SHAKTI STONEX,INDUSTRIAL AREA KISHANGARH vs DCIT CENTRAL CIRCLE AJMER, JAIPUR ROAD AJMER

Income Tax Appellate Tribunal, JAIPUR BENCHES, “SMC” JAIPUR

Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 762/JPR/2023

Hearing: 11/01/2024Pronounced: 19/01/2024

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “SMC” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 762/JPR/2023 fu/kZkj.k o"kZ@Assessment Year : 2020-21 cuke Shakti Stonex DCIT, Vs. E-291, RIICO Industrial Area, E- Central Circle Ajmer, Ajmer 291, RIICO Industrial Area, Kishangarh LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAYFS 5086 N vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. C. M. Agarwal (CA) jktLo dh vksj ls@ Revenue by : Smt. Monisha Chaudhary (Addl. CIT) lquokbZ dh rkjh[k@ Date of Hearing : 11/01/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 19/01/2024

vkns'k@ ORDER

PER: RATHOD KAMLESH JAYANTBHAI, A.M. This appeal is filed by the assessee aggrieved from the order of the Commissioner of Income Tax (Appeals), Jaipur-5 [Here in after referred as (CIT(A))] for the assessment year 2020-21 dated 07.12.2023, which in turn arises from the order passed by the DCIT, Central Circle, Ajmer passed under Section 271AAB of the Income tax Act, 1961 (in short 'the Act') dated 30.03.2022.

2 ITA No. 762/JPR/2023 Shakti Stonex vs. DCIT 2. The assessee assailed the present appeal on the following

grounds;

On the facts and in the circumstances of the case and in law the order passed by Ld CIT (A) for confirming penalty u/s 271AAB of Income Tax Act. 1961 is wrong, bad in law, invalid and void-ab-initio as the Id. AO initiated the penalty u/s 271AAB of Income Tax Act, 1961 in the assessment order without specifying the limbs of section 271AAB (1A) of the Act whether it is for clause (a) or clause (b) section 271AAB(1A). 2. On the facts and in the circumstances of the case and in law the order passed by Ld CIT (A) for confirming penalty u/s 271AAB of Income Tax Act, 1961 is wrong, bad in law, invalid and void-ab-initio as the Id. AO issued notice under section 274 r.w.s. 271AAB (1A) of 1. Tax Act without specifying the default of the assessee. 4. On the facts and in the circumstances of the case the Id. CIT(A) has grossly erred in confirming penalty for Rs.14,81943/- u/s 271AAB of the I.T. Act, 1961, for the assessment year 2020-21 The appellant craves leave to add, alter, amend or withdraw any of the grounds of appeal during the course of appellate proceedings.”

The fact as culled out from the records is that the search and

seizure action u/s 132 of IT Act, 1961 was carried out on

13.02.2020 at the residential and business premises of the

assessee group and her family members i.e. Saini-Gupta-Jain-

Malpani-Somani Group” of Ajmer. Various assets had been found

at the time of search and some of them were also seized at various

places of the group at the time of action u/s 132 of IT Act. Certain

incriminating documents/Loose papers/Books of accounts etc.

were also found, inventorized and some of them also seized or

3 ITA No. 762/JPR/2023 Shakti Stonex vs. DCIT impounded at the time of search/survey u/s 132/133A of the I.T.

Act.

3.1 During the course of search/survey proceedings, physical

stock was taken. On verification of physical stock tallied with stock

as per books, it was found that the stock was short by Rs.

1,66,21,164/-. During the course of assessment proceedings, the

said shortage of stock was considered as undisclosed sales of the

assessee and accordingly, GP. Rate @ 14.86% (being declared by

the assessee in its revised computation of Total Income) was

applied on the undisclosed sales of Rs. 1,66,21,164/-, which

comes to Rs.24,69,905/-. Therefore, after making an addition of

Rs.24,69,905/- on account of GP assessment proceedings u/s

143(3) of the IT. Act, 1961 were completed at total income of

Rs.36,25,245/- vide order dated 29.09.2021. Against the said

assessment order, appellant had not preferred an appeal before

the ld. CIT(A). Thereafter, the AO proceeded to finalize the

pending penalty proceedings and accordingly penalty of Rs.

