M/s Shagun Traditional Jewellers, Chandigarh V. DCIT, Chandigarh

ITA 1144/CHANDI/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6710 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 15-02-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 07-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Business income; Initiation of penalty proceedings
• Section: 143(3); 133A; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.1144/CHD/2016 (ASSESSMENT YEAR: 2012-13) M/S SHAGUN TRADITIONAL JEWELLERS, VS. THE D.C.I.T., SCO 818, MANIMAJRA, CENTRAL CIRCLE-1, CHANDIGARH. CHANDIGARH. PAN: ABMFS9478B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PARIKSHIT AGGARWAL, CA RESPONDENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 02.08.2017 DATE OF PRONOUNCEMENT : 31.10.2017 O R D E R PER ANNAPURNA GUPTA, A.M. : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE LD.CIT (APPEALS)-3, GURGAON DAT ED 22.8.2016 CONFIRMING THE LEVY OF PENALTY U/S 271(1) (C) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AMOUN TING TO RS.82,060/-. 2. THE FACTS LEADING TO THE CASE ARE THAT A SURVEY U/S 133A OF THE ACT WAS CARRIED OUT AT THE BUSINESS PRE MISES OF THE ASSESSEE WHERE THE ASSESSEE IS CARRYING ON TRAD ING OF JEWELLERY. DURING THE COURSE OF SURVEY THE ASSESSE E SURRENDERED RS.1.90 CRORES TO COVER UP DISCREPANCIE S IN STOCK AND RS.35 LACS ON ACCOUNT OF OTHER ISSUES. T HE SAME WERE DULY DISCLOSED IN THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE FOR THE IMPUGNED YEAR. THEREAFTER RETURN OF INCOME WAS FILED AT A TOTAL INCOME OF RS.2,44,97,63 0/-. 2 ASSESSMENT U/S 143(3) OF THE ACT WAS FRAMED MAKING AN ADDITION OF RS.2,65,570/- ON ACCOUNT OF DIFFERENCE IN CLOSING STOCK AS PER ACCOUNTS SUBMITTED AT THE TIME OF SURVEY AND CLOSING STOCK AS PER THE TRADING ACCOUNT ON THE DATE OF SURVEY SUBMITTED ALONGWITH INCOME TAX RETUR N FILED BY THE ASSESSEE. THEREAFTER PENALTY PROCEEDINGS WE RE INITIATED ON THE SAID ADDITION AND PENALTY LEVIED B Y THE ASSESSING OFFICER VIDE HIS ORDER DATED 29.9.2015. THE SAME WAS CONFIRMED BY THE LD.CIT(APPEALS). 3. AGGRIEVED BY THE SAME, THE ASSESSEE HAS FILED TH E PRESENT APPEAL BEFORE US RAISING FOLLOWING GROUNDS: 1. THAT THE IMPUGNED ORDER IS AGAINST FACTS AND LA W. 2. THAT ON LAW, FACTS AND CIRCUMSTANCES OF THE CASE , THE WORTHY CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE LD. AO, WHEREIN THE LD. AO HAD LEVIED PENALTY OF RS. 82,060/- U/S 271(1)(C) OF THE ACT ON ADDITION OF RS. 2,65,570/- ON ACCOUNT OF DIFFERENCE IN CLOSING STOCK. THE PENALTY HAS BEEN IMPOSED AGAINST THE SETTLED PRINCIPLE OF LAW THAT QUANTUM PROCEEDINGS AND PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT FROM EACH OTHER AND LEVY OF PENALTY IS NOT AUTOMATIC CONSEQUENCE OF ADDITION IN QUANTUM PROCEEDINGS AND MORESO WHEN THE ADDITION IN QUANTUM PROCEEDINGS WAS MADE ON ESTIMATED BASIS WITHOUT FINDING ANY SPECIFIC DEFECT. 