SINGAL NATURAL STONES PVT. LTD., Jaipur V. ITO, Jaipur

ITA 702/JPR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5616 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 14-08-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DHK
• Keywords: Depreciation; Bonafide mistake
• Section: 143(3)

Judgement Text

ITA NO. 702/JP/13 M/S SINGHAL NATURAL STONES PVT. LTD. V. ITO, WARD 4(2), JAIPUR 1 VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO. 702/JP/13 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07. VKNS'K@ ORDER FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL CA JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJ MEHRA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 24.11.2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 06/01/2016 VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A),- II, JAIPUR DATED 09.07.11.06.2013 WHEREIN THE ASS ESSEE HAS TAKEN THE FOLLOWING GROUND OF APPEAL : THE LD. CIT(A) HAD ERRED ON FAT AND IN LAW IN CONFI RMING THE LEVY OF PENALTY OF RS.1,73,437/- U/ 271(2)(C). 2. THE FACTS RELEVANT FOR MATTER UNDER CONSIDERATIO N ARE AS FOLLOWS: M/S SINGHAL NATURAL STONES PVT. LTD. F-972(B), ROAD NO. 14, VKI AREA, JAIPUR CUKE VS. ITO, WARD 4(2), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAICS 9922K ITA NO. 702/JP/13 M/S SINGHAL NATURAL STONES PVT. LTD. V. ITO, WARD 4(2), JAIPUR 2 2.1 THE ASSESSEE DERIVES INCOME FROM PROCESSING OF MARBLE BLOCKS INTO SLABS AND TILES AND JOB WORK FOR OUTSIDE PARTIES. IT FILED THE RETURN DECLARING INCOME OF RS. 1,02,540/- WHICH IS ASSESSE D BY THE AO AT INCOME OF RS. 22,53,361/-U/S 143(3) OF THE ACT. 2.2 THE AO WHILE COMPLETING THE ASSESSMENT, MADE A N ADDITION OF RS. 20,78,821/ ON ACCOUNT OF UNDERVALUATION OF THE CLO SING STOCK. IN APPEAL BEFORE THE LD. CIT(A), THE SAME WAS REDUCED TO RS. 5,15,259/- WHICH IS CONFIRMED BY HONBLE ITAT. THE BREAK UP OF ADDITI ON OF RS. 5,15,259/- ON ACCOUNT OF UNDERVALUATION OF STOCK IS AS UNDER: 1. CALCULATION MISTAKE IN VALUATION OF MARBLE SLAB (AVG. RATE WRONGLY TAKEN AT RS. 488 SQ, MTR. INSTEAD OF R. 682/- SQ.MTR. RS. 1,61,400/ - 2. VALUATION OF OLD MARBLE SLAB AT 50% OF AVERAGE RATE INSTEAD OF 25% OF AVERAGE ARTE TAKEN BY ASSESSEE RS. 1.13 , 434/ - 3. VALUATION OF OLD TILE AT 50% OF AVERAGE RATE INSTEAD OF 25% OF AVERAGE RATE TAKEN BY ASSESSEE. RS.2,39,865/ - 2.3 IN PENALTY PROCEEDINGS, AO OBSERVED THAT ASSESS EE HAS UNDERVALUED THE CLOSING STOCK TOP DEFLATE ITS PROFITS AND EVADE TAX AND TO THIS EXTENT HE HAS SUPPRESSED ITS INCOME. HE THEREFORE, IMPOSED P ENALTY OF RS. 1,73,437/- U/S 271(1)(C) OF THE ACT COMPUTED AT 1 00% OF THE SUSTAINED