TMI Blog2018 (6) TMI 1614X X X X Extracts X X X X X X X X Extracts X X X X ..... a particular year would be taken as opening stock at the beginning of the next year and therefore the tax effect of such alleged excess stock is Nil and thus it being a tax neutral entry, the learned Tribunal found that there was no concealment on the part of the Assessee, attracting penalty u/s 271(1)(c). We are satisfied that in the facts of the present case before us, since the Tribunal has reiterated the findings of facts that both the additions made to the income of the Assessee having been set aside following the decision of the High Court in the case of Tata Elxsi Ltd., [supra] as far as issue of Section 10B is concerned and on the issue of excess stock being tax neutral, such cogent and reasonable findings of facts returned by the learned Tribunal and consequentially setting aside the penalty u/s 271(1)(c) , does not give rise to any substantial question of law requiring the consideration by this Court u/s 260A. - I.T.A. No.502/2017 - - - Dated:- 21-6-2018 - DR VINEET KOTHARI AND MRS S. SUJATHA, JJ. For The Appellants Revenue : Mr. K. V. Aravind For The Respondent : Mr. A.Shankar Mr. M.Lava, JUDGMENT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee-company vide letted dated 04/06/2010. It is not the case of the AO that excess stock was as a result of purchase made outside books of account. Excess stock, if any, is only on account of wrong entries in the books of account. As a result of this, if there is higher stock than shown in the books of accounts as at the end of the particular year, same should be allowed as opening stock of the beginning of the next year. Therefore, it is tax neutral and no mala fides can be attributed to the assessee-company in view of the fact that tax rates applicable to all these years is uniform. In any event, addition was made based on information filed by the assessee-company itself and it is not on account f any deletion made by the AO and therefore, assessee-company cannot be held to be guilty of furnishing inaccurate particulars of income and no penalty is exigible. The AO Office had not given finding in the penalty order as to how and in what manner the assessee had furnished inaccurate particulars of income resulting in additions to the returned income, except making a bald charge against the assessee that it had furnished the inaccurate particulars, which is an essential requis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n what matter he furnished the particulars of his income. It is beyond any doubt or dispute that for the said purpose the Income-tax Officer must arrive at a satisfaction in this behalf. (See CIT v. Ram Commercial Enterprises Ltd. [2000] 246 ITR 568 (Delhi) and Diwan Enterprises v. CIT [2000] 246 ITR 571 (Delhi)). 17.2 The AO has not found the explanation furnished by the assessee in response to the show-cause notice to be false nor found to be not bona fide. Therefore, the Explanation (1) to section 271(1)(c) of the Act is not attracted and, therefore, provisions of section 271(1)(c) of the Act are not applicable as held by the Hon ble apex court in the case of K.P.Madhusudhanan v. CIT (2001) 251 ITR 99 (SC) and also in the case of T.Ashok Pai v. CIT (2007) 292 ITR 11 (SC), vide para 18 held as follows (page 18): Even if the explanation are taken recourse to, a finding has to be arrived at having regard to clause (A) of Explanation 1 that the Assessing Officer is required to arrive at a finding that the explanation offered by an assessee, in the even, he offers one was false. He must be found to have failed to prove that such explanationis not on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as justified. (ii) That the Tribunal was justified in holding that the entire penalty proceedings were vitiated on the ground that the notice issued was not in accordance with law. (iii) That the subject matter of the penalty proceedings was the order of the appellate authority and not the order passed by the Assessing Officer. Hence, the order of penalty by the Assessing Officer was not valid. (iv) That when two fact finding authorities were satisfied that the explanation offered by the assessee was not false and it was a bona fide though the assessee had failed to conclusively prove the Explanation the levy of penalty was not justified. 4. The first reason for which penalty in question was imposed by the Assessing Authority in the present case was on account of the excessive deduction claimed under Section 10B of the Act which was set aside by the learned Tribunal, following the decision of this Court in the case of CIT v. Tata Elxsi Ltd. [2012] 17 taxmann.com 100/204 Taxman 321/349 ITR 98 (Kar). Another ground on which the penalty was imposed by the Assessing Authority was the additions made in the income on ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has only stated that he had surrendered the additional sum of ₹ 40,74,000/- with a view to avoid litigation, buy peace and to channelize the energy and resources towards productive work and to make amicable settlement with the income tax department. Statute does not recognize those types of defences under the explanation 1 to Section 271(1)(c) of the Act. It is trite law that the voluntary disclosure does not release the Appellant-assessee from the mischief of penal proceedings. The law does not provide that when an assessee makes a voluntary disclosure of his concealed income, he had to be absolved from penalty. 9. We are of the view that the surrender of income in this case is not voluntary in the sense that the offer of surrender was made in view of detection made by the AO in the search conducted in the sister concern of the assessee. In that situation, it cannot be said that the surrender of income was voluntary. AO during the course of assessment proceedings has noticed that certain documents comprising of share application forms, bank statements, memorandum of association of companies, affidavits, copies of Income Tax Returns and assessment orders ..... X X X X Extracts X X X X X X X X Extracts X X X X
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