Swiss Glass Coat Equipment Ltd., Anand V. The Dy.CIT,Cent.Circle-1, Baroda

ITSSA 500/AHD/2012

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 2938 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-03-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 09-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Depreciation; Document seized; Question of law; Wrong claim; Documents seized; Capital expenditure
• Section: 143(3); 153A; 80IB; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ( ) ./ IT(SS)A NOS. 499 & 500/AHD/2012 / ASSESSMENT YEAR: 2003-04 & 2004-05 SWISS GLASS COAT EQUIPMENT LTD. H-106, GIDC, VITTHAL UDYOGNAGAR, ANAND PAN : AACCS 6297 G VS. DCIT, CENTRAL CIRCLE-1, BARODA [ / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI S.N. SOPARKAR & PARIN SHAH REVENUE BY : SHRI PRASOON KABRA, SR. DR. / DATE OF HEARING : 13/03/2017 / DATE OF PRONOUNCEMENT: 22/03/2017 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER: THESE TWO APPEALS BY SAME ASSESSEE FOR ASSESSMENT YEARS 2003-04 AND 2004-05 ARE FILED AGAINST THE CONSOLIDATED ORDER OF THE COMMISSIONER OF INCOME- TAX (APPEALS)-IV, AHMEDABAD DATED 01.08.2012 VIDE A PPEAL NOS. CIT(A)- IV/9B/CC-01/11-12 & CIT(A)-IV/10B/CC-1/11-12, ARISI NG OUT OF SEPARATE ORDERS FRAMED BY THE DCIT, CENTRAL CIRCLE-1, BARODA DATED 25.02.2011 AND 17.03.2011 IMPOSING PENALTY U/S 271(1)(C) OF RS.10, 00,000/- AND RS.45,00,000/- FOR AYS 2003-04 AND 2004-05 RESPECTIVELY. 2. BRIEFLY STATED FACTS, AS CULLED OUT FROM THE ASS ESSMENT RECORDS, ARE THAT A SEARCH U/S 132 OF THE ACT WAS CONDUCTED IN SWISS GL ASS COAT GROUP OF CASES ON 19.01.2006. IN RESPONSE TO NOTICE U/S 153A OF THE ACT, ASSESSEE FILED RETURN OF INCOME ON 31.07.2006 DECLARING INCOME AT RS.69,22,9 40/- AND RS.1,12,60,100/- FOR ASSESSMENT YEARS 2003-04 AND 2004-05 RESPECTIVE LY. ORDER U/S 143(3) R.W.S. 153A OF THE ACT WAS PASSED ON 31.12.2007 ASSESSING INCOME AT RS.98,72,234/- IT(SS) NOS. 499 & 500/AHD/2012 SWISS GLASS COAT EQUIPMENT LTD VS. DCIT AYS : 2003-04 & 2004-05 - 2 AND RS.2,34,91,800/- FOR ASSESSMENT YEARS 2003-04 A ND 2004-05, AFTER MAKING ADDITION TOWARDS UNACCOUNTED EXCESS STOCK OF RS.27, 75,131/- AND DISALLOWANCE U/S 80IB OF RS.1,74,163 IN AY 2003-04; AND AS REGAR DS TO AY 2004-05, THE ADDITION TOWARDS UNACCOUNTED EXCESS STOCK WAS MADE AT RS.1,21,97,610/- AND DISALLOWANCE U/S 80IB AT RS.34,090/-. APPEAL ON QU ANTUM ADDITION BEFORE THE CIT(A) COULD NOT BRING ANY SUCCESS TO THE ASSESSEE AS ALL THE ADDITIONS WERE CONFIRMED. ASSESSEE FURTHER PREFERRED APPEAL BEFORE THE CO-ORDINATE BENCH, WHEREIN THE ISSUE RELATING TO DISALLOWANCE U/S 80IB WAS RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER AND THE ADDITION MADE ON A CCOUNT OF UNACCOUNTED EXCESS STOCK WAS CONFIRMED. THE ASSESSEE FURTHER P REFERRED APPEAL BEFORE THE HONBLE JURISDICTIONAL HIGH COURT, BUT COULD NOT SU CCEED. IN ALL, THE ADDITION ON ACCOUNT OF EXCESS STOCK FOR AYS 2003-04 AND 2004-05 AT RS.27,75,131/- AND RS.1,21,97,610/- ATTAINED FINALITY. 3. ON THE ABOVE ADDITIONS ON ACCOUNT OF EXCESS STOC K, PENALTY U/S 271(1)(C) WERE IMPOSED AT RS.10,00,000/- AND RS.45,00,000/- I N AYS 2003-04 AND 2004-05 AS THE ASSESSEE WAS CONSIDERED TO HAVE CONCEALED PA RTICULARS OF INCOME AS THERE WAS VARIATION IN THE ACTUAL BOOK RESULTS AND THE AL LEGED ANNEXURE A-5 AT PAGE NO.111 SHOWING DETAILS OF STOCK OF FINISHED AND SEM I-FINISHED GOODS. THE LD. ASSESSING OFFICER ALSO OBSERVED THAT IF SEARCH OPER ATION HAS NOT TAKEN PLACE AND THE CASE OF THE ASSESSEE WAS NOT TAKEN UP FOR SCRUT INY, THE REAL FACT IN RESPECT OF ADDITION/DISALLOWANCE WOULD HAVE REMAINED UNNOTICED . 4. AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE TH E LD. CIT(A) AGAINST THE ORDER OF ASSESSING OFFICER IMPOSING PENALTY U/S 271 (1)(C) OF THE ACT AND GOT PARTIAL SUCCESS AS LD. CIT(A) GAVE TELESCOPIC BENEF IT OF THE EXCESS STOCK FOR AY 2003-04 AGAINST THE EXCESS STOCK FOR AY 2004-05 AND ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO RE-COMPUTE THE PENALTY LEVIABL E ON EXCESS STOCK FOR AY 2004-05 AT RS.94,22,479/- (RS. 1,21,97,610 RS. 27 ,75,131) BY OBSERVING AS UNDER:- IT(SS) NOS. 499 & 500/AHD/2012 SWISS GLASS COAT EQUIPMENT LTD VS. DCIT AYS : 2003-04 & 2004-05 - 3 7.13 IN VIEW OF THE ABOVE, IT IS HELD THAT THE EX PLANATION OF THE APPELLANT IN RELATION TO EXCESS STOCK