ADDITIONS OF RS. 5,15,259/-. ITA NO. 702/JP/13 M/S SINGHAL NATURAL STONES PVT. LTD. V. ITO, WARD 4(2), JAIPUR 3 2.4 BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTE R BEFORE HE LD. CIT(A) WHO HAS CONFIRMED THE LEVY OF PENALTY. THE RELEVANT FINDINGS IS AT PARA 5 OF HER ORDER WHICH READS AS UNDER: AFTER GOING THROUGH RIVAL SUBMISSIONS IT IS SEEN THAT THE CLOSING STOCK VALUATION DECLARED BY THE APPELLANT WAS FOUND BY T HE HIGHEST FACT FINDING BODY TO BE UNDERVALUED BY RS.5,15,259/- AND IT IS NOT A CASE OF SIMPLE ESTIMATION, THE APPELLANT FURNISHED INACCURA TE PARTICULARS CONSCIOUSLY, AS VALUING THE STOCK AT 25% OF THE WEI GHTED AVERAGE RATE WAS NOT ANYTHING ACCIDENTAL BUT CONSCIOUS/DELIBERATE A CT RESULTING INTO SUPPRESSION OF INCOME. THE PENALTY OF RS.1,73,437/ - LEVIED U/S 271(1)(C) OF CONCEALMENT IS UPHELD. 2.5 DURING THE COURSE OF HEARING THE LD. AR ARGUE D THE MATTER AT LENGTH AGAINST THE LEVY OF PENALTY ND HASDRAWN SPECIFIC AT TENTION OF THE BENCH TO ITS SUBMISSIONS AND FINDINGS OF THE COORDINATE BENC H IN THE QUANTUM PROCEEDINGS (REPRODUCED IN SUBSEQUENT DISCUSSIONS) . HE HAS ALSO REITERATED THE SUBMISSIONS MADE, IN THE CONTEXT OF PENALTY PROCEEDINGS, BEFORE THE LD. CIT(A) WHICH ARE CONTAINED AT PAGE 1 -3 OF THE PAPER BOOK WHICH ARE REPRODUCED AS UNDER: ON MERIT, IT MAY BE NOTED THAT THE ADDITION ON ACCO UNT OF UNDERVALUATION OF CLOSING STOCK IS ON ACCOUNT OF BONAFIDE MISTAKE IN CALCULATION/RATE TO BE ADOPTED FOR VALUATION OF OLD STOCK. THE DETAILED C ALCULATION OF VALUATION OF STOCK WAS FURNISHED ALONGWITH THE AUDITED ACCOUN TS. THE SAME IS REPRODUCED IN THE ASSESSMENT ORDER. THE ADDITION T O THE INCOME HAS REMAINED BECAUSE OF FOLLOWING MISTAKE/ESTIMATION. A. THE WEIGHTED AVERAGE RATE OF MARBLE SLAB AS MENTION ED ON PAGE 2 OF THE ASSESSMENT ORDER IS RS.682/MT. HOWEVER, BY MIST AKE WHILE VALUING THE STOCK THE SAME HAS BEEN TAKEN AT RS.488/MT. TH IS IS SIMPLY A CALCULATION MISTAKE WHICH IS EVIDENT FROM THE DETAI LS MENTIONED IN THE ASSESSMENT ORDER. THEREFORE, INCREASE IN THE VALUAT ION OF STOCK BECAUSE OF SUCH MISTAKE CANNOT BE CONSIDERED AS CONCEALMENT OF INCOME. ITA NO. 702/JP/13 M/S SINGHAL NATURAL STONES PVT. LTD. V. ITO, WARD 4(2), JAIPUR 4 B. ASSESSEE HAS ESTIMATED 50% OF THE TOTAL STOCK S OLD STOCK WITH INFERIOR QUALITY AND VALUED IT AT 25% OF THE WEIGHTED AVERAG E COST. THIS IS NOT ACCEPTED BY THE AO. HOWEVER, LD. CIT(A)/HONBLE ITA T ACCEPTED THAT 50% OF THE TOTAL STOCK IS TO BE CONSIDERED AS STOCK WITH INFERIOR QUALITY. HOWEVER, THEY DIRECTED TO VALUE STOCK AT 50% OF THE WEIGHTED AVERAGE COST INSTEAD OF 25% OF THE AVERAGE COST TAK EN BY THE ASSESSEE. THUS, THIS