3. THAT ON THE FACTS, CIRCUMSTANCES AND LE GAL POSITION OF THE CASE, CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTIONS OF THE LD. AO, WHEREIN THE L D. AO IN THE IMPUGNED PENALTY ORDER, HAS IMPOSED PENALTY OF RS.82,060/- U/S 271(1)(C) OF THE ACT, IS NOT SUSTAINABLE SINCE THE APPELLANT HAS NOT BEEN CHARGED WITH ANY SPECIFIC LIMB OF SEC. 271(1((C) IN THE PENALTY ORDER. 4. THAT ON THE FACTS, CIRCUMSTANCES AND LEGAL POSITION OF THE CASE, WORTHY CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE LD. AO, WHEREIN THE LD. AO IN THE IMPUGNED PENALTY ORDER, HAS IMPOSED PENALTY OF RS.82,060/- U/S 271(1)(C) OF THE ACT, SINCE THE APPELLANT WAS NOT 3 SHOW CAUSED WITH ANY SPECIFIC LIMB OF SEC.271(1)(C) OF THE SHOW CAUSE NOTICE/QUANTUM ASSESSMENT ORDER. 5. THAT ON THE FACTS, CIRCUMSTANCES AND LEGAL POSITION OF THE CASE, WORTHY CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ACTIONS OF THE LD. AO, WHEREIN THE LD. AO IN THE IMPUGNED PENALTY ORDER, INITIATION OF PENALTY IN THE QUANTUM ASSESSMENT ORDER DOES NOT AMOUNT TO ISSUANCE OF DIRECTION AS CONTEMPLATED IN S.271(1)(C) OF THE A CT. 6. THAT THE APPELLANT CRAVES LEAVE FOR ANY ADDITION , DELETION OR AMENDMENT IN THE GROUNDS OF APPEAL ON OR BEFORE THE DISPOSAL OF THE SAME. 4. DURING THE COURSE OF HEARING BEFORE US, THE LD. COUNSEL FOR ASSESSEE FIRST MADE HIS ARGUMENTS ON GROUND NO. 5 RAISED BEFORE US CHALLENGING THE IMPOSITION OF PENA LTY IN THE ABSENCE OF ANY DIRECTION IN THE QUANTUM ASSESSMENT ORDER FOR INITIATION OF PENALTY. THE LD. COUNSEL FOR ASS ESSEE DREW OUR ATTENTION TO PARA 2 OF THE ASSESSMENT ORDER PAS SED IN QUANTUM PROCEEDINGS AND POINTED OUT THAT THE ADDITI ON ON ACCOUNT OF DIFFERENCE IN THE QUANTITY OF STOCK WAS DEALT WITH IN THE SAID PARA. THE LD. COUNSEL FOR ASSESSEE POI NTED OUT THAT NO DIRECTIONS FOR INITIATION OF PENALTY PROCEE DINGS ON ACCOUNT OF THE SAID ADDITION HAVE BEEN MADE AFTER M AKING THE ADDITION. PARA-2 OF THE ASSESSMENT ORDER IS RE PRODUCED HEREUNDER: 2. DURING THE COURSE OF ASSESSMENT IT WAS FOUND THA T THERE WAS SOME DIFFERENCE AN AMOUNT OF RS.2,65,570/- I N QUALITY OF CLOSING STOCK AS PER ACCOUNTS SUBMITTED AT THE TIME OF SURVEY AND CLOSING STOCK AS PER TRADING ACCOUNT O N 08.09.2011 SUBMITTED ALONG-WITH INCOME TAX RETURN FILED B Y THE ASSESSEE. THIS FACT WAS CONFRONTED TO THE ASSESSEE. THE ASSES SEE VIDES HIS SUBMISSION DATED 24.03.2015 STATED AS UNDER: 'CALCULATION OF THAT DIFFERENCE WAS ATTACHED IN THE S UBMISSION OF THE ASSESSEE. AT THE TIME OF FINAL AUDIT OF ACCOUNT S THOSE PETTY DISCREPANCIES WERE IDENTIFIED AND POSTED IN T HE BOOKS 4 WHICH HAD NOT BEEN DONE AT THE TIME OF SURPRISE SURV EY U/S 13A OF THE ACT. HOWEVER, TO AVOID LITIGATION TO BUY PEACE OF MIND SUBJECT TO NON-INITIATION OF ANY PENALTY OR PROSE CUTION WE HEREBY OFFER THIS AMOUNT OF DIFFERENCE OF RS.2,65,570/ - AS ADDITIONAL INCOME. 