CANNOT BE TREATED AS BONA FIDE AS THE ADDITION IS BASED ON SEIZED DOCUMENTS AND THE EXPLANATION FURNISHED BY T HE APPELLANT IS NOT SUPPORTED BY ANY EVIDENCE. IT IS WELL SETTLED PROPO SITION IN LAW THAT MERE FURNISHING OF EXPLANATION IS NOT SUFFICIENT BUT IT HAS TO BE SUBSTANTIATED WITH EVIDENCE. IN THE ABSENCE OF SUBSTANTIATING EXPLANAT ION WITH EVIDENCE, THE AO IS PERFECTLY JUSTIFIED, IN THE CIRCUMSTANCES OF THE CA SE, IN COMING TO THE CONCLUSION THAT THE EXPLANATION IS FALSE AND THE SEIZED PAGE 1 11 GIVES CORRECT VALUE OF STOCK WHICH ARE IN EXCESS OF STOCK SHOWN IN THE BOOKS OF ACCOUNT AND THEREFORE, THE APPELLANT HAS CONCEALED THE PARTICULARS OF INCOME. 7.14 CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDERED OPINION THAT PENALTY LEVIED BY THE AO U/ S 271(1)(C) OF THE ACT IN RESPECT OF ADDITION MADE ON ACCOUNT OF EXCESS STOCK AS PER PAGE 111 IS PERFECTLY JUSTIFIED AND IS ACCORDINGLY SUSTAINED FOR BOTH THE ASSESSMENT YEARS. HOWEVER, CONSIDERING THE DIRECTION OF THE HON'BLE TRIBUNAL A T PARA 12 OF ORDER NO.61- 62/AHD/2009 DTD.29-01-201C VIDE WHICH THE AO HAS BE EN DIRECTED TO GIVE EFFECT TO THE ADDITION OF CLOSING STOCK FOR THE OPENING ST OCK OF NEXT YEAR, EXCESS CLOSING STOCK IN AY 2003-04 OF RS.27,75,131/- HAS TO BE TAK EN INTO CONSIDERATION BY INCREASING THE OPENING STOCK OF AY 2004-05 BY THE A BOVE AMOUNT OF RS. 27,75,131/-. ACCORDINGLY, EXCESS STOCK SO FAR AS AY 2004-05 IS CONCERNED WILL BE EXCESS STOCK AS DETERMINED BY AO AT RS.1,21,97,610/ - AS REDUCED BY THE EXCESS STOCK OF RS. 27,75,131/- FOUND IN AY 2003-04 AS PER DIRECTION OF HON'BLE ITAT. IN VIEW OF THE ABOVE, THE PENALTY LEVIED U/S 271(1) (C) ON EXCESS STOCK OF RS.27,75,131/- IS SUSTAINED SO FAR AS AY 2003-04 IS CONCERNED. SO FAR AS AY 2004-05 IS CONCERNED, THE AO IS DIRECTED TO RECOMPU TE THE PENALTY LEVIABLE U/S 271(1)(C) ON THE EXCESS STOCK AS FOUND AT RS.1,21,9 7,610/-WHICH HAS TO BE REDUCED BY RS. 27,75,131/-. 5. AGGRIEVED, THE ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 6. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE OF EXCESS STOCK CROPPED UP BECAUSE OF THE SEIZED PAGE NO.111 OF ANN EXURE A-5, SHOWING DETAILS OF STOCK FOR AY 2003-04 AND 2004-05. LD. ASSESSING OFFICER HAS COMPARED THE FIGURES OF STOCK AS PER SEIZED PAGE WI TH THE DETAILS AS PER BALANCE-SHEET OF THESE YEARS FILED BY THE ASSESSEE AND NOTED DISCREPANCIES AS THE STOCK SHOWN IN THE SEIZED PAGE NO.111 WAS MORE THAN THE STOCK SHOWN AS PER THE AUDITED BALANCE-SHEET - BOTH UNDER THE HEAD FIN ISHED GOODS AND SEMI- FINISHED GOODS; BUT THE MAJOR VARIATION WAS IN THE STOCK OF SEMI-FINISHED GOODS. LD. COUNSEL FURTHER SUBMITTED THAT SEARCH WAS CONDU CTED ON 19.01.2006, PERTAINING TO FY 2005-06, AND PHYSICAL STOCK WAS VE RIFIED WITH THE BOOK STOCK IT(SS) NOS. 499 & 500/AHD/2012 SWISS GLASS COAT EQUIPMENT LTD VS. DCIT AYS : 2003-04 & 2004-05 - 4 BY THE SEARCH TEAM AND THERE WAS NO MAJOR VARIATION FOUND IN QUANTITATIVE TERMS OF THE STOCK LYING AT THE BUSINESS PREMISES. THE ALLEGED DOCUMENT AT PAGE NO.111 OF ANNEXURE A-5 WAS BASICALLY A CMA DATA SHE ET PREPARED BY THE ACCOUNTANT FOR THE BANKING PURPOSES TO GET HIGHER B ANK LIMITS AND THE FIGURES SHOWN IN THE CMA DATA WERE MAINLY ESTIMATED AND THE MAJOR VARIATION WAS ON ACCOUNT OF ADOPTING DIFFERENT PERCENTAGE FOR ALLOCA TION OF EXPENSES. LD. COUNSEL REFERRED TO PAGE NO.54 61 OF THE PAPER-BO OK AND SUBMITTED THAT AT PAGE NO.61, A HANDWRITTEN SHEET IS PREPARED SHOWING DETAILS OF SALES, MANUFACTURING EXPENSES AND WORK-IN-PROGRESS AND ALL OCABLE EXPENSES HAVE BEEN SHOWN AT RS.2.1 CRORES AND RS.0.88 CRORES FOR AYS 2004-05 AND 2003-04 RESPECTIVELY; WHEREAS AT PAGE NO.54, THE ALLOCABLE EXPENSES HAVE BEEN SHOWN AT RS.0.90 CRORES AND 0.61 CRORES AND THE DIFFERENCE O F THE ALLOCABLE EXPENSES IN THESE TWO SHEETS REPRESENT THE EXCESS STOCK CALCULA TED BY THE LD. ASSESSING OFFICER. LD. COUNSEL FURTHER ADDED THAT THE ISSUE IN THESE APPEAL RELATES TO IMPOSITION OF PENALTY U/S 271(1)(C) OF THE ACT. IT IS UNDISPUTED FACT THAT QUANTUM ADDITION HAS BEEN CONFIRMED UP TO THE LEVEL OF JURISDICTIONAL HIGH COURT, BUT IT IS WELL ESTABLISHED JUDICIAL PRUDENCE THAT QUANTUM PROCEEDINGS AND PENALTY PROCEEDINGS ARE BOTH SEPARATE AND IT IS NOT A WRITTEN LAW THAT IF THE QUANTUM ADDITION IS CONFIRMED, THEN THE PENALTY U/S 271(1)(C) HAS TO BE