DIFFERENCE IN VALUATION IS ON ACCOUNT OF ESTIMATION OF THE VALUE TO BE TAKEN FOR THE INFERIOR STOCK. AN Y ADDITION ON SUCH ADDITION IN VALUE CANNOT BE TERMED AS CONCEALMENT OF INCOME. ADDITION IS MADE TO THE VALUE OF CLOSING STOCK. CL OSING STOCK OF ONE YEAR BECOMES THE OPENING STOCK OF THE NEXT YEAR. AS A RESULT OF THE ADDITION, THE OPENING STOCK OF NEXT YEAR HAS INCREA SED BY THAT AMOUNT AND THE PROFIT OF THE SUBSEQUENT YEAR HAS REDUCED B Y THAT AMOUNT. THUS THIS ADDITION IS TAX NEUTRAL. THEREFORE, NO PR ESUMPTION OF CONCEALMENT OF INCOME SHOULD BE DRAWN ON ACCOUNT OF UNDERVALUATION OF CLOSING STOCK. FURTHER IN SUPPORT OF ITS CONTENTION, THE LD. AR HA S PLACED RELIANCE IS PLACED ON THE FOLLOWING JUDGEMENTS AND DRAWN SPECIF IC ATTENTION TO DECISION OF HONBLE HIMACHAL PRADESH HIGH COURT: 1. CIT VS. H.P. STATE A FOREST CORPOATION LTD. 340 ITR 204 (HP) (HC) 2. DCIT VS. KALPAKA BAZAR 46 ITD 221 (COC.)( TRIB.) 3. DURGA TRADERS VS. ITO 90 TTJ 767 (CHD.)(TRIB.) 4. VARUN ENTERPRISES VS. ACIT 47 TTJ 461 (DEL.)(TRIB.) 5. GODHWANI BROTHERS VS. ACIT 48 TTJ 403 (DEL.)(TRIB.) 2.6 THE LD. DR RELIED ON THE ORDER OF THE LOWER AUT HORITIES. ITA NO. 702/JP/13 M/S SINGHAL NATURAL STONES PVT. LTD. V. ITO, WARD 4(2), JAIPUR 5 2.7 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FIRSTLY REGARDING CALCULATION MISTAKE IN VALUATION OF MARBLE SLABS, IT IS NOTED THAT AVERAGE RATE WAS TAKEN AT RS. 488 Q.MTR. INSTEAD OF RS 682/- PER SQ. THE ASSESSEE HAS SUBMI TTED DETAILS OF WORKING OF THE VALUATION SHOWING THE QUANTITY AND VALUE PART OF THE AUDITED FINANCIAL STATEMENT WHICH HAS ALSO BEEN REPRODUCED AT PARA 3 OF PAGE 2 OF THE ASSESSMENT ORDER. THE ASSESSEE HAS SUBMITTED THAT THE VALUE OF RS. 682/- SQ.MTR IS COMPUTED BY THE ASSESSEE HIMSEL F AND IS APPEARING IN THE DETAIL STOCK VALUATION AND IT IS SIMPLY A CA LCULATION MISTAKE ON HIS PART, WHEREIN HE HAD CONSIDERED THE VALUE OF RS. 48 8/- SQ.MTR INSTEAD OF RS. 682/ SQ.MTR. THE ASSESSEE HAS HOWEVER NOT PRO VIDED ANY EXPLANATION REGARDING THE BASIS/CRITERIA FOR WORKING OUT THE VA LUE AT RS. 488/- S.MTR AND WHY IT WAS ADOPTED AT FIRST PLACE. THE SO CALL ED CALCULATION MISTAKE AN BE ACCEPTED WHERE THE SAME IS APPARENT FROM THE VALUATION WORKING AS SUBMITTED BY THE APPELLANT AND WHERE BY MISTAKE, THE APPELLANT HA TAKEN A PARTICULAR VALUE INSTEAD OF ANOTHER VALUE. HOWEVER, THERE IS NO SUCH CALCULATION/WORKING DETERMINING VALUE AT RS. 488/SQ.MTR WHICH IS ON RECORD. THUS, THE VALUE OF S. 488/- SQ.MTR. IS SUR ROUNDED IN MYSTERY AND EXPLANATION OF THE APPELLANT DOES NOT INSPIRE CONFI DENCE THAT IT WAS ITA NO. 702/JP/13 M/S SINGHAL NATURAL STONES PVT. LTD. V. ITO, WARD 4(2), JAIPUR 6 SIMPLY CALCULATION MISTAKE. IN LIGHT OF THAT, TH E EXPLANATION OF THE ASSESSEE IS NOT SUBSTANTIATED AND THE BONAFIDE OF T HE CASE IS THUS NOT PROVED. HENCE, THE PENALTY LEVIED ON ENHANCED VALU E OF CLOSING STOCK TO EXTENT OF RS. 1,61,400/- IS CONFIRMED. 