5. THEREAFTER THE LD. COUNSEL FOR ASSESSEE DREW OU R ATTENTION TO PARA 3 OF THE ASSESSMENT ORDER AND POI NTED OUT THAT THE SAME DEALT WITH THE ISSUE OF SURRENDER MAD E BY THE ASSESSEE DURING THE COURSE OF SURVEY, WHICH THE ASS ESSING OFFICER VERIFIED FROM THE RETURN OF INCOME AS HAVIN G BEEN DISCLOSED THEREIN, BUT STILL INITIATED PENALTY PROC EEDINGS THEREON HOLDING THAT THE SURRENDER HAD BEEN MADE AS A CONSEQUENCE OF SURVEY PROCEEDINGS AND THUS PENALTY U/S 271(1)(C) OF THE ACT WAS WARRANTED. THE RELEVANT P ARA 3 OF THE ASSESSMENT ORDER IS AS UNDER: 3. DURING THE ASSESSMENT PROCEEDING VIDE Q'AIRE DAT ED 07.08.2013 THE ASSESSEE WAS ASKED THE FOLLOWING QUE STION RELATED TO SURVEY CONDUCTED AT HIS PREMISE REPLY TO THE SAME THE ASSESSEE REPLIED AS UNDER ' 'HOWEVER A SURVEY WAS CONDUCTED ON 08.09,2011 U/S 133 A ON THE BUSINESS PREMISES OF M/S SHAGUN TRADITIONAL J EWELLERS SCO 848 NAC MANI MAJRA AND THE FOLLOWING AMOUNT WAS VOLUNTARILY SURRENDERED RS. 1.90 CRORES TO COVER UP THE DISCREPANCY IN STOCK AND RS. 35 LACS TO COVER UP TH E ROUGH ESTIMATE OF SALES AS PER NOTE-PADE IMPOUNDED AS PER ANNEXURE A-L TO ANNEXURE A-22. THE ABOVE DISCREPANC Y WAS MADE OVER AND ABOVE THE REGULAR BUSINESS INCOME OF THE ASSESSEE FIRM SUBJECT TO NO PENAL ACTION UNDER THE INCOME TAX ACT, THE ABOVE FACT WAS VERIFIED FROM THE RETURN OF INCO ME FILED BY THE ASSESSEE. THE CONTENTION OF THE ASSESSEE WAS FOU ND TO BE CORRECT. ACCORDINGLY, IT IS ACCEPTED. HOWEVER SINCE THE SURRENDER WAS DONE AS A CONSEQUENCE OF SURVEY PROCE EDINGS PENALTY PROCEEDINGS U/S 271(L)(C) ARE HEREBY INITIATED . LOOKING AND THE CIRCUMSTANCE OF THE CASE THE INCOME OF THE ASSESSEE IS RECALCULATED AS UNDER: RETURNED INCOME 2,44,97,630/- ADDITION AS PER PARA 2 2,65,570/- 5 ASSESSED INCOME 2,47,63,200/- ASSESSED INCOME RS.2,47,63,200/- 6. THE LD. COUNSEL FOR ASSESSEE POINTED OUT THAT THEREAFTER THERE IS NO MENTION OF ANY DIRECTION REG ARDING INITIATION OF PENALTY PROCEEDINGS IN THE ASSESSMENT ORDER. THE LD. COUNSEL FOR ASSESSEE STATED THAT IT IS EVID ENT FROM THE ABOVE THAT VIS--VIS THE ADDITION MADE ON ACCOU NT OF DIFFERENCE IN STOCK OF RS.2,65,570/- NO DIRECTION H AD BEEN ISSUED BY THE ASSESSING OFFICER FOR INITIATION OF P ENALTY U/S 271(1)(C) OF THE ACT AND IN THE ABSENCE OF SUCH A D IRECTION THE ASSESSING OFFICER COULD NOT HAVE ASSUMED JURISD ICTION TO LEVY OF PENALTY ON THE SAME. THE LD. COUNSEL FO R ASSESSEE RELIED UPON THE DECISION OF THE HON'BLE AL LAHABAD HIGH COURT IN THE CASE OF CIT VS. TRIVENI ENGINEERI NG & INDUSTRIES LTD.