M/S. SAYAJI STEEL,VADODARA vs. THE DY. COMMISSIONER OF INCOME TAX,CIRCLE-3(1), VADODARA

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ITA 974/AHD/2019Status: DisposedITAT Ahmedabad10 November 2021AY 2008-093 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal noted that the addition on account of undisclosed stock was deleted by a previous order, and only a 2% profit element was confirmed. Considering this negligible amount and the change in the nature of the addition, the Tribunal held that the assessee did not deserve to be penalized for concealment of income.

What were the facts?

The assessee filed its return of income which was revised. The Assessing Officer made an addition on account of undisclosed stock. The assessee appealed against the penalty levied under Section 271(1)(c) on this addition.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when the addition on account of undisclosed stock, which formed the basis for the penalty, was substantially deleted and reduced to a profit element.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD

Before: SHRI RAJPAL YADAV & SHRI WASEEM AHMED

For Appellant: Ms. Kinjal Shah, AR
Hearing: 09/11/2021Pronounced: 10/11/2021

आदेश आदेश आदेश PER RAJPAL YADAV, VICE PRESIDENT :

The assessee is in appeal before the Tribunal against the order of learned Commissioner of Income-tax (Appeals)-3, Vadodara (“CIT(A) in short) dated 2nd April 2019 passed for Assessment Year 2008-09. 2. The solitary grievance of the assessee is that the learned CIT(A) has erred in confirming the levy of penalty amounting to Rs.9,10,024/-, which was imposed under Section 271(1)(c) of the Income-tax Act, 1961 by the Assessing Officer.

3.

The brief facts of the case are that the assessee has filed its return of income on 29.09.2008 declaring total income at Rs.5,87,770/- which was revised on 21.11.2008 declaring total income at Rs.12,96,280/-. The scrutiny assessment was passed on 20.12.2010 determining the total income at Rs.29,45,060/-. The Assessing Officer has made an addition of M/s Sayaji Steel Vs. DCIT AY : 2008-09 2

Rs.16,48,776/- on account of excess stock out of books, i.e. undisclosed stock. This amount has been considered by the Assessing Officer for visiting the assessee with penalty.

4.

It has been brought to our notice by the learned Counsel for the assessee that the dispute regarding the addition on account of this undisclosed stock travelled upto the Tribunal in ITA No.923/Ahd/2016. The Tribunal has made reference to the case of the partner in the assessee’s firm, i.e. ITA No.2177/Ahd/2014. The Tribunal has deleted this addition of Rs.16,48,776/- and confirmed the addition at 2% of the total amount. In other words, the gross addition of the alleged excess stock was not confirmed; rather the profit element on sale of unaccounted stock at 2% has been added. Thus, that amount could hardly be Rs.32,000/- and the tax component on such amount could be Rs.10,000/-. Sub clause (iii) of Section 271(1)(c) of the Act provides the computation of penalty. It could be equivalent or three times of the tax which is calculated on the addition made to the total income of the assessee. In the present case, the addition stands deleted and it has been reduced to the negligible figure. It has also changed the colour of the addition. Considering the above facts, we are of the view that the assessee does not deserve to be visited with the penalty for concealment of income under Section 271(1)(c) of the Act. The appeal of the assessee is thus allowed and the penalty is deleted.

5.

In the result, the appeal of the assessee is allowed.

Order pronounced in the Court on 10th November 2021 at Ahmedabad. (WASEEM AHMED) VICE-PRESIDENT Ahmedabad, Dated 10/11/2021 *Bt M/s Sayaji Steel Vs. DCIT AY : 2008-09 3

आदेश क" "ितिलिप अ"ेिषत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant

2.

""यथ" / The Respondent. 3. संबंिधत आयकर आयु" / Concerned CIT 4. आयकर आयु" ( ) / The CIT(A)- अपील 5. िवभागीय "ितिनिध , , राजोकट/DR,ITAT, Ahmedabad, अिधकरण अपीलीय आयकर 6. गाड" फाईल /Guard file. आदेशानुसार/ BY ORDER,सहायक पंजीकार (Asstt.

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