2.8 REGARDING VALUATION OF OLD MARBLE SLABS AND OL D TILES AT 25% OF THE AVERAGE RATE INSTEAD OF 50% OF THE AVERAGE COST, THE ASSESSEE HAS SUBMITTED BEFORE THE COORDINATE BENCH ITS SUBMISSIO N WHICH ARE REPRODUCED AS UNDER: AS REGARDS THE ESTIMATION OF 50% OF THE STOCK AS OF INFERIOR QUALITY IN VALUING AT 25% OF THE AVERAGE COST, IT WAS ARGU ED THAT SINCE THE ENTIRE SALE IS ON CUSTOMER SELECTION BASIS, THE GOO DS REMAINED IN STOCK AT THE CLOSE OF THE YEAR COMPRISES OF INFERI OR QUALITY, BROKEN STOCK ETC. THE ESTIMATE OF DEAD STOCK IS MADE ON THE BASIS OF EXPERIENCE, ESTIMATE MADE BY OTHER UNITS AND ALSO SUB SEQUENT SALE INVOICE OF SUCH INFERIOR OF DEAD STOCK. THE ES TIMATE MAY VARY WITH ACTUALITY BUT THE SAME HAVE NO EFFECT IN THE PROFIT OF THE COMPANY IN CONCEPT OF GOING CONCERN. THE CLOSING ST OCK OF THE CURRENT YEAR WILL BE THE OPENING STOCK OF THE FOLL OWING YEAR, THE LOWER OR HIGHER SALE PRICE OF THAT STOCK AUTOMATICAL LY AFFECTS THE PROFIT OF THE FOLLOWING YEAR. HENCE THE ESTIMATE OF DEAD STOCK AND VALUATION THEREOF IS REASONABLE. THE FACT OF SALE O F SUCH DEAD STOCK AT LOW PRICE IS EVIDENT FROM THE SALE BILLS FROM WHIC H IT CAN BE NOTED THAT WEIGHTED AVERAGE SALE RATE IN CASE OF SU CH SLABS IS RS. 141.18/- PER S.MTR. & TILES IS 121/- PER SQ. MTR. WHI CH IS EVEN LOWER THAN THE RATE AT WHICH SUCH STOCK IS VALUED BY THE ASSESSEE. THE ASSESSEE THUS JUSTIFIED THE VALUATION OF CLOSING ST OCK MADE BY IT AND PRAYED FOR DELETION OF THE ADDITION CONFIRMED BY CIT(A). ITA NO. 702/JP/13 M/S SINGHAL NATURAL STONES PVT. LTD. V. ITO, WARD 4(2), JAIPUR 7 2.9 THE COORDINATE BENCH, AFTER CONSIDERING THE SUBMI SSION OF THE ASSESSEE HAS GIVEN ITS FOLLOWING FINDINGS WHICH ARE C ONTAINED AT PARA 7 OF ITS ORDER WHICH READS AS UNDER: HAVING CONSIDERED THE FACTS OF THE CASE AND THE AR GUMENTS ADVANCES BY BOTH THE PARTIES, WE AGREE WITH THE CON TENTION OF THE LD. AR THAT FIFO METHOD OF VALUATION CAN BE FOLLOWE D WHEN ITEMS PURCHASED /MANUFACTURED ARE IDENTICAL TO THE ITEMS IN THE STOCK. SINCE THIS IS NOT POSSIBLE IN THIS TIME OF BUSINESS , THE ONLY METHOD OF VALUATION IS TO TAKE THE AVERAGE RATE OF THE GOO DS MANUFACTURED TO VALUE THE CLOSING TOCK. SECONDLY CHOICE OF METHOD OF VALUATION IS OF THE ASSESSEE WHICH IS TO BE FOLLOWING CONSISTENTLY A ND SINCE IT IS THE FIRST YEAR OF THE COMPANY AND THE METHOD OF VAL UATION HAVE BEEN