(2014) 369 ITR 660 (ALL.) IN THIS RE GARD. 7. THE LD. DR, ON THE OTHER HAND, REBUTTED THE ARGU MENTS OF THE ASSESSEE VIS--VIS THE INITIATION OF PENALTY PROCEEDINGS BY STATING THAT THE DIRECTION OF THE AS SESSING OFFICER AT PARA 3 OF THE ASSESSMENT ORDER COVERED T HE SURRENDER MADE BY THE ASSESSEE IN PARA 2 OF THE ASS ESSMENT ORDER ALSO AND COULD BE TREATED AS A DIRECTION FOR INITIATION OF PENALTY PROCEEDINGS VIS--VIS THE ADDITION MADE ON ACCOUNT OF DIFFERENCE IN STOCK OF RS.2,65,000/- ALS O. THE LD. DR FURTHER STATED THAT THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF TRIVENI ENGINEERING & IND USTRIES LTD.(SUPRA) DID NOT APPLY TO THE PRESENT CASE SINCE THE DIRECTION FOR INITIATION OF PENALTY PROCEEDINGS WAS CLEAR. 6 8. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIE S. THE FACTS OF THE CASE ARE THAT DURING ASSESSMENT PROCEE DINGS THE ASSESSING OFFICER DEALT WITH TWO ISSUES: A) DIISCREPANCY OF STOCK AS PER BOOKS ON THE DATE O F SURVEY, AS SHOWN DURING SURVEY PROCEEDINGS AND ASSESSMENT PROCEEDINGS, WHICH WAS NOT CONTESTED BY THE ASSESSEE RESULTING IN ADDITION OF RS.2,65,570/- AND; B) SURRENDER MADE DURING SURVEY ON ACCOUNT OF DIFFERENCE IN PHYSICAL STOCK OF JEWELLERY FOUND AND THE STOCK AS PER BOOKS OF RS.1.90 CRORES AND ON ACCOUNT OF SALES MADE OF RS.35 LACS. PENALTY WAS LEVIED ONLY ON ACCOUNT OF ADDITION MADE OF RS.2,65,570/-, WHICH THE ASSESSEE HAS CHALLENGED BE FORE US ON ACCOUNT OF ABSENCE OF DIRECTION TO LEVY OF SAME. 9. WE FIND MERIT IN THE CONTENTION OF THE LD. COUNS EL FOR ASSESSEE. UNDISPUTEDLY, THE JURISDICTION TO IMPOSE PENALTY FLOWS FROM SATISFACTION OF THE ASSESSING OFFICER DU RING THE COURSE OF PROCEEDINGS BEFORE HIM TO ANY DEFAULT COM MITTED BY THE ASSESSEE, AS SPECIFIED IN SECTION DEALING WI TH LEVY OF PENALTY, AND CONSEQUENT DIRECTION THAT SUCH PERSON SHALL PAY PENALTY FOR THE DEFAULT. IN THE PRESENT CASE, S ATISFACTION OF THE ASSESSING OFFICER AND THE DIRECTION ISSUED I S CLEARLY VIS--VIS THE SURRENDER MADE BY THE ASSESSEE DURING SURVEY PROCEEDINGS ONLY AND NOT THE AMOUNT SURRENDERED DUR ING ASSESSMENT PROCEEDINGS OF RS.2,65,570/-. A BARE REA DING OF THE DIRECTION FOR LEVY OF PENALTY AT PARA 3 OF THE ASSESSMENT ORDER AS REPRODUCED ABOVE REVEALS THE ABOVE FACT, WHERE THE ASSESSING OFFICER AFTER DEALING WITH THE ISSUE ON QUESTION RAISED RELATED TO SURVEY CONDUCTED AT THE PREMISES 7 OF THE ASSESSEE AND REPLY OF THE ASSESSEE WITH REGA RD TO THE SAME STATING THAT THE ASSESSEE HAD SURRENDERED RS.1 .9 CRORES TO COVER UP DISCREPANCY IN STOCK AND RS.35 L ACS TO COVER UP ROUGH ESTIMATE OF SALE AS PER NOTE PAD IMP OUNDED, STATED THAT THE ABOVE FACTS WERE VERIFIED FROM THE RETURN OF INCOME FILED BY THE ASSESSEE AND FOUND CORRECT AND THUS ACCEPTED. THE ASSESSING OFFICER