LEVIED. LD. COUNSEL FURTHER SUBMITTED THAT THERE WAS NO VAR IATION IN QUANTITY OF STOCK ON THE DATE OF SEARCH. THE DISPUTE IS ONLY WITH TH E VALUATION OF CLOSING STOCK, THAT ALSO ON THE BASIS OF TWO DOCUMENTS; BOTH HAVE BEEN PREPARED BY ASSESSEE HIMSELF SHOWING THE VALUE OF CLOSING STOCK. EVER S INCE THE ASSESSMENT PROCEEDINGS ON QUANTUM ISSUE, THE ASSESSEE HAS TAKE N THE SAME STAND THAT THE ALLEGED SHEET AT PAGE NO.111 OF ANNEXURE A-5, WHICH IS PLACED AT PAGE NO.68 OF THE PAPER-BOOK, SHOWING DETAILS OF FINISHED GOODS/S EMI-FINISHED GOODS, DEBTORS AND CREDITORS FOR AY 2002-03, 2003-04 AND 2 004-05 IS BASICALLY A CMA DATA SHEET PREPARED FOR THE PURPOSE OF BANK. THE F IGURES SHOWN IN THE SHEET CLEARLY SHOW THAT THERE IS AN ESTIMATION OF FIGURES YEAR BY YEAR WITH INCREASING TREND. THE MAIN DIFFERENCE BETWEEN THE SHEET AND TH E AUDITED BALANCE-SHEET IS IT(SS) NOS. 499 & 500/AHD/2012 SWISS GLASS COAT EQUIPMENT LTD VS. DCIT AYS : 2003-04 & 2004-05 - 5 WITH REGARD TO THE ALLOCABLE EXPENSES. AS PER THE W ORKING OF THE FIGURES IN THE BALANCE-SHEET, THE ALLOCABLE EXPENSES WERE ESTIMATE D AT 14% OF MANUFACTURING COST WHICH WAS WORKED OUT FOR THE PURPOSE OF ALLEGE D PAGE NO.111 IS RS.2,10,00,000 IN AY 2003-04 WHILE IT WAS WORKED OU T AT RS.88,00,000/- FOR AY 2004-05. BUT, IN FACT, THE FIGURES SHOWN IN AY 200 4-05 AND 2003-04 ARE PUT IN A WRONG BOX, I.E. OF AY 2004-05 IN AY 2003-04 AND VIC E VERSA WHICH IS REALLY WORKED OUT AT THE TIME OF FINALIZATION AT RS.2,13,5 0,759/- AND RS.86,93,900/- RESPECTIVELY AND THAT ALTERED BOTH SCENARIO. INSOF AR AS THE FINISHED GOODS ARE CONCERNED, THE DIFFERENCE IS MEAGER AT RS.390/- AND RS.1,69,075/- ONLY. LD. COUNSEL FURTHER REFERRED AND RELIED ON THE DECISION OF THE CO-ORDINATE BENCH IN ITA NO.1227/AHD/2013 IN THE CASE OF BALAR EXPORTS V S. DCIT, PRONOUNCED ON 06.02.2017, WHEREIN THE TRIBUNAL HAS HELD THAT IN C ASE THERE IS NO VARIATION IN THE PHYSICAL STOCK AND THE ADDITION IS ONLY WITH RE GARD TO VALUATION OF CLOSING STOCK, THEN THE ASSESSEE SHOULD NOT BE VISITED WITH PENALTY U/S 271(1)(C). IN THE PRESENT CASE ALSO, THE ISSUE IS ONLY WITH REGARD TO VALUATION OF CLOSING STOCK, THAT TOO BASED ON THE RECORDS SEIZED BY THE DEPARTMENT A ND THE ALLEGED SHEET WHICH IS ALSO PREPARED BY ASSESSEE HIMSELF AND THERE WAS NO OTHER EVIDENCE TO SHOW THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED PARTICULARS OF INCOME. 7. ON THE OTHER HAND, LD. DR VEHEMENTLY ARGUED SUPP ORTING THE ORDERS OF THE LOWER AUTHORITIES AND ADDED THAT ASSESSEE HAS B EEN UNABLE TO PROVE THERE IS NO MENS REA IN THE ALLEGED VALUATION OF CLOSING STOCK BY SHOWI NG THEM AT A LOWER AMOUNT EVEN WHEN ALL THE OTHER FIGURES OF BALANCE-S HEET WERE MATCHING THE ALLEGED SHEET GIVING DETAILS OF THREE FINANCIAL YEA RS RELATING TO STOCK, DEBTORS AND CREDITORS. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. THE SOLITARY GRIEVANCE IN ASSESSEES AP PEAL FOR AY 2003-04 AND 2004- 05 IS AGAINST THE LD. CIT(A)S ORDER CONFIRMING IMP OSITION OF PENALTY U/S IT(SS) NOS. 499 & 500/AHD/2012 SWISS GLASS COAT EQUIPMENT LTD VS. DCIT AYS : 2003-04 & 2004-05 - 6 271(1)(C) ON THE ADDITION CONFIRMED ON ACCOUNT OF E XCESS STOCK FOR AYS 2003-04 AND 2004-05 AT RS.27,75,131/- AND RS.94,22,479/- RE SPECTIVELY. 9. WE FIND THAT ASSESSEE HAS LOST IN QUANTUM APPEAL UP TO THE LEVEL OF JURISDICTIONAL HIGH COURT. THE SHORT ISSUE BEFORE US IS WHETHER THE PENALTY U/S 271(1)(C) OF THE ACT IS JUSTIFIED ON THE ADDITION R ELATING TO EXCESS STOCK FOR BOTH THE ASSESSMENT YEARS. WE OBSERVE THAT SEARCH WAS C ONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 19.01.2006. DURING THE COURSE OF SEARCH, A SHEET CONTAINING DETAILS OF SEMI-FINISHED/FINISHED GOODS, DEBTORS AND CREDITORS FOR AYS 2002-03, 2003-04, 2004-05 WAS SEIZED BEARING NO .111 OF ANNEXURE A-5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, LD. AS SESSING OFFICER COMPARED THE FIGURES OF STOCK AS PER SEIZED PAGE WITH THE DE TAILS AS PER AUDITED BALANCE- SHEET FOR AYS 2003-04 AND 2004-05 AND OBSERVED THAT STOCK OF FINISHED GOODS AND SEMI-FINISHED GOODS WERE VALUED LESS IN COMPARI SON TO THE STOCK SHOWN IN THE SEIZED SHEET. 