14,81,943/- was levied u/s. 271AAB(1A) of the Act.

4 ITA No. 762/JPR/2023 Shakti Stonex vs. DCIT 4. Aggrieved from the order of the assessment, assessee

preferred an appeal before the ld. CIT(A). Apropos to the grounds

so raised the relevant finding of the ld. CIT(A) is reiterated here in

below :

“Thus in the present case physical stock was verified during the course of search and short stock of Rs 1.66 cr was found which leads to unrecorded sales. The income generated out of such sales has not been recorded in the regular books of accounts directly comes under the purview of definition of undisclosed income as mentioned above. C As per the provision of section 271AAB(1A)(b) penalty of 60% is leviable if the assessee had not furnishes the return of income for the specified previous year declaring such undisclosed income therein and pays the tax, together with interest, if any, in respect of the undisclosed income In the present case the assessee had neither disclosed such unaccounted income in ROI filed nor paid any taxes before filing ROI. Instead of this, the assessee had filed revised computation just before finalisation of the assessment order. The language of this section is very much clear. The law does not allow any exemption from penalty on filing revised computation during assessment proceedings in this section. The exemption up to 30% penalty has provided only if the assessee had offered such undisclosed income in ROI and paid taxes on it. As the assessee had not complied the above conditions, therefore the penalty at the rate of 60% as mentioned in this section is clearly applicable. It is important to mention here that there are specified conditions in the Act for imposing penalty at the rate 30% or 60%. Thus, any liberal view cannot be taken that the revised computation filed during assessment proceedings to be considered as ROI filed before due date D Therefore, I uphold the order of the AO, for imposing the penalty @ 60 percent as per provisions of clause (b) of sub-section (1A) of section 271AAB of the I.T.Act, 1961. 6. The 4th ground of appeal is that the appellant the appellant craves leave to add amend or withdraw any ground of appeal during the appellate proceedings 6.1 The appellant has not added, amended, altered and modified any of the above mentioned grounds of appeal. Accordingly, such mention by the appellant in its ground is treated as general in nature, no

5 ITA No. 762/JPR/2023 Shakti Stonex vs. DCIT needing any specific adjudication and is accordingly treated as dispose off. 7. In the result the appeal is treated as dismissed.”

As the assessee did not find any relief from the order of the

ld. CIT(A) and feeling dissatisfied with the order of the ld. CIT(A)

the assessee has preferred the present appeal on the grounds as

reiterated here in above. The ld. AR of the assessee submitted that

the assessee has already during the pendency of the assessment

proceeding filed a revised computation of income and the said

income is accepted by the ld. AO. The assessee has paid the tax

along with the interest on the said revised computation of income

before the ld. AO proved that the assessee really concealed any

income. To support this view the ld. AR of the assessee has relied

upon the decision of Jaipur bench in the case of M/s. R. P. Wood

Products Private Limited in ITA no. 168/JP/2023 and Shri

Ghanshyam Tak in ITA no. 167/JP/2023. Thus, the ld. AR

supported the various contentions and grounds so raised by the

assessee in the written submission. The written submission reads

as;

Most respectfully, the humble appellant submits that the present appeal has been filed against the order dated 07/12/2023 passed by the Ld CIT (A) Jaipur -5 whereby the Ld CIT(A) has dismissed the appeal in

6 ITA No. 762/JPR/2023 Shakti Stonex vs. DCIT toto, summarily rejecting all submissions/contentions of the appellant. Ld CIT(A) confirmed the penalty u/s 271AAB of the Income Tax Act levied by the Ld Assessing Officer at Rs 14,81,943/ Most humbly it is submitted that order of the Ld Assessing Officer levying penalty u/s 271AAB of the Income Tax Act was challenged before the Ld CIT (A) -5 Jaipur specifically raising the following grounds of Appeal in addition to the grounds challenging the order on merit:

“That on the facts and in the circumstances of the case and in law the penalty order passed u/s 271AAB of Income Tax Act. 1961 is wrong, bad in law, invalid and void-ab-initio as the Id. AO initiated the penalty u/s 271AAB of Income Tax Act, 1961 in the assessment order without specifying the limbs of section 271AAB (IA) of the Act whether it is for clause (a) or clause (b) section 271AAB(1A).