THEREAFTER WENT ON TO STATE THAT HOWEVER, SINCE THE SURRENDER WAS DONE AS A CONSEQUENCE OF SURVEY PROCEEDINGS, PENALTY PROCEEDI NGS U/S 271(1)(C) OF THE ACT WAS INITIATED. CLEARLY, THE A SSESSING OFFICER WHILE ISSUING THE AFORESAID DIRECTION, REFE RRED AND WAS SATISFIED WITH LEVY OF PENALTY ONLY VIS--VIS T HE AMOUNT SURRENDERED BY THE ASSESSEE OF RS.1.9 CRORES AND RS .35 LACS, AS STATED ABOVE DURING SURVEY PROCEEDINGS AND NOT THE ADDITION MADE OF RS.2,65,570/- ON ACCOUNT OF DIFFER ENCE IN CLOSING STOCK AS PER ACCOUNTS SUBMITTED DURING SURV EY AND THAT SUBMITTED ALONGWITH INCOME-TAX RETURN FILED AN D ON WHICH PENALTY IN THE IMPUGNED CASE HAS BEEN LEVIED. THE SAME WE FIND WAS SURRENDERED ONLY DURING ASSESSMENT PROCEEDINGS AND, THEREFORE, WHEN THE ASSESSING OFFI CER IN HIS DIRECTIONS REFERRED TO SURRENDER MADE AS A CONS EQUENCE OF SURVEY PROCEEDINGS, THE REFERENCE CLEARLY WAS NO T TO THE AFORESAID SURRENDER MADE BY THE ASSESSEE OF RS.2,65 ,570/-. WE, THEREFORE, FIND NO MERIT IN THE CONTENTION OF T HE LD. DR THAT THE DIRECTION FOR LEVY OF PENALTY COVERED THE AMOUNT OF ADDITION MADE OF RS.2,65,570/- ALSO. 8 10. IN VIEW OF THE ABOVE, IT IS CLEAR THAT DURING T HE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER WAS NOT SATISFIED THAT THE ASSESSEE HAD CONCEALED OR FURNIS HED INACCURATE PARTICULARS OF INCOME VIS--VIS THE ADDI TION MADE OF RS.2,65,570/- AND CONSEQUENTLY HAD GIVEN NO DIRE CTIONS FOR LEVY OF PENALTY ON THE SAME. THEREFORE, IN THE ABSENCE OF HAVING ASSUMED JURISDICTION TO LEVY OF PENALTY, THE PENALTY LEVIED ON THE ADDITION MADE OF RS.2,65,570/ - WE HOLD WAS WITHOUT JURISDICTION AND NEEDS TO BE DELET ED FOR THE AFORESAID REASON. THE RELIANCE PLACED BY THE L D. COUNSEL FOR ASSESSEE ON THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF TRIVENI ENGINEE RING & INDUSTRIES LTD.(SUPRA) IS APT WHEREIN IT HAS BEEN H ELD AS UNDER: UNDOUBTEDLY, AS HELD IN THE DECISION OF THE SUPREME COURT IN MAK DATA PRIVATE LIMITED VS. COMMISSIONER OF INCOME TA X [1] , THE ASSESSING OFFICER HAS TO SATISFY HIMSELF WHETHER PENALTY PROCEEDINGS SHOULD BE INITIATED OR NOT DURING THE COUR SE OF ASSESSMENT PROCEEDINGS AND HE IS NOT REQUIRED TO REC ORD HIS SATISFACTION IN A PARTICULAR MANNER OR REDUCE IT INTO WRITING. HOWEVER, IN THE PRESENT CASE, THERE IS NO DIRECTION WHATSOEVER BY THE ASSESSING OFFICER IN RESPECT OF T HE SPECIFIC HEAD OF INTEREST ON THE SDF LOAN, ON WHICH THE PENALT Y WAS DELETED BY THE TRIBUNAL. THIS OMISSION IN THE CASE OF THE SDF LOAN STANDS IN SHARP CONTRAST TO THOSE ITEMS WHERE T HE ASSESSING OFFICER HAS SPECIFICALLY DIRECTED THE INIT IATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C). CONSEQUEN TLY, AND FOR THIS REASON, WE ARE OF THE VIEW THAT THE TRI BUNAL WAS JUSTIFIED IN DELETING THE PENALTY UNDER SECTION 271(1 )(C) IN RESPECT OF THE SDF LOAN. IN VIEW OF THE ABOVE, WE DELETE THE PENALTY LEVIED IN THE ABSENCE OF ANY DIRECTION IN THE ASSESSMENT ORDER FO R LEVY OF THE SAME. GROUND NO.5 RAISED BY THE ASSESSEE THEREF ORE STANDS ALLOWED . 