10. WE FURTHER OBSERVE THAT SINCE THE COURSE OF SEA RCH AND BEFORE ALL THE LOWER AUTHORITIES AS WELL AS BEFORE THE JURISDICTIO NAL HIGH COURT, ASSESSEE HAS TAKEN A COMMON STAND CLAIMING THAT THE ALLEGED SHEE T WAS BASICALLY A WORKING FOR PREPARING CMA DATA FOR RENEWAL/ENHANCING THE BA NK LIMITS AND THE SAME HAS PREPARED BY THE ACCOUNTANT. IT WAS ALSO SUBMITT ED BY ASSESSEE THAT THE BASIC REASON FOR CHANGE IN VALUATION OF STOCK IS BECAUSE OF VARIATION IN PERCENTAGE OF ALLOCATION OF EXPENSES. EVEN BEFORE US, LD. COUNSE L HAS TAKEN US THROUGH PAGE NOS, 54, 61 AND 68 IN ORDER TO CONVINCE THAT VARIAT ION OF STOCK VALUATION HAS ARISEN DUE TO CHANGE IN PERCENTAGE ADOPTED FOR ALLO CATING EXPENSES AND IF THE ALLOCATION EXPENSES ARE CALCULATED IN THE ROUGH SHE ET AND THE FINAL SHEET AT SIMILAR PERCENTAGE, THERE WOULD HARDLY BE ANY DIFFE RENCE IN VALUATION OF CLOSING STOCK. 11. WE FURTHER OBSERVE THAT IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS LOST IN QUANTUM ADDITION UP TO THE LEVEL OF JURISDICTIONAL HIGH COURT AND WE ARE DEALING FOR LIMITED PURPOSE ABOUT THE IMPOSITION OF PENALTY U/S 271(1)(C) OF THE IT(SS) NOS. 499 & 500/AHD/2012 SWISS GLASS COAT EQUIPMENT LTD VS. DCIT AYS : 2003-04 & 2004-05 - 7 ACT WHICH CAN ARISE IF AN ASSESSEE HAS FURNISHED IN ACCURATE PARTICULARS OF INCOME OR CONCEALED ANY PARTICULARS OF INCOME. ANA LYZING THE FACTS UNDER THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT, WE FIND THAT DURING THE COURSE OF SEARCH, PHYSICAL VERIFICATION OF STOCK WAS TAKEN UP BY THE DEPARTMENT AND ADMITTEDLY, NO MAJOR VARIATION WAS FOUND. THIS FAC T IS FURTHER CONFIRMED IN THE LD. CIT(A)S ORDER, WHEREIN LD. CIT(A) CATEGORICALL Y ACCEPTED THAT THERE WAS NO VARIATION IN QUANTITY OF PHYSICAL VERSUS BOOK STOCK . IT MEANS THAT, AS ON THE DATE OF SEARCH, THE QUANTITATIVE RECORDS OF THE ASS ESSEE WERE PERFECT. 12. IT WAS THAT SINGLE PAGE DOCUMENT BEARING NO.111 /ANNEXURE A-5 SEIZED DURING THE COURSE OF SEARCH WHICH WAS EXHIBITING SO ME COMPARATIVE DETAILS FOR THREE FINANCIAL YEARS WHICH IS THE GENESIS OF ALL I SSUES. CERTAINLY, THE ALLEGED DOCUMENT WAS NOT A PART OF REGULAR BOOKS OF ACCOUNT , BUT IT WAS A SUMMARY WITH A COMPARATIVE ANALYSIS OF STOCK, DEBTORS AND C REDITORS WHICH IS NORMALLY PREPARED TO GIVE A FINANCIAL PICTURE OF THE BUSINES S CONCERN. SIMILAR TYPE OF DETAILS ARE GENERALLY CALLED FOR BY THE BANKS TO PR OVIDE CREDIT FACILITIES OR RENEW THE CREDIT FACILITY AND ESTIMATED FIGURES ARE REQUI RED FROM THE SIDE OF BUSINESS CONCERN TO PROVE THAT THERE IS SUFFICIENT LIQUIDITY AND PROFITABILITY WHICH CAN COVER UP THE INTEREST COST OF THE BANK CREDITS AS W ELL AS FUTURE PROSPECTS OF THE BUSINESS. UNDOUBTEDLY, THIS SHEET WAS PREPARED BY ASSESSEE ONLY AND THE ASSESSING AUTHORITY HAS JUST COMPARED THE FIGURES S HOWN IN THE SEIZED SHEET WITH THE AUDITED BALANCE-SHEET WHICH WERE FILED MUC H BEFORE THE DATE OF SEARCH. THIS COMPARISON LANDED UP FORMING A VIEW THAT ASSES SEE HAS UNDERVALUED THE CLOSING STOCK. THERE IS NOTHING ON RECORD TO SHOW THAT REVENUE HAS DIPPED INTO THE BOOKS OF ACCOUNTS FOR FY 2002-03 AND 2003-04 TO BRING ANY MATERIAL EVIDENCE TO SHOW THAT ASSESSEE HAS NOT ACCOUNTED FO R ANY TRANSACTION OF SALES OR ANY DEFECT IN THE PURCHASES OR THE QUANTITATIVE DET AILS OF EACH FINANCIAL YEAR. IT IS RATHER A CASE WHERE LD. ASSESSING OFFICER HAS ED GED THE ROUGH CMA DATA SHEET OVER AND ABOVE THE AUDITED FINANCIAL STATEMEN TS. IT SEEMS THAT THE ADDITION WAS CONFIRMED BECAUSE OF THE CHANGE IN VAL UATION OF CLOSING STOCK, BUT IT(SS) NOS. 499 & 500/AHD/2012 SWISS GLASS COAT EQUIPMENT LTD VS. DCIT AYS : 2003-04 & 2004-05 - 8 THERE WAS NO OTHER EVIDENCE AGAINST THE ASSESSEE TO PROVE MENS REA THAT IT HAS INTENTIONALLY CONCEALED THE INCOME. 13. AT THIS JUNCTURE, WE FIND IT PERTINENT TO OBSER VE THE DECISION OF THE CO- ORDINATE BENCH IN THE CASE OF BALAR EXPORTS (SUPRA) , RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE, ADJUDICATING SIMILAR ISSUE AGAINS T IMPOSITION OF PENALTY IN A CASE WHERE THERE IS NO VARIATION IN QUANTITATIVE RE CORDS BUT THE ADDITION HAS BEEN MADE MERELY FOR DIFFERENCE IN VALUATION OF CLO SING STOCK. THE CO-ORDINATE BENCH ALLOWED THE ASSESSEES APPEAL AND DELETED THE PENALTY U/S 271(1)(C) OF THE ACT, BY OBSERVING AS FOLLOWS:- 14.1 AT THIS JUNCTURE WE TAKE NOTE OF CERTAIN JUDI CIAL PRONOUNCEMENTS. WE FIND IN THE CASE OF CIT VS. H.P. STATE FOREST CORPORATIO N LTD. (SUPRA) WHEREIN SIMILAR ISSUE HAS BEEN DECIDED IN FAVOUR OF ASSESSEE BY OBS ERVING AS UNDER :- HELD THE WORD 'INACCURATE' AS USED IN THE WOULD MEAN SOM ETHING WHICH IS NOT ACCURATE NOT EXACT OR NOT CORRECT. SOMETHING WHICH IS UNTRUE IS IN ACCURATE. THE SAME FACTS CAN BE GIVEN TWO INTERPRET ATIONS. IF THE INTERPRETATION GIVEN IS PLAUSIBLE, THOUGH NOT ACCEP TED BY THE ASSESSING AUTHORITY, IT CANNOT BE SAID THAT THE STATEMENT OF PARTICULAR IS SO INACCURATE OR ERRONEOUS AS TO INVITE IMPOSITION OF PENALTY. TUE IT IS THAT MENS REA IS NOT REQUIRED TO BE PROVED. WHEN MENS RE A IS PROVED IT SHOWS THAT THE PERSON HAD AN INTENTION OF EVADING PAYMENT OF TAX BY ILLEGAL MEANS. MERELY BECAUSE A WRONG INTERPRETATION TO THE SAME SET OF FACTS IS GIVEN, IT WOULD NOT MEAN THAT THE ASSESSEE WAS LIAB LE TO PAY PENALTY ALSO. ONE SHOULD REMEMBER THAT PENALTY IS BY ITS VERY NAT URE, PENAL AND SOMEBODY IS BEING PUNISHED FOR AN ACT WHICH IS UNJU STIFIED (PARA 21) THE APEX COURT IN CIT VS. RELIANCE PETRO PRODUCTS ( P) LTD. (2010) 322 ITR 158 HAS CLEARLY LAID DOWN THAT MERELY BECAUSE T HE ASSESSEE MAKES A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, WILL NOT AMO UNT TO FURNISHING OF INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. IN THE INSTANT CASE, THE ASSESSEE WAS DEDUCTING CERTAIN AMOUNT ON ACCOUNT OF DETERIORATION OF OLD STOCK. THAT WAS BEING DONE ON ESTIMATION ON THE BASIS OF THE REPORTS MADE BY VARIOUS OFFICERS OF THE CORP ORATION. THAT ESTIMATION WAS NOT ACCEPTED MAINLY ON THE GROUND THAT THE REPO RTS WERE MADE AND RESOLUTION WAS PASSED BY THE BOARD AFTER THE ASSESS MENT YEAR WAS OVER AND, THEREFORE, THEY COULD NOT BE GIVEN RETROSPECTI VE BENEFIT. IT HAD NOT IT(SS) NOS. 499 & 500/AHD/2012 SWISS GLASS COAT EQUIPMENT LTD VS. DCIT AYS : 2003-04 & 2004-05 - 9 BEEN FOUND THAT THE CLAIM OF THE ASSESSEE THAT THE WOOD HAD ROTTED AND DETERIORATED WAS FALSE. IT WAS NOBODY'S CASE THAT T HE ASSESSEE FUDGED THE AMOUNTS, THE BOOKS OF ACCOUNT OR TRIED TO CREATE FA LSE EVIDENCE. THE CLAIM MADE BY THE ASSESSEE MIGHT NOT HAVE BEEN ACCEPTED B Y THE REVENUE BUT IT COULD NOT BE SAID THAT THE ASSESSEE FURNISHED INACC URATE PARTICULARS TO SUCH AN EXTENT THAT PENALTY SHOULD BE IMPOSED UPON IT. THERE DID NOT APPEAR TO BE FALSEHOOD IN THE ACCOUNTS THOUGH THE S YSTEM OF CALCULATING THE DEPRECIATION MIGHT HAVE BEEN IMPROPER. THE ASSE SSEE WAS A GOVERNMENT CORPORATION. ITS ACCOUNTS WERE DULY AUDI TED AND EVEN THE COMPTROLLER AND AUDITOR GENERAL HAD GONE THROUGH AN D APPROVED THE ACCOUNTS OF THE CORPORATION. IN SUCH CIRCUMSTANCES, MERELY BECAUSE THE ASSESSEE HAD CLAIMED DEPRECIATION WHICH CLAIM WAS N OT ACCEPTED BY THE REVENUE THAT BY ITSELF, WOULD NOT ATTRACT PENALTY U NDER SECTION 271(1)(C). (PARA 22) 15. WE FURTHER FIND THAT A SIMILAR ISSUE HAS BEEN D ECIDED IN THE CASE OF CASE OF CEMENT MARKETING CO. OF INDIA LTD. VS. ASSTT. CS T (1980) 124 ITR 15 WHEREIN IT HAS BEEN HELD AS UNDER :- 5. THE ASSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) WHEREBY HE HAS UPHELD THE ORDER OF IMPOSING THE PENALTY UNDER SECTION 271(L)(C) OF THE ACT PASSED BY THE ASSESSING OFFICER. THE TRIBUNAL VIDE ITS ORDER DATE D 5-4-2007 ACCEPTED THE APPEAL FILED BY THE ASSESSEE AND SET ASIDE THE ORDER OF THE CIT(A) AND DELETED THE PENALTY OF RS. 4,15,000. THE OPERATIVE PART OF THE JUDGMENT OF THE TRIBUNAL IS REPRODUCED AS UNDER : 'WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NO T SHOWN PURCHASES OF RS. 5,71,360 IN THE CLOSING STOCK AND THEREBY CONCE ALED INCOME TO THAT EXTENT. HE FURTHER OBSERVED THAT THE ASSESSEE HAS F ILED INACCURATE PARTICULARS OF INCOME BY MAKING A WRONG CLAIM OF CO MMISSION PAID TO M/S. ROSHAN ENGG. &. CONSULTANTS (P.) LTD. RS. 94,9 91. HE FURTHER OBSERVED THAT SIMILARLY THE ASSESSEE HAS MADE FALSE STATEMENT WITH REGARD TO THE PAYMENT OF RS. 52,500 TO M/S. PROPLUS MANAGE MENT SERVICE, REGISTRAR OF COMPANIES AND SH. K.K. PAUL CLAIMING T HIS EXPENDITURE TO BE REVENUE IN NATURE WHEREAS THE SAME WAS CAPITAL EXPE NDITURE. THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS FURNIS HED INACCURATE PARTICULARS OF INCOME AMOUNTING TO RS. 7,18,851 AND LEVIED PENALTY OF RS. 4,15,000. WE FIND THAT THE RETURN WAS FILED BY THE ASSESSEE ON 4-1-1994 WHEREAS THE DECISION OF THE HON'BLE SUPREME COURT I N THE CASE OF BROOKE BOND INDIA LTD. V. 67/7225 ITR 798 (SC) WAS RENDERE D ON 27-2-1997 HOLDING FEES PAYABLE TO REGISTRAR OF COMPANIES FOR INCREASE