2, That on the facts and in the circumstances of the case and in law the penalty order passed u/s 271AAB of Income Tax Act, 1961 is wrong, bad in law. Invalid and void-ab-initio as the Id. AO issued notice under section 274 r.w.s. 271AAB (1A) of I. Tax Act without specifying the default of the assessee.”

All the grounds of appeal have been summarily rejected by the Ld CIT(A) without considering various judicial precedents on the issue submitted before him. Moreover, absolutely identical issue decided by the Hon’ble Bench in other group case namely M/s R P Wood Products Pvt Ltd specifically dealing with absolutely identical legal issue has been ignored/ erroneously distinguished by the Ld CIT (A).

Facts of the case have been duly noted by the Ld CIT (A) as under; “Para 3.1 A search and seizure action u/s 132 of the I.T.Act,1961 was carried out on 13.02.2020 at the residential and business premises of assesseee group and his family members i.e. Saini-Gupta-Jain-Somani Group of Ajmer . Various assets along with certain incriminating documents/loose papers/Books of accounts etc. were also found, inventoried and some of them were also seized or impounded at the time of Search/Survey u/s 132/133A of the I.T.Act,1961.

3.2 The assessee was associated with the above Group. In the instant case the assessee firm has filed its original ROI on 01.01.2021 declaring thereon total income of Rs. 11,65,340/-. During the course of assessment preceding the assessee firm has only furnished revised computation of income, but neither and revised ROI was found neither available on system nor furnished by the assessee

3.3 During the course of Search/Survey proceedings, physical stock was taken. On verification of physical stock tallied with stock as per

7 ITA No. 762/JPR/2023 Shakti Stonex vs. DCIT books, it was found that the stock was short by Rs. 1,66,21,164/-. During the course of assessment proceedings, the said shortage of stock was considered as undisclosed sales of the assessee and accordingly, G.P. rate @ 14.86% (being declared by the assessee in its revised computation of Total Income) was applied on the undisclosed sales of Rs. 1,66,21,164/-, which comes to Rs. 24,69,905/-. Therefore, after making an addition of Rs. 24,69,905/- on account of G.P. assessment proceedings u/s 143(3) of the I.T. Act, 1961 were completed at total income of Rs. 36,25,245/- vide order dated 29.09.2021. Against the said assessment order, appellant had not preferred an appeal before the Ld. CIT (A). Thereafter, the AO proceeded to finalize the pending penalty proceedings. Penalty proceedings u/s 271AAB (1A) of the I.T.Act, 1961 were initiated separately vide notice dated 29.09.2021 which was duly served. Penalty u/s 271AAB (1A) of the I.T.Act, 1961 was imposed @ 60% of undisclosed income (i.e. Rs. 24, 69,905/-) of Rs. 14, 81,943/-.

