BHAVESHKUMAR SHANTILAL JANI,AHMEDABAD vs. THE INCOME TAX OFFICER, WARD-6(1)(1), AHMEDABAD

This appeal is filed by the Assessee against order dated 26.06.2024 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2012-13.

The assessee has raised the following grounds of appeal :-

Assessment under Section 143(3) of the Income Tax Act, 1961 was passed on 27.03.2015 making addition of Rs.22,55,897/- in respect of Stock Difference of Rs.1,81,725/-, Lumpsum addition of 20% of balance of Sundry Creditors amounting to Rs.19,21,522/- and non-deduction of TDS under Section 40a(ia) of the Act amounting to Rs.1,52,650/-. In respect of the said additions, the Assessing Officer initiated penal proceedings under Section 271(1)(c) of the Act. Notice under Section 274 read with Section 271(1)(c) of the Act was issued on 27.03.2015. The assessee has not filed any submissions before the Assessing Officer and, therefore, the Assessing Officer levied penalty of Rs.60,348/- under Section 271(1)(c) of the Act.

Being aggrieved by the Penalty Order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

The Ld. AR submitted that the CIT(A) was not right in upholding the penalty to the extent of addition of Rs.1,81,725/- being difference in stock. The assessee inadvertently has claimed credit of opening stock of Rs.1,81,725/- but there was no discrepancy found in the books of account by the Assessing Officer and thus question of concealment of particulars of income or furnishing of inaccurate particulars of income does not arise. The Ld. AR further submitted that the Assessing Officer levied penalty vide order dated 23.03.2020 and mentioned that the initiation of penalty proceedings for furnishing of inaccurate particulars and concealment of income for all the issues including that of addition of 20% of balance of Sundry Creditors, stock difference and non-deduction of TDS. But, in the notice, there was no mention regarding the particular limb of Section 271(1)(c) of the Act. The Ld. AR relied upon the decision of Hon’ble Apex Court in the case of CIT & Another vs. Manjunatha Cotton & Ginning Factory, 291 ITR 519(SC) and also relied upon the decision of Dilip N. Shroff vs. JCIT, 6 SCC 329. The Ld. AR further submitted that the assessee has difference in closing stock is not justifiable as the assessee has admittedly submitted that the Audited Accounts has given proper details related to the opening stock and closing A.Y. 2012-13 Bhaveshkumar Shantilal Jani vs. ITO Page 3 of 3 stock details after taking into consideration the purchase register. Thus, there was no case of the Department for furnishing inaccurate particulars or that of concealment of income.

The Ld. DR relied upon the Assessment Order and the order of the CIT(A).

We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that notice under Section 274 read with Section 271(1)(c) of the Act dated 27.03,2015 has not expressed under which limb the penalty is initiated under Section 271(1)(c) of the Act. The decision of Hon’ble Apex Court in the case of Manjunatha Cotton & Ginning Factory (supra) is applicable in the present case. Besides this, the assessee has rightly submitted the closing stock details as well as the stock difference was also reflected in the audited accounts and there was no case built up by the Revenue that the assessee has filed inaccurate particulars of income or concealment of income. Thus, the Assessing Officer as well as the CIT(A) was not right in imposing the penalty.

In the result, appeal of the assessee is allowed.