SHREE PRITHVI IRON MILLS PRIVATE LIMITED,JAIPUR vs. ACIT, CIRCLE 4, JAIPUR, JAIPUR

order says that the value of the excess stock is an approximation. consequence, that the addition is based on an estimation. Even when the statement recorded during survey proceedings on 09.10.2014 vide answering to Q.25, the assessee stated that there is no difference in stock.

Thus, we are of the considered view that there is no clear finding that the in fact the assessee accepted that there exist a excess stock. The bench noted that the survey proceeding the stock quantity taken within the short time and the considering the quantity measure the difference of 0.426 % cannot establish that there exist an unexplained excess stock in the hands of the assessee. Merely the assessee has not challenged that addition it cannot be reason to levy the penalty. Penalty proceedings are quasi criminal proceedings and are separate from the assessment proceedings.

Merely the assessee has accepted the alleged difference and offered the tax on that small difference in stock cannot be conclusive evidence that in fact there exist a excess stock investment by the assessee. Even the assessee holds stock of 1962.10 MT the difference to the extent of 0.426 % can happen because of recording the quantity weight in the survey proceeding. Thus, considering the possibility of the difference in scale and recording the quantity there must exist some error or omission which gives the minor difference in quantity which the assessee even in the statement hands of the assessee when the assessee has already recorded huge stock the allegation of excess stock to the extent of Rs. 3,63,661/- and that too on account of stock taking process cannot be said to be unexplained investment of the assessee and therefore, we do not find any reason sustain the penalty on such minor difference in quantity as concealment of income and thereby liable for penalty as per provision of section 271(1)(c) of the Act. We get strength of our view from the decision of apex court in the case of CIT Vs. Reliance Petro Products Private Limited [ 322 ITR 158 ] wherein the highest court has observed that “Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the revenue, that by itself would not, in our opinion, attract the penalty under section 271(1)(c). If we accept the contention of the revenue then in case of every Return where the claim made is not accepted by Assessing Officer for any reason, the assessee will invite penalty under section 271(1)(c). That is clearly not the intendment of the Legislature.”

Here in this case the explanation of the difference in stock was not accepted by the revenue, which was the reasons for difference in stock automatically cannot be considered as an attempt the conceal the income by the assessee. Thus, considering that set of facts do not see any reason penalty levied for an amount of Rs. 1,17,670/- thereby allowing the ground no. 2 raised by the assessee.

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

Order pronounced in the open court on 26/03/2025.

Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 26/03/2025 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Shree Prithvi Iron Mills Private Ltd., Jaipur 2. izR;FkhZ@ The Respondent- ACIT, Circle-04, Jaipur 3. vk;dj vk;qDr@ The ld CIT vk;dj vk;qDr¼vihy½@The ld CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 03/JP/2025) 6. vkns'kkuqlkj@ By order,

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