DISCLOSED IN THE NOTES TO ACCOUNTS, THERE IS NO JUSTIFICATION TO DISTURB THE METHOD OF VALUATION FOLLOWED BY THE ASSESSEE. THE STOCK TAKEN OVER FROM SINGHAL GRANITES IS THER EFORE RIGHTLY CONSIDERED BY THE ASSESSEE IN WORKING OUT T HE AVERAGE RATE OF THE STOCK. IT IS ALSO OBVIOUS THAT IN THE LINE OF BUSINESS THE FRESH STOCK IS READILY SALABLE WHEREAS THE REMAINING STOC K IS SOLD AT A LESSER RATE WHICH IS ALSO EVIDENT FROM THE SALE INV OICE OF THE SUBSEQUENT PERIOD FILED BY THE ASSESSEE IN THE PAPER BOOK. THEREFORE, WE UPHOLD THE FINDING OF THE CIT(A) IN C ONSIDERING 50% OF THE TOTAL STOCK AS INFERIOR QUALITY. THE ASSESSEE HAS VALUED THE INFERIOR STOCK AT 25% OF THE AVERAGE COST WHICH THOUGH SUPPORTED BY FEW SALE BILLS OF THE SUBSEQUENT PERIOD BUT THE SAME APPEARS TO BE ON LOWER SIDE AND THEREFORE CIT(A) W AS CORRECT IN ADOPTING THE VALUE OF SUCH TOCK AT 50-% OF THE AVERAGE RATE. THE FINDING S OF CIT(A) IS THEREFORE UPHELD BY DIS MISSING THE GROUND OF THE DEPARTMENT AS WELL AS THE CROSS OBJECT ION OF THE ASSESSEE. ITA NO. 702/JP/13 M/S SINGHAL NATURAL STONES PVT. LTD. V. ITO, WARD 4(2), JAIPUR 8 2.10 IN LIGHT OF ABOVE, IT IS CLEAR THAT THE SUBMISS ION OF THE ASSESSEE REGARDING THE METHOD OF VALUATION S WELL AS ESTIMATION OF 50% OF THE CLOSING STOCK OF INFERIOR QUALITY HAS BEEN DULY ACCEPTED AND CONFIRMED BY THE COORDINATE BENCH. AS FAR AS MATTER OF VALUING THE STOCK OF INFERIOR QUALITY IS CONC ERNED THE ASSESSEE HAS VALUED THE STOCK AT 2% OF THE AVERAGE C OST CONFIRM4D BY THE COORDINATE BENCH. HENCE IT WOULD BE RE LEVANT TO NOTE THAT THE COORDINATE BENCH HAS ACCEPTED THE SUBMI SSION AND EXPLANATION OF THE ASSESSEE THAT THE SAID INFERIOR STO CK HAS BEEN SOLD DURING THE SUBSEQUENT FINANCIAL YEAR AT A LOWER PRICE WHICH IS EVIDENT FROM SALE BILLS OF THE SUBSEQUENT PERIOD. BUT THE OPINION THE COORDINATE BENCH, EVEN THOUGH THE SAID SALE VALUE IS SUPPORTED BY THE SALE BILLS OF THE SUBSEQUENT PERIOD B UT THE SAME APPEARS TO BE A LOWER SIDE. BASED ON THAT, THE COORDIN ATE BENCH CONFIRMED THE VALUATION OF INFERIOR STOCK AT 50% OF THE A VERAGE STOCK AS AGAINST 25% AVERAGE COST TAKEN BY THE ASSES SEE. THE ITA NO. 702/JP/13 M/S SINGHAL NATURAL STONES PVT. LTD. V. ITO, WARD 4(2), JAIPUR 9 FINDINGS OF THE COORDINATE BENCH THUS HAVE A DIRECT B EARING ON THE SUBJECT LEVY OF PENALTY AND WILL EQUALLY APPLY IN TH E PRESENT PROCEEDINGS. IT IS THEREFORE NOT A CASE WHERE THE ASS ESSEES EXPLANATION CAN BE SAID TO BE INCORRECT OR FALSE. TH E BASIS OF TAKING THE VALUE OF INFERIOR STOCK HAS BEEN DULY SUP PORTED BY SALE INVOICES OF THE SUBSEQUENT PERIOD AND THUS IT CANNOT BE SAID THAT THE ASSESSEE DOES NOT HAVE A BASIS FOR SUCH VALUATION T O STAND. IT IS PURELY A MATTER OF OPINION AND JUDGEMENT WHERE THE LD. CIT(A) AND COORDINATE BENCH HAS TAKEN A VIEW WHICH DIFFERS F ROM THAT OF THE ASSESSEE ON EXAMINATION OF SAME SET OF FACTS WHICH HAVE BEEN DULY DISCLOSED. IT IS THEREFORE NOT A MATTER WHICH CA LLS FOR LEVY OF PENALTY UNDER THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. 2.11 FURTHER DURING THE COURSE OF HEARING THE LD. AR HAS GIVEN A STATEMENT THAT THE ASSESSEE HAS NOT TAKE ANY ADVANT AGE OF SAID VALUATION ADOPTED BY THE LD. AO IN THE SUBSEQUENT PER IOD WHILE VALUING THE OPENING STOCK. ITA NO. 702/JP/13 M/S SINGHAL NATURAL STONES PVT. LTD. V. ITO, WARD 4(2), JAIPUR 10 2.12 FURTHER THE LD. AR HAS BROUGHT TO THE NOTICE OF THE BENCH DECISION OF HONBLE HIMACHAL PRADESH HIGH COURT IN THE CASE OF H.P. STATE FOREST CORPORATION (340 ITR 204) REGARDING NON-LEVY OF PENALTY IN RESPECT OF DISPUTED VALUATION OF CLOSING STOC K WHICH SQUARELY APPLIES IN THE INSTANT CASE. THE RELEVANT FINDING OF THE HONBLE HIGH COURT CONTAINED AT PARA 21 & 22 OF ITS OR DER WHICH READS AS UNDER: WE ARE OF THE CONSIDERED VIEW THAT THE LATEST JUDG EMENT OF THE APEX COURT IN RELIANCE PETRO PRODUCTS CASE (SUP RA) SQUARELY COVERS THE PRESENT CASE ALSO. THE APEX COURT IN TH IS JUDGEMENT HAS CLEARLY HELD THAT THE WORD INACCURATE AS USE D IN THE ACT WOULD MEAN SOMETHING WHICH IS NOT ACCURATE, NOT EXAC T OR NOT CORRECT. SOMETHING WHICH IS UNTRUE IS INACCURATE. T HE SAME FACTS CAN BE GIVEN TWO INTERPRETATIONS. IF THE INTERPRET ATION GIVEN IS PLAUSIBLE THOUGH NOT ACCEPTED B THE ASSESSING AUTHO RITY IT CANNOT BE SAID THAT STATEMENT OF PARTICULARS IS SO INACCU RATE OR ERRONEOUS S TO INVITE IMPOSITION OF PENALTY. TRUE IT IS THAT MENSREA IS NOT REQUIRED TO BE PROVED. WHEN MENS REA PROVED IT SHOWS THAT THE PERSON HAD AN INTENTION OF EVADING P AYMENT OF T BY ILLEGAL MENS. MERELY BECAUSE WRONG INTERPRETATION T O THE SAME SET OF FATS IS GIVEN WOULD NOT, IN OUR OPINION, MEA N THAT THE ASSESEE IS LIABLE TO PAY PENALTY ALSO. WE MUST REMEMB ER THAT PENALTY IS BY ITS VERY NATURE PENAL AND SOMEBODY IS BEING PUNISHED FOR AN ACT WHICH IS UNJUSTIFIED. THE ASSESSEE IN T HE PRESENT CASE HAS ALREADY BEEN BURDENED WITH TAX AND INTEREST ON THE AMOUNT ITA NO. 702/JP/13 M/S SINGHAL NATURAL STONES PVT. LTD. V. ITO, WARD 4(2), JAIPUR 11 ADDED TO HIS INCOME. THE MOOT QUESTION IS WHETHER THE ASSESSEE SHOULD BE MADE LIABLE TO PAY PENALTY. THE APEX COURT IN RELIANCE PETRO PRODUCTS CASE (SU PRA) HAS CLEARLY LAID DOWN THAT MERELY BECAUSE THE ASSESSEE MAKES A CL AIM WHICH IS NOT SUSTAINABLE IN LAW, WILL NOT AMOUNT TO FURNI SHING INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. I N THE PRESENT CASE, AS POINTED OUT ABOVE, THE ASSESSEE WAS DEDUC TING THE AMOUNT OF RS. 2,12,18,295/- ON ACCOUNT OF DETERIORA TION OF OLD STOCK. THIS WAS BEING DONE ON ESTIMATION ON THE BAS IS OF THE REPORTS MADE BY VARIOUS OFFICERS OF THE CORPORATION. THIS ESTIMATION WAS NOT ACCEPTED MAINLY ON THE GROUND THAT THE REPORTS WERE MADE AND RESOLUTION PASSED BY THE BOAR D AFTER THE ASSESSMENT YEAR WAS OVER AND THEREFORE THEY COULD N OT BE GIVEN RETROSPECTIVE BENEFIT. IT HAS NOT BEEN FOUND THAT THE CLAIM OF THE ASSESSEE THAT THE WOOD HAD NOTED AND DETERIORATED I S FALSE. IT IS NOBODYS CASE THAT THE ASSESSEE FUDGED THE AMOUNTS, THE BOOKS OF ACCOUNTS OR TRIED TO CREATE FALSE EVIDENCE. THE CLA IM MADE BY THE ASSESSEE MAY NOT HAVE BEEN ACCEPTED BY THE REVENUE BUT IT CANNOT BE SAID THAT THE ASSESSEE FURNISHED INACCURA TE PARTICULARS TO SUCH AN EXTENT THAT PENALTY SHOULD BE IMPOSED U PON IT. THERE DOES NOT APPEAR TO BE FALSEHOOD IN THE ACCOUNTS THO UGH THE SYSTEM OF CALCULATING THE DEPRECIATION MAY HAVE BEEN IMPROPER. WE ALSO CANNOT LOSE SIGHT OF THE FACT THAT ASSESSEE IS A GOVERNMENT CORPORATION. ITS ACCOUNTS ARE DULY AUDITE D AND EVEN THE CAG HAS GONE THROUGH AND APPROVED THE ACCOUNTS OF THE CORPORATION. IN SUCH CIRCUMSTANCES, WE ARE OF THE V IEW THAT MERELY BECAUSE THE ASSESSEE HAD CLAMED DEPRECATION WHICH CL AIM WAS NOT ACCEPTED BY THE REVENUE THAT BY ITSELF WOULD NO T, IN OUR OPINION, ATTRACT PENALTY UNDER SEC. 271(1)(C) OF TH E ACT. ITA NO. 702/JP/13 M/S SINGHAL NATURAL STONES PVT. LTD. V. ITO, WARD 4(2), JAIPUR 12 2.13 CONSIDERING THE PENALTY OF THE FACTS AND CIRCUMS TANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE DECISIONS OF HON BLE HP HIGH COURT IN CASE OF H.P. STATE FOREST CORPORATION, WE A RE OF THE CONSIDERED VIEW THAT THE LD. AO HAS ERRED IN LEVY OF PENALTY ON ENHANCED VALUE OF OLD MARBLE SLABS AND OLD TILES OF RS . 1,13,434/- AND RS. 2,39,86/- RESPECTIVELY. THE PENALTY TO THIS EXTENT IS THUS DELETED ON THE SAID ADDITIONS. IN THE RESULT THE APPEAL OF THE ASSSESSEE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06/01/2016 SD/- SD/- (R.P. TOLANI) (VIKRAM SINGH YADAV) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED : 06/01/2016 PILLAI COPY OF THE ORDER FORWARDED TO:- 1. THE APPELLANT, M/S SINGHAL NASTURAL STONES PVT. LTD . JAIPUR 2. THE RESPONDENT, ITO, WARD 4(2), JAIPUR 3. THE CIT-II, JAIPUR, 4. THE CIT(A)-II, JAIPUR 5. THE DEPARTMENTAL REPRESENTATIVE, ITAT, JAIPUR 6 GUARD FILE (ITA NO. 702/JP/13) BY ORDER ITA NO. 702/JP/13 M/S SINGHAL NATURAL STONES PVT. LTD. V. ITO, WARD 4(2), JAIPUR 13 ASSISTANT REGISTRAR. `