Aggrieved by the aforesaid penalty, the appellant has preferred the present appeal. So far as the legal challenge made to the order of the Ld Assessing Officer, the Ld CIT (A) rejected the related grounds as under:

“Para 5 Decision (For grounds 1-3) I have considered the facts of the case, gone through the relevant assessment orders, penalty orders and the paper-book & submission of the appellant and the various case laws. All grounds are related to only imposing penalty u/s 271AAB of the I.T.Act, 1961, therefore all of them are taken as together. The contentions/submissions of the appellant are being discussed and decided as under: 5.5 During the course of assessment proceedings, the assessee Firm has furnished only revised computation of total income, but neither any revised ROI was found available on system nor furnished by the assessee 5.6 Penalty u/s 271AAB (1A) of the I.T.Act,1961 was imposed @ 60% of undisclosed income (i.e. Rs. 24,69,905/-) of Rs. 14,81,943/- considering the provisions of section 271AAB(1A) of the I.T.Act,1961, the assessee was liable to pay a sum computed at the rate of Sixty per cent of the undisclosed income of the specified previous year by way of penalty in addition to tax payable by it as the undisclosed income was not declared in the return of income for the A.Y.2020-21.

5.7 The AO held that the income so surrendered during the course of assessment proceedings was yet to be recorded in the books of account and therefore was in the nature of “undisclosed income” as defined u/s 271AAB of the Act thus qualifying for levy of penalty under the said section. The AO has clearly mentioned in the notice u/s274 r.w.s 271 and 271AAB of the I.T.Act,1961 that undisclosed income

8 ITA No. 762/JPR/2023 Shakti Stonex vs. DCIT detected pertains to specified previous year and in the assessment order, the AO had made addition only on account of undisclosed income found during the course of search/survey proceedings. Moreover, the appellant had not made compliance of the provisions of clause (a) of the section 271AAB (1A) of the I.T.Act,1961, hence the AO had imposed the penalty as per the provisions of clause (b) of section 271AAB (1A) of the I.T.Act,1961. Hence the contention of the appellant is not acceptable that the notices were without specifying the default of the assessee and without specifying the clause (a) or (b) of the section 271AAB (1A) of the I.T.Act,1961. ” Thus from the decision of the Ld CIT(A) it is evident that Ld Assessing Officer has not specified the exact charge against the assessee either in the assessment order or in the show cause notice or in the penalty notice. Ld CIT (A) merely inferring the charge from the eventual order passed by the Ld Assessing Officer. However, the route taken by the Ld CIT (A) of inferring the cause from the effect is not a legally permissible route. In penalty proceedings, the Assessing Officer is required to show cause the appellant with the specific charge against him. After levy of penalty, deducing the charge from the penalty imposed by the Ld Assessing Officer does not met the requirement of law. Evidently from the penalty levied by the Ld Assessing Officer @60%, Ld CIT(A) is inferring that penalty has been levied under clause (b) of Section 271AAB(1A) of the Income Tax Act. From the order of the Ld CIT (A) it is undisputed fact that before passing the final order, the assessee was never show caused with the specific charge against him.

The law in this regard is fully settled by numerous decisions of the Hon’ble Bench, decisions of coordinate Benches, various High Courts and Hon’ble Supreme Court. The issue is squarely covered by the decision of the Hon’ble Bench in the case of other group concern namely M/s R. P. Wood Products Private Limited, Naya Bazar, Ajmer Vs.DCIT, Central Circle, Ajmer ITA. No. 168/JP/2023 dated 5.7.2023 wherein the Hon’ble Bench held as under:

“We further note that in the case in hand, the AO in the show cause notices has neither specified the grounds and default on the part of the assessee nor even specified the undisclosed income on which the penalty was proposed to be levied. Thus it is clear that both the show cause notices issued by the AO for initiation of penalty proceedings under section 271AAB(1A) are very vague and silent about the default of the assessee and further the amount of undisclosed income on which the penalty was proposed to be levied. Even the Hon’ble Jurisdictional High Court in case of Shevata Construction Co. Pvt. Ltd in DBIT Appeal No. 534/2008 dated 06.12.2016 has concurred with the view taken by Hon’ble Karnataka High Court in case of CIT vs. Manjunatha Cotton & Ginning Factory, 359 ITR 565 (Karnataka) which was subsequently

