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At the outset ld. Authorised Representative submitted that the quantum addition of Rs. 5,46,407/- in respect of under valuation of closing stock has been deleted by the Tribunal, Ahmedabad vide ITA No.1063/Ahd/2013 pronounced on 16.8.16 and, therefore, as the quantum addition has been deleted, the penalty u/s 271(1)(c) of the Act will not stand and deserves to be deleted.
Ld. Departmental Representative could not controvert the submissions made by ld. Authorised Representative.
We have heard the rival contentions and perused the material placed before us and gone through the decision relied on by the ld. Authorised Representative. Solitary grievance of the assessee in this appeal is against the order of ld. Commissioner of Income Tax(A) confirming penalty of Rs.1,67,200/- on the quantum addition in the gross profit towards under valuation of closing stock at Rs.5,46,407/-. Relevant provisions of section 271(1)(c) of the Act suggest that in Asst. Year 2007-08 order to cover there has to be a concealment of particulars of income or furnishing of inaccurate of particulars of income. Examining the facts of the case in the light of these provisions we observe that the quantum addition relating to undervaluation of closing stock of Rs.5,46,407/- already stands deleted by the Tribunal’s order in ITA No.1063/Ahd/2013 by observing as follows :-
In the present case, the assessee had duly furnished a certificate from the APMC Palanpur confirming the market price at the yearend which has clearly established that the market price were lower than the cost price. It was on the basis of that market price that the stocks were valued. That is precisely what ought to have been done anyway. The stand of the assessee does merit acceptance. As for the valuation on FIFO basis, i.e. first in first out, I do not find any legal sanction for mandatory use of this method. Be that is it may, even if FIFO is taken, since the market price are admittedly lower than the prices so arrived at, only market price can be taken into account. Viewed thus also, the stand of the assessee cannot be faulted with. In view of the above discussions, as also bearing in mind entirety of the case, I uphold the plea of the assessee. The addition of Rs 5,46,407 to the value of closing stock is thus deleted. The assessee gets the relief accordingly.
In the given facts and circumstances of the case, we find that penalty u/s 271(1)(c) of the Act has been levied on the addition made by ld. Assessing Officer but when the basis i.e. quantum addition has itself been deleted by the Co-ordinate Bench, there remains no basis for the penalty u/s 271(1)(c) of the Act to stand for. We accordingly delete the same.