9 11. THEREAFTER TAKING UP GROUND NO.2 WHICH DEALT WI TH THE MERITS OF THE CASE THE LD. COUNSEL FOR ASSESSEE SUB MITTED THAT THE IMPUGNED ADDITION HAD BEEN MADE ON ACCOUNT OF PETTY DIFFERENCES IN STOCK. THE LD. COUNSEL FOR ASS ESSEE SUBMITTED THAT THE DIFFERENCE WAS ON ACCOUNT OF QUA NTITY OF STOCK AS PER ACCOUNT SUBMITTED AT THE TIME OF SURVE Y AND CLOSING STOCK AS PER TRADING ACCOUNT ON THE DATE OF SURVEY SUBMITTED ALONGWITH INCOME TAX RETURN FILED BY THE ASSESSEE. THE LD. COUNSEL FOR ASSESSEE SUBMITTED T HAT THE QUANTITY OF STOCK DETERMINED AT THE TIME OF SURVEY IS BASED ON ESTIMATES, ASSUMPTIONS AND YARDSTICKS OF DIFFERE NT VALUERS ON ACCOUNT OF WHICH THERE MAY BE PETTY DIFF ERENCES ARISING LATER ON WHICH DO NOT WARRANT ANY ADDITION AT ALL. THE LD. COUNSEL FOR ASSESSEE STATED THAT IN THE PRE SENT CASE ALSO THE DIFFERENCE POINTED OUT BY THE ASSESSING OF FICER WAS PETTY AND DID NOT WARRANT ANY ADDITION BUT THE ASSE SSEE HAD AGREED TO THE SAME TO AVOID LITIGATION AND BUY PEACE OF MIND. THE LD. COUNSEL FOR ASSESSEE DREW OUR AT TO THE COPY OF REPLY FILED BEFORE THE ASSESSING OFFICER IN THIS REGARD PLACED AT PAPER BOOK PAGE NOS.28 TO 31. THE RELEVA NT PORTION OF THE REPLY IS AS UNDER: 2. DURING THE COURSE OF LAST HEARING, AN OBJECTION WAS RAISED THAT THERE IS SOME PETTY DIFFERENCE IN QUANT ITY OF CLOSING STOCK AS PER ACCOUNTS SUBMITTED AT THE TIME OF SURVEY AND CLOSING STOCK AS PER TRADING ACCOUNT ON 08.09.2011 SUBMITTED ALONGWITH INCOME TAX RETURN FILED BY THE ASSESSEE. CALCULATION OF THIS DIFFEREN CE IS ATTACHED HEREWITH. IT IS SUBMITTED THAT THE DIFFERE NCE IS ONLY IN GRAMS. AT THE TIME OF FINAL AUDIT OF ACCOUN TS, THESE PETTY DISCREPANCIES WERE IDENTIFIED AND POSTED IN THE BOOKS WHICH HAD NOT BEEN DONE AT THE TIME OF 10 SURPRISE SURVEY U/S 133A OF THE ACT. HOWEVER, TO AVOI D LITIGATION, TO BUY PEACE OF MIND, SUBJECT TO NON-INITIAT ION OF ANY PENALTY OR PROSECUTION, WE HEREBY OFFER THIS AMOU NT OF DIFFERENCE OF RS. 2,65,570/- AS ADDITIONAL INCOM E. 12. THE LD. COUNSEL FOR ASSESSEE DREW OUR ATTENTION TO THE SUMMARY OF DIFFERENCE IN STOCK FILED TO THE ASSESSI NG OFFICER PLACED AT PAPER BOOK PAGE NO.31, WHICH IS REPRODUCE D HEREUNDER: S. NO. NAME OF THE ITEM QUANTITY AS PER BOOKS AT THE TIME OF SURVEY QUANTITY AS PER TRADING ACCOUNT AS ON 08.09.2011 SUBMITTED ALONGWITH ITR DIFFERENCE IN QTY. RATE VALUE OF DIFFERENCE (IN RS.) 1 GOLD (22CT) 18619.16 19702.788 83.628 2,727.00 2,28,05 3.56 2 DIAMOND JEWELLERY 4939.57 4919.93 -19.64 1,620.00 31,816.80 