9 ITA No. 762/JPR/2023 Shakti Stonex vs. DCIT upheld by the Hon’ble Supreme Court by dismissing the SLP filed by the revenue in the case of CIT vs. SSA’s Emerald Meadows, 242 taxman 180 (SC). Accordingly, following the decision of the Coordinate Bench as well as Hon’ble Jurisdictional High Court, this issue is decided in favour of the assessee by holding that the initiation of penalty is not valid and consequently the order passed under section 271AAB is not sustainable and liable to be quashed.” Ld CIT (A) instead referring to the decision of the Hon’ble Bench in ITA No 302/JP/2023 tried to distinguish the factual matrix of the present case from the case decided by the Hon’ble Bench. However, it is submitted that the penalty in ITA No 302/JP/2023 was cancelled by the Hon’ble Bench on merit itself and therefore, did not consider the specific challenge to the jurisdiction of the Assessing Officer in imposing penalty without show causing the assessee with specific charge of Section 271AAB(1A) of the Income Tax Act. However, in ITA No 168/JP/2023, the Hon’ble Bench had an occasion to consider the specific legal challenge to the jurisdiction of the Assessing Officer for levying penalty which has been decided by the Hon’ble Bench in favour of the appellant. The present issue being squarely covered by the decision dated 5.7.2023 of the Hon’ble Bench in ITA No 168/JP/2023; the penalty order may please be cancelled. It is prayed accordingly. Identical issue has also been decided by the Hon’ble Bench in the decision dated 05/07/2023 in ITA No 167/JP/2023 in the case of Sh Ghanshyam Tak Vs DCIT Central Circle, Ajmer. Reliance is also placed on the decision of the Hon’ble Bench dated 08/11/2023 in the case of JCIT Ajmer Vs Vijay Kumar Saini ITA No 371/JP/2023. Submissions of merit – While upholding the levy of penalty on the appellant, the Ld CIT(A) held as under: 5.10 The facts of the above case laws quoted by the assessee, are different from the facts of the instant case. In the present case, during the course of Search/Survey proceedings, physical stock was taken. On verification of physical stock tallied with stock as per books, it was found that the stock was short by Rs. 1,66,21,164/-.

5.11 The AO had accepted the income so offered by the assessee by filing revised computation of income during the course of assessment proceedings considering that the income disclosed by the assessee falls under the definition of the undisclosed income of the assessee and

10 ITA No. 762/JPR/2023 Shakti Stonex vs. DCIT the profit declared by the assessee was based on the G.P. rate of the assessee.

“Para 5.16; In the instant case, during the course of Search/Survey proceedings, physical stock was taken. On verification of physical stock tallied with stock as per books, it was found that the stock was short. This is very clear that there was no any ground for shortage of stock found during the course of search/survey proceedings. There are some transactions which were not recorded in the regular books of accounts. These were the unrecorded sales due to which stock was found short during the search/survey proceedings on physical verification. During the course of assessment proceedings, the said shortage of stock was considered as undisclosed sales of the assessee and accordingly, G.P. rate was applied on the undisclosed sales 5.17 Considering the facts that the penalty cannot be deleted argued by the appellant because the case of the assessee is covered by the definition of undisclosed income as defined in the section 271AAB (1A) of the I.T.Act,1961 itself. In this case, the assessee has not made compliance of the provision as laid down in section 271AAB (1A) of the I.T.Act,1961.

Thus, it is evident that the penalty has been imposed on the income disclosed by the Appellant though through filing revised computation of income. However, it is submitted that there is no difference in disclosure of income in the return or disclosure through filing revised computation before the completion of assessment proceedings. Therefore, the penalty which has been levied only on the returned income as substituted by the revised computation is not leviable even on merits. Reliance in this regard is placed on the following decisions:

Hon’ble High Court of Madya Pradesh in the case of CIT Vs Suresh Chand Mittal 241ITR124 (2000) MP

Supreme Court Judgement in Sir Shadilal Sugar and General Mills Ltd. Vs. CIT, [1987]168 ITR 705

Hon’ble ITAT Delhi Bench in the case of M.G.Contractors Pvt.Ltd. Vs DCIT, Central Circle-1, Faridabad in ITA Nos 7034 to 7038/Del/2014

Hon’ble High Court of Gujarat in the case of Cheldas Khushaldas Patel And Ors. vs Commissioner Of Income-Tax 1992, 196 ITR 200 Guj held as under:

“7. The Commissioner, in the case of the firm, refused to waive penalty and interest for the assessment years 1976-77 and 1977-78

11 ITA No. 762/JPR/2023 Shakti Stonex vs. DCIT only on the ground that the returns filed beyond the prescribed period could not be considered to be returns in the eye of law. As pointed out above, since the returns for the said two assessment years were filed beyond the period prescribed for making assessment, the Income-tax Officer issued notice under section 148 of the Act and at the request of the petitioners treated the returns which were earlier filed as returns filed in response to the notice under section 148. It is urged on behalf of the Revenue that disclosure of income voluntarily and in good faith, as envisaged under sub-clauses (a) and (c) of sub-section (1), could be made only by filing a valid return and, if disclosure was not made by a valid return, such disclosure could not be considered, even if it was made voluntarily and in good faith

We are not inclined to accept the submission made on behalf of the Revenue. There is nothing in the above provision to support the Revenue's argument that disclosure could be made only by a valid return. What the provision envisages is a disclosure and not a disclosure by a valid return. It is significant that the provision does not require the filing of a return of income for disclosure of income. Disclosure need not necessarily be made by filing returns of income. It could be made either by an application or a letter or a return which might be beyond the period prescribed for making assessments. A return filed after the expiry of the period of limitation for making assessment would, in our opinion, amount to disclosure of income within the meaning of sub-clauses (a) and (c) of sub-section (1) of section 273A. It cannot be gainsaid that the return of income discloses the total income of the assessee filing the return. Therefore, merely because the return of income is filed beyond the period prescribed for making assessment, it would not mean that it does not disclose income. As pointed out above, a return of income does disclose the total income of the assessee and such return would not cease to be disclosure of his total income, merely because it is filed beyond the period prescribed for making assessment. In other words, it is not necessary that there should be a valid return filed before the expiry of the period prescribed for making assessment for making disclosure as envisaged under sub-clauses (a) and (c) of sub-section (1) of section 273A. Sub-clause (b) of sub-section (1) also speaks about full and true disclosure of particulars of income. So far as a case covered by clause (ii) of sub-section (1) is concerned, such full and true disclosure has to be made prior to the detection by the Income-tax Officer of concealment of particulars of income or of the inaccuracy of particulars furnished in respect of such income. Such disclosure could also be by a revised return or an application or a letter addressed to the taxing authority. Disclosure contemplated by sub-clauses (a), (b) and (c) cannot have different meanings. In other words, it has the same meaning and such disclosure could be made by a return within or

12 ITA No. 762/JPR/2023 Shakti Stonex vs. DCIT beyond the prescribed time for making assessment or by a letter or an application to the taxing authority.”

Thus, in view of the legal position as to the true import of filing revised computation of income, explained by the Hon’ble High Court of Gujarat, the appellant cannot be held guilty of not furnishing correct particulars of its income. Merely because there is no express provision u/s 153A of the Act for revising the return of income, the revised computation which has the effect of substituting the original computation and particularly in the circumstances when the revised computation has not been tinkered with by the Ld AO in any manner and has been accepted as it is, the assessee should not be visited with a penalty for citing technicalities alone. Evidently, the revised computation of income is in substitution of original computation of income and has to be treated as such. In the circumstances, the appellant cannot be visited with a penalty. Hon’ble Ahmedabad Bench of the Tribunal in decision dated 17th May 2023 in the case of DCIT, Central Circle-1(1), Ahmedabad v. NBM Iron & Steel Trading Pvt. Ltd. [ITA No. 205/Ahd/2022, dated May 17, 2023] held that if an assessee during a survey surrendered his income and later showed that income in his regular income tax return, no penalty can be imposed on the assessee. Delhi Bench of the Hon’ble ITAT in the case of ACIT vs. Ashok Raj Nath [2015-ITR V-ITAT-MUM-129] has held that when the assessee voluntary disclosed additional income in the course of assessment proceedings and paid tax thereon and revenue has not placed any material that assessee want to conceal his income there is no basis arises for imposition of penalty. Hon’ble ITAT Mumbai Bench in the case of ITO vs. Gope M. Rochlani [2013-ITRV-ITAT-MUM-119] has held that undisclosed income offered in belated return filed u/s 139(4) is eligible for immunity from penalty under Explanation 5 to s. 271(1)(c). In the circumstances, it is prayed that the penalty levied by the Ld Assessing Officer and upheld by Ld CIT (A) be cancelled. It is prayed accordingly.”

The ld DR is heard who relied on the findings of the lower

authorities and more particularly advanced the similar contentions

as stated in the order of the ld. CIT(A). She further submitted that

13 ITA No. 762/JPR/2023 Shakti Stonex vs. DCIT the assessment is pursuant to the search, merely filling the revised

computation does not escape the penal provision of the Act. The

case law relied upon by the assessee has been distinguished by

the ld. CIT(A).

We have heard the rival contentions and perused the material

placed on record. The brief facts of the case is that in the present

case during the course of Search/Survey proceedings, physical

stock was taken. On verification of physical stock tallied with stock

as per books, it was found that the stock was short by Rs.

1,66,21,164/-. The said shortage of stock was considered as

undisclosed sales of the assessee and accordingly, G.P. rate @

14.86% (being declared by the assessee in its revised computation

of Total Income) was applied on the undisclosed sales of Rs.

1,66,21,164/-, which comes to Rs. 24,69,905/-. The assessee filed

the revised computation of income and offered the said income.

The ld. AO considered this addition of Rs. 24,69,905/- on account

of G.P. as undisclosed income of the assessee and based on that

assessment proceedings u/s 143(3) of the I.T. Act, 1961 were

completed at total income of Rs. 36,25,245/- vide order dated

14 ITA No. 762/JPR/2023 Shakti Stonex vs. DCIT 29.09.2021. Against the said assessment order, appellant had not

preferred an appeal before Ld. CIT (A). Since there was no appeal

pursuant to the assessment the ld. proceeded to finalize the

pending penalty proceedings based on the provision of section

271AAB (1A) of the I.T.Act, 1961. Penalty u/s 271AAB (1A) of the

I.T.Act, 1961 was imposed @ 60% of undisclosed income (i.e. Rs.

24, 69,905/-) of Rs. 14,81,943/-. The levy of the penalty was

challenged before the ld. CIT(A). The ld. CIT(A) has dismissed the

appeal of the assessee by observing that ;

In the present case the assessee had neither disclosed such unaccounted income in ROI filed nor paid any taxes before filing ROI. Instead of this, the assessee had filed revised computation just before finalisation of the assessment order. The language of this section is very much clear. The law does not allow any exemption from penalty on filing revised computation during assessment proceedings in this section. The exemption up to 30% penalty has provided only if the assessee had offered such undisclosed income in ROI and paid taxes on it. As the assessee had not complied the above conditions, therefore the penalty at the rate of 60% as mentioned in this section is clearly applicable. It is important to mention here that there are specified conditions in the Act for imposing penalty at the rate 30% or 60%. Thus, any liberal view cannot be taken that the revised computation filed during assessment proceedings to be considered as ROI filed before due date D Therefore, I uphold the order of the AO, for imposing the penalty @ 60 percent as per provisions of clause (b) of sub-section (1A) of section 271AAB of the I.T.Act, 1961.

The bench noted that in the present case the profit is

estimated on amount of stock which was found short by Rs.

15 ITA No. 762/JPR/2023 Shakti Stonex vs. DCIT 1,66,21,164/-. The said shortage of stock was considered as