jhaveri was not well and ultimately expired on 08-05-2009 and the wife of the said Mr. Sameer Jhaveri was not interested in persuing the business as well litigation with the Revenue. In any case , the closing stock of this assessment year would become the opening stock of the next year and ultimately it has got no effect on the taxes payable to Revenue and revenue effect is tax neutral as there is no loss to the Revenue. The penalty levied by the A.O. and as confirmed/sustained by learned CIT(A) is not sustainable in the eyes of law keeping in view peculiar facts and circumstances of the case and the bonafide explanations submitted by the assessee - Decided in favour of assessee
|