3 DIAMOND 1110.81 1110.24 -0.57 10,000.00 5,700.00 4 SILVER 11558.21 11558.21 - 59,700.00 - TOTAL 2,65,570.36 13. THE LD. DR COUNTERED BY SAYING THAT THE ASSES SEE HAD SURRENDERED THE IMPUGNED AMOUNT ONLY ON BEING CORNERED AND THE LD.CIT(APPEALS) HAD, THEREFORE, RI GHTLY APPLIED THE DECISION OF THE HON'BLE APEX COURT IN T HE CASE OF MAK DATA PVT. LTD. VS. CIT (2013) 358 ITR 592 TO CONFIRM THE LEVY OF PENALTY. THE LD. DR ALSO STATED THAT T HE ASSESSEE AT THIS STAGE CANNOT REVISIT ASSESSMENT PROCEEDINGS AND STATE THAT THE ADDITION MADE THERE IN WAS INCORRECT. THE LD. DR REFERRED TO THE DECISION IN THE CASE OF RATTAN CHAND BHOLA NATH, 210 ITR 682. 14. THE LD. COUNSEL FOR ASSESSEE AT THIS JUNCTURE COUNTERED THE ARGUMENTS OF THE LD. DR VIS--VIS REV ISITING THE ASSESSMENT ORDER BY STATING THAT REFERRING TO T HE EXPLANATION OF THE ASSESSEE VIS--VIS THE ADDITIO N MADE ON 11 ACCOUNT OF DIFFERENCE IN STOCK DID NOT TANTAMOUNT T O REVISITING THE ASSESSMENT ORDER AND, THEREFORE, THE DECISION CITED BY THE LD. DR DID NOT APPLY IN THE PRESENT CA SE. 15. WE HAVE HEARD BOTH THE PARTIES. THE FACTS AS RE LATING TO THE ISSUE AND WHICH ARE UNDISPUTED ARE THAT DURI NG SURVEY CONDUCTED ON THE ASSESSEES BUSINESS PREMISE S ON 8.9.2011 DIFFERENCE IN PHYSICAL STOCK AS PER BOOKS OF ACCOUNT WAS FOUND, ON ACCOUNT OF WHICH THE ASSESSEE SURRENDERED A SUM OF RS.1.90 CRORES. THE DIFFERENCE FOUND IN THE STOCK OF JEWELLERY, AS REPRODUCED IN THE QUE STIONNAIRE ISSUED TO THE ASSESSEE DURING ASSESSMENT PROCEEDING S PLACED IN THE PAPER BOOK BEFORE US AT PAGE 39 IS AS UNDER: SR. NO. ITEM QUANTITY AS PER PHYSICAL INVENTORY QUANTITY AS PER CLOSING STOCK DIFFERENCE 1 DIAMOND JEWELLERY 18CT 10083.466 G 4939.57 G 5143.896 G 2 GOLD ORNAMENTS 22CT 19274.603 G 18619.16 G 655.443G 3 DIAMOND 1967.37 CT 1110.81 CT 9143.44 CT 4 SILVER 14500 G11558.21 11558.21 G 2941.79 G TOTAL THEREAFTER DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER FOUND DIFFERENCE IN THE STOCK OF ITEMS AS REFLECTED IN THE BOOKS DURING SURVEY AND IN THE BOO KS FILED ALONGWITH RETURN OF INCOME AND WHICH IS AS UNDER: S. NO. NAME OF THE ITEM QUANTITY AS PER BOOKS AT THE TIME OF SURVEY QUANTITY AS PER TRADING ACCOUNT AS ON 08.09.2011 SUBMITTED ALONGWITH ITR DIFFERENCE IN QTY. RATE VALUE OF DIFFERENCE (IN RS.) 1 GOLD (22CT) 18619.16 19702.788 83.628 2,727.00 2,28,05 3.56 2 DIAMOND JEWELLERY 4939.57 4919.93 -19.64 1,620.00 31,816.80 3 DIAMOND 1110.81 1110.24 -0.57 10,000.00 5,700.00 12 4 SILVER 11558.21 11558.21 - 59,700.00 - TOTAL 2,65,570.36 THE SAID DIFFERENCE TANTAMOUNTED IN ALL TO RS.2,65,570/-. ALL THE ABOVE FACTS ARE UNDISPUTED. 