IN SHARE CAPITAL AS CAPITAL EXPENDITURE. THUS ON THE DATE OF FILING OF THE RETURN THE IT(SS) NOS. 499 & 500/AHD/2012 SWISS GLASS COAT EQUIPMENT LTD VS. DCIT AYS : 2003-04 & 2004-05 - 10 ASSESSEE DID NOT HAVE THE BENEFIT OF THE ORDER OF T HE HON'BLE SUPREME COURT. THEREFORE, PENALTY CANNOT BE LEVIED ON THE S UM OF RS. 7,500 PAID TO REGISTRAR OF COMPANIES. FURTHER WITH REGARD TO RS. 5,71,360 NOT SHOWN THE ASSESSEE IN THE CLOSING STOCK WE FIND THAT THE ASSESSEE ADMITTED THE MISTAKE AND THE TRIBUNAL WHILE DECIDING THE ISSUE H AS HELD THAT THIS AMOUNT HAS TO BE INCLUDED IN THE CLOSING STOCK OF T HE YEAR UNDER APPEAL AND SIMULTANEOUSLY HAS TO BE CONSIDERED IN THE OPEN ING STOCK IN SUBSEQUENT YEAR. THUS WE FIND THAT THE NET RESULT T O THE ADDITION OF THE INCOME OF THE ASSESSEE IS ZERO AS ADDITION IS MADE IN ONE YEAR WHEREAS DEDUCTION IS ALLOWED IN THE SUBSEQUENT YEAR. FURTHE R THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAS NOT ALLOWED THE D EDUCTION FOR PAYMENT OF RS. 25,000 TO M/S. PROPLUS MANAGEMENT AND RS. 20 ,000 TO SH. K.K. PAUL ON THE GROUND THAT EVIDENCE FOR RENDERING OF S ERVICES COULD NOT BE FILED. IN THESE FACTS WE ARE OF THE VIEW THAT THOUG H THE ASSESSING OFFICER WAS OF THE VIEW THAT NO SERVICES WERE RENDERED BY T HE TWO PERSONS - M/S. PROPLUS MANAGEMENT AND SH. K.K. PAUL, BUT IT CANNOT BE SAID THAT THE ASSESSEE FILED INACCURATE PARTICULARS OF INCOME OR CONCEALED ITS INCOME. THE HON'BLE SUPREME COURT IN THE CASE OF CEMENT MAR KETING CO. OF INDIA LTD. V. ASSTT. C/T124 ITR 15 HAS HELD THAT UNLESS T HE FILING OF AN INACCURATE RETURN IS ACCOMPANIED BY A GUILTY MIND, PENALTY CANNOT BE IMPOSED. IF THE VIEW CANVASSED ON BEHALF OF THE REV ENUE WERE ACCEPTED, THE RESULT WOULD BE THAT IF THE ASSESSEE RAISED A HONA FIDE CONTENTION THAT A PARTICULAR ITEM IS NOT TAXABLE, HE WOULD HAVE TO S HOW IT AS FORMING PART AND PAY TAX UPON IT ON THE POINT OF BEING HELD LIAB LE FOR PENALTY IN CASE CONTENTION IS ULTIMATELY FOUND BY THE COURT TO BE N OT ACCEPTABLE. THIS SURELY COULD NEVER HAVE BEEN INTENDED BY THE LEGISL ATURE. HENCE, FOR THE REASONS GIVEN ABOVE, WE ARC OF THE VIEW THAT THE PE NALTY LEVIED CANNOT BE SUSTAINED IN LAW. HENCE, WE SET ASIDE THE ORDER OF THE CIT(A) AND DELETE THE PENALTY OF RS. 4,15,000. THE GROUNDS OF APPEAL OF THE ASSESSEES ARE ALLOWED.' 6. MR. YOGESH PUTNEY, COUNSEL FOR THE APPELLANT, HA S ARGUED THAT THE ASSESSEE HAD FILED INACCURATE PARTICULARS AS THE AD DITIONS HAVE BEEN MADE ON THE RETURNED INCOME AS DECLARED BY THE ASSESSEE AND THEREFORE, THE BREACH OF THIS STATUTORY OBLIGATION ATTRACTS LEVY O F PENALTY IRRESPECTIVE OF THE FACT WHETHER THE CONTRAVENTION WAS MADE BY THE ASSESSEE WITH ANY GUILTY INTENTION OR NOT. 7. AFTER CONSIDERING THE ARGUMENTS RAISED BY THE CO UNSEL FOR THE APPELLANT AND PERUSING THE RECORD, WE FIND NO FORCE IN THE CO NTENTION RAISED BY THE COUNSEL FOR THE APPELLANT. A PERUSAL OF THE IMPUGNE D ORDER WOULD SHOW THAT THE TRIBUNAL HAS GIVEN A FINDING OF FACT TO TH E EFFECT THAT RETURN WAS FILED BY THE ASSESSEE ON 4-1-1994 WHEREAS THE APEX COURT IN THE CASE OF BROOKE BOND INDIA LTD. \. CIT[\.997] 225 ITR 798 ' RENDERED THE DECISION ON 27- 2-1997 HOLDING FEES PAYABLE TO REGI STRAR OF COMPANIES FOR IT(SS) NOS. 499 & 500/AHD/2012 SWISS GLASS COAT EQUIPMENT LTD VS. DCIT AYS : 2003-04 & 2004-05 - 11 INCREASE IN SHARE CAPITAL AS CAPITAL EXPENDITURE, T HUS, THE PENALTY CANNOT BE LEVIED ON THE AMOUNT PAID TO THE REGISTRAR OF CO MPANIES.. IT HAS ALSO BEEN FOUND BY THE REVENUE THAT WITH REGARD TO SUM O F RS.5,71,360 WHICH WAS NOT SHOWN BY THE ASSESSEE IN THE CLOSING STOCK, THE TRIBUNAL WHILE DECIDING THE QUANTUM APPEAL HAS HELD THAT THIS AMOU NT HAS TO BE INCLUDED IN THE CLOSING STOCK OF THE YEAR UNDER APPEAL AND S IMULTANEOUSLY HAS TO BE CONSIDERED IN THE OPENING STOCK IN SUBSEQUENT YEAR AND THE NET RESULT TO THE ADDITION OF THE INCOME OF THE ASSESSEE IS ZERO ON THIS ACCOUNT. SIMILARLY, THE TRIBUNAL HAS GIVEN A FINDING WITH RE GARD TO THE CLAIM OF DEDUCTION TOR PAYMENT OF RS. 25,000 TO M/S. PROPLUS MANAGEMENT AND RS. 20,000 TO SH. K.K. PAUL. IT CANNOT BE SAID THAT THE ASSESSEE FILED INACCURATE PARTICULARS OF INCOME OR CONCEALED ITS I NCOME. THE HON'BLE SUPREME COURT IN THE CASE OF CEMENT MARKETING CO. O F INDIA LTD. V. ASSTT. CST[\WQ} 124JTRJL52 HAS HELD THAT UNLESS THE FILING OF AN INACCURATE RETURN IS ACCOMPANIED BY A GUILTY MIND, PENALTY CANNOT BE IMPOSED. IT HAS BEEN FURTHER HELD THAT RETURN CANNO T BE 'FALSE' UNLESS THERE IS AN ELEMENT OF DELIBERATENESS IN IT. WHERE THE ASSESSEE DOES NOT INCLUDE A PARTICULAR ITEM IN THE TAXABLE TURNOVER U NDER BONA FIDE BELIEF THAT HE IS NOT LIABLE SO AS TO INCLUDE THE SAME, IT WOULD NOT BE RIGHT TO TREAT THE RETURN AS A FALSE RETURN INVITING IMPOSITION OF PENALTY. THUS, WE ARE OF THE VIEW THAT THE ORDER OF THE TRIBUNAL DOES NOT SU FFER FROM ANY ILLEGALITY AND NO SUBSTANTIAL QUESTION OF LAW AIISES IN THE AP PEAL AND THE SAME IS DISMISSED IN LIMINE. 16. FURTHER WE ALSO OBSERVE THAT A SIMILAR ISSUE CA ME UP BEFORE THE CO-ORDINATE BENCH, AHMEDABAD IN THE CASE OF D. SUBHASHCHANDRA & CO. VS. ACIT IN ITA NO.2805/AHD/2006 FOR AY 2003-04 WHEREIN THE ISSUE H AS BEEN DECIDED BY OBSERVING AS UNDER :- NO DOUBT WHERE THERE IS A FALL IN THE VALUE OF THE GOODS AND THE GOODS COULD NOT BE SOLD EVEN AT COST, THE ASSESSEE IS PER MITTED TO VALUE THE GOODS AT AN ESTIMATED REALIZABLE VALUE. BUT THE ESTIMATED NET REALIZABLE VALUE MUST BE BASED ON THE EVIDENCE AND MATERIAL ON RECOR D. THE ONUS IS ON THE ASSESSEE TO PROVE THE ESTIMATED REALIZABLE VALUE TO BE BONA FIDE ONE. IT CANNOT BE AD HOC VALUE JUST WORKED OUT ON THE BASIS OF ESTIMATING GP AT A PREDETERMINED RATE AND THEN WORKING OUT THE BALANCI NG VALUE TO BE THE CLOSING STOCK AND IN CASE THE AO WANTS TO VERIFY TH E SAME, THE DETAILS OF ESTIMATING THE NET REALIZABLE VALUE OF EACH ITEM BE WORKED OUT SO THAT THE TOTAL MAY MATCH WITH THE VALUE TAKEN IN THE P&L A/C AS SEEMS TO HAVE HAPPENED IN THE CASE OF THE ASSESSEE OTHERWISE THE ASSESSEE WOULD HAVE FIFED ALL THE DETAILS BEFORE THE AO DURING THE COUR SE OF THE. ASSESSMENT - PROCEEDING SO THAT ITS ONUS WOULD HAVE BEEN DISCHAR GED. THE ONUS IS ON THE ASSESSEE TO PROVE THAT THE NET REALIZABLE VALUE WHATEVER HAS BEEN SHOWN BY ASSESSEE IS THE CORRECT NET REALIZABLE VAL UE AND IS LESS THAN THE COST. THE ASSESSEE HAS TO SATISFY THE AO BY ADDUCIN G THE EVIDENCE THAT THE IT(SS) NOS. 499 & 500/AHD/2012 SWISS GLASS COAT EQUIPMENT LTD VS. DCIT AYS : 2003-04 & 2004-05 - 12 NET REALIZABLE VALUE IS LESS THAN THE COST. IN THIS CASE THE ASSESSEE HAS NOT SUBMITTED ANY EVIDENCE TO SUPPORT THE ESTIMATED NET REALIZABLE VALUE. EVEN THE ASSESSEE HAS NOT SHOWN THE SUBSEQUENT INVO ICE TO VERIFY THE VALUE ACTUALLY REALIZED BY THE ASSESSEE. THE AO HAS GIVEN SUFFICIENT OPPORTUNITY TO THE ASSESSEE. THE ASSESSEE FOR THE. FIRST TIME H AS EVEN FILED THE DETAILS OF THE VALUATION OF POLISHED DIAMONDS BEFORE THE TRIBU NAL VIDE LETTER DT. 26TH JULY, 2007, ALTHOUGH THE .ACCOUNTS OF THE ASSESSEE WERE DULY AUDITED UNDER S. 44AB. THE AUTHORISED REPRESENTATIVE POINTE D .OUT THAT THE GP RATE OF THE ASSESSEE DURING THE YEAR WAS 13.81 PER CENT HIGHER THAN THE ONE WHICH VAS EARNED IN THE EARLIER YEAR. IF THE ASSES SEE HAS EARNED THE GP RATE @ 13.81 PER CENT, THEN THE ''AVERAGE NET VALUE REALIZED IN THE CASE OF THE ASSESSEE SHOULD BE MORE THAN THE COST AT LEAST BY 13.81 PER CENT IF THE AVERAGE COST METHOD OR THE NET REALIZABLE VALUE IS COMPARED. THE AUTHORISED REPRESENTATIVE WHEN ASKED FOR THE EVIDEN CE TO SUPPORT THE NET REALIZABLE VALUE, EXPRESSED HIS INABILITY AND POINT ED OUT THAT THE NET REALIZABLE VALUE HAS BEEN WORKED OUT ON THE BASIS O F VALUATION AS EXAMINED BY THE PARTNER. ONE CANNOT BELIEVE THAT THE ASSESSE E WAS NOT KEEPING THE ACCOUNTS OF EACH PIECE OF DIAMOND. CUT AND POLISHED DIAMONDS ARE SORTED IN DIFFERENT LOTS, SIZES, QUALITIES AND THESE DETAI LS ARE BOUND TO BE MAINTAINED ACCORDING TO THE 4 CS (CUT, CARAT, CLARI TY AND COLOUR) BY A PERSON WHO IS DEALING IN DIAMONDS. WHENEVER ROUGH D IAMONDS ARE ISSUED, EXPECTED YIELD IS NOTED ON THE PACKETS AND THESE DE TAILS ARE VERIFIED BY THE ASSESSEE OR ITS REPRESENTATIVE WHEN CUT AND POLISHE D DIAMONDS ARE RECEIVED FROM THE LABOURERS. THE ASSESSEE COULD NOT RUN ITS BUSINESS WITHOUT GETTING THE ACCOUNTS OF EACH AND EVERY PIECE OF DIA MOND. THE AO IN THIS CASE HAS VALUED THE STOCK AT AVERAGE COST WHICH WIL L BE LESS THAN THE REALIZABLE VALUE AS THE ASSESSEE HAS SHOWN THE GP R ATE @ 13.81 PER CENT AND VALUING THE STOCK AT AVERAGE COST, WHEN IT IS L ESS THAN REALIZABLE VALUE IS WELL RECOGNIZED METHOD OF VALUATION OF CLOSING S TOCK AND DULY RECOGNIZED BY AS-2 AND PRUDENCY PRINCIPLES OF ACCOU NTING. THE ASSESSEE IN THIS CASE SINCE COULD NOT PROVE THE NET REALIZAB LE VALUE, THEREFORE, THE NATURAL INFERENCE WILL BE AGAINST THE ASSESSEE. THE AC HAS RIGHTLY VALUED THE CLOSING STOCK OF THE POLISHED DIAMONDS AT AVERA GE COST BY ADOPTING PER CARAT RATE AND ACCORDINGLY, THE ORDER OF THE AO IS CONFIRMED. 17. IN THE LIGHT OF ABOVE JUDICIAL PRONOUNCEMENTS A ND OUR DISCUSSION IN THE PRECEDING PARAGRAPHS ABOUT THE FACTS OF THE CASE OF ASSESSEE, IN THE GIVEN CASE WHERE THE ASSESSEE WHO IS DEALING INTO THE BUSINESS OF DIAMOND HAVING A WIDE RANGE OF VARIETIES AND THERE IS UNCERTAINTY ABOUT C ORRECT VALUATION OF SUCH ITEMS EVEN THEN ASSESSEE HAD PROPERLY MAINTAINED QUANTITA TIVE RECORDS, PROPER BOOKS OF ACCOUNT DULY AUDITED, CONSISTENT ADOPTION OF METHOD OF VALUATION AT 'COST PRICE OR AT MARKET PRICE WHICHEVER IS LESS' AND THE BASIS OF FINDING BY THE REVENUE FOR VALUING OF CLOSING STOCK AT AVERAGE COST TAKEN FROM THE RECORDS OF ASSESSEE ITSELF, CLEARLY SHOWS THAT ASSESSEE HAS NOT FURNISHED INACC URATE PARTICULARS OF INCOME NOR HAS IT CONCEALED ANY PARTICULAR OF INCOME AND I N SUCH CASE WHERE THERE IS IT(SS) NOS. 499 & 500/AHD/2012 SWISS GLASS COAT EQUIPMENT LTD VS. DCIT AYS : 2003-04 & 2004-05 - 13 ONLY A CLAIM OF VALUATION OF CLOSING STOCK BY CERTA IN METHOD WHICH IS BONA FIDELY DEEMED CORRECT BY THE ASSESSEE BUT NOT ACCEPTED BY THE REVENUE, WE ARE OF THE CONFIRMED VIEW THAT ASSESSEE SHOULD NOT HAVE BEEN V ISITED WITH PENALTY U/S. 271(1)(C) OF THE ACT. WE ACCORDINGLY DELETE THE PEN ALTY U/S 271(1)(C) OF THE ACT AT RS.96,66,060/- AND ALLOW THE APPEAL OF ASSESSEE. 18. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. 14. WE FIND THAT THE ISSUE IS ALSO SQUARELY COVERED BY THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIAN CE PETROPRODUCTS PVT LTD, REPORTED IN [2010] 322 ITR 158 (SC), WHEREIN IT HAS BEEN FAIRLY LAID DOWN THAT MERELY BECAUSE THE ASSESSEE MAKES A CLAIM, WHICH IS NOT SUSTAINABLE IN LAW, WILL NOT AMOUNT OF FURNISHING OF INACCURATE PARTICULARS RELATING TO INCOME OF THE ASSESSEE. IN THE CASE BEFORE US, THE ASSESSEE HAS MADE A CLAIM SINCE BEGINNING THAT THE IMPUGNED SHEET WAS PREPARED BY THE ACCOUNT ANT FOR THE PURPOSE OF PREPARING CMA DATA TO BE GIVEN TO THE BANK AND SOME VARIATION HAS TO OCCUR BECAUSE THE SHEET HAS A ROUGH CALCULATION; WHEREAS, THE AUDITED FINANCIAL STATEMENTS ARE THE FINAL PIECE OF DOCUMENTS. ASSESS EES CLAIM HAS NOT BEEN ACCEPTED AT ANY OF THE FORUM AND HE HAS LOST ON QUA NTUM ISSUE, BUT CERTAINLY IT CANNOT BE HELD TO HAVE FURNISHED INACCURATE PARTICU LARS OF INCOME OR CONCEALED ANY PARTICULARS OF INCOME. 15. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH ADJUDICATING SIMILAR ISSUE, DECISION OF HONBLE APE X COURT IN THE CASE OF RELIANCE PETROPRODUCTS PVT LTD (SUPRA), IN VIEW OF OUR DISCUSSION MADE ABOVE AND IN TOTALITY OF FACTS, WE ARE OF THE CONSIDERED OPINION THAT THE ADDITION CONFIRMED IN THE CASE OF ASSESSEE AROSE ONLY DUE TO VARIATION IN CLOSING STOCK VALUATION IN AUDITED FINANCIAL STATEMENTS VERSUS SE IZED DOCUMENT SHOWING COMPARATIVE ANALYSIS OF THREE FINANCIAL YEARS HAVIN G DIFFERENT VALUATION OF STOCK; BUT CERTAINLY THERE WAS NO OTHER EVIDENCE AG AINST THE ASSESSEE TO PROVE THAT BOOKS OF ACCOUNTS WERE INACCURATE OR PARTICULA RS OF INCOME WERE CONCEALED WHILE FILING THE RETURN OF INCOME. AS THE ADDITION ON WHICH THE PENALTY HAS IT(SS) NOS. 499 & 500/AHD/2012 SWISS GLASS COAT EQUIPMENT LTD VS. DCIT AYS : 2003-04 & 2004-05 - 14 BEEN IMPOSED WAS MERELY DUE TO CHANGE IN VALUATION AND PERCENTAGE OF ALLOCATION OF EXPENSES AND THERE IS NO FINDING ABOU T VARIATION IN QUANTITY OF STOCK, WE ARE OF THE VIEW THAT ASSESSEE SHOULD NOT BE VISITED WITH PENALTY U/S 271(1)(C) OF THE ACT. WE ACCORDINGLY DELETE THE IMP UGNED PENALTY OF RS.10,00,000/- AND RS.45,00,000/- FOR ASSESSMENT YE ARS 2003-04 AND 2004-05 RESPECTIVELY. 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE COURT ON 22 ND MARCH 2017 AT AHMEDABAD. SD/- SD/- ( S.S. GODARA ) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER AHMEDABAD; DATED, 22/03/2017 ! '!/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. % ' / CONCERNED CIT 4. ' ) ( / THE CIT(A)- 5. ! % , % , /DR,ITAT, AHMEDABAD, 6. 1 / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT.REGISTRAR) % ITAT, AHMEDABAD