16. IT IS CLEARLY EVIDENT FROM THE ABOVE THAT THE D IFFERENCE IN STOCK DETECTED DURING ASSESSMENT PROCEEDINGS AND ON WHICH PENALTY HAS BEEN LEVIED IS PETTY, BEING ONLY 0.5% OF STOCK AS PER BOOKS OF GOLD ORNAMENTS AND DIAMOND JE WELLERY AND 0.05% IN CASE OF DIAMOND. THE SAME IS EVIDENT F ROM THE VALUE OF THE SURRENDER MADE DURING SURVEY BEING 1.9 0 CRORES AS AGAINST THE DIFFERENCE FOUND DURING ASSES SMENT BEING 2.65 LACS, WHICH AGAIN IS AROUND ONLY 1% OF T HE AMOUNT SURRENDERED. THE EXPLANATION OF THE ASSESS EE THAT THE SAME COULD BE ATTRIBUTED TO HAVING ARISEN ON A CCOUNT OF ESTIMATES AND ASSUMPTION MADE WHILE CALCULATING THEM IS PLAUSIBLE. WE ALSO AGREE WITH THE LD.COUNSEL FOR THE ASSESSEE THAT THOUGH ADDITION ON ACCOUNT OF SUCH DI FFERENCE CAN BE MADE IN QUANTUM PROCEEDINGS BUT CLEARLY IT I S NOT A GOOD ENOUGH CASE FOR LEVY OF PENALTY HOLDING THE AS SESSEE LIABLE FOR HAVING EITHER CONCEALED OR FURNISHED INA CCURATE PARTICULARS OF INCOME. WE ARE ALSO NOT IN AGREEMENT WITH THE CONTENTION OF THE LD.DR THAT THE ASSESSEE IS CH ALLENGING THE ADDITION MADE DURING QUANTUM PROCEEDINGS, THUS REVISITING THE ASSESSMENT ORDER BY VIRTUE OF ITS EX PLANATION THAT THE DIFFERENCES IN STOCK WERE MINOR WARRANTING NO LEVY OF PENALTY. THE LD.COUNSEL FOR THE ASSESSEE WE FIN D HAS IN FACT AGREED TO THE FACT THAT THERE WERE DIFFERENCES IN STOCK WARRANTING ADDITION BUT HAS STATED THAT THE DIFFERE NCES WERE 13 TOO MINOR SO AS TO ATTRIBUTE ANY CONCEALMENT OR FUR NISHING OF ANY INACCURATE PARTICULARS OF INCOME TO THE ASSE SSEE FOR LEVYING PENALTY. IT IS THEREFORE NOT A CASE OF REV ISITING THE ASSESSMENT ORDER AT ALL AND THE DECISION RELIED UPO N BY THE LD.DR IN THE CASE OF RATTAN CHAND BHOLA NATH, 210 ITR 682.THEREFORE DOES NOT APPLY IN THE FACTS OF THE P RESENT CASE. 17. WE, THEREFORE, HOLD THAT NO PENALTY IS LEVIABLE ON ACCOUNT OF THE ADDITION MADE OF RS.2,65,570/- SINCE IT IS BASED PURELY ON ESTIMATES AND ASSUMPTIONS AND RELIA NCE PLACED BY THE LD. COUNSEL FOR ASSESSEE IN THE CASE OF CIT VS. IQBAL SINGH & COMPANY 180 TAXMAN 355 AND CIT VS. SANGRUR VANASPATI MILLS LTD. 303 ITR 53 IS APT, WHE REIN THE HON'BLE JURISDICTIONAL HIGH COURT HAS CATEGORICALLY HELD THAT IF ADDITION IN THE QUANTUM PROCEEDINGS IS BASE D ON ESTIMATES OR ASSUMPTIONS WITHOUT ANY CONCRETE EVIDE NCE OF CONCEALMENT BY THE ASSESSEE NO PENALTY U/S 271(1)(C ) OF THE ACT IS LEVIABLE. IN VIEW OF THE ABOVE, GROUND NO.2 RAISED BY THE ASSESSEE STANDS ALLOWED. 18. SINCE WE HAVE DELETED THE PENALTY LEVIED ON ACC OUNT OF ABSENCE OF ANY DIRECTION TO LEVY OF PENALTY AND EVE N ON THE MERITS OF THE CASE, WE ARE NOT DEALING WITH THE RES T OF THE GROUNDS RAISED BY THE ASSESSEE CHALLENGING THE LEVY OF PENALTY. 14 19. IN THE RESULT, THE APPEAL OF THE ASSESSEE, THER EFORE, STANDS ALLOWED IN ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31 ST OCTOBER, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH