Penalty U/s. 271(c) Addition for difference on account of method of valuation of Closing Stock without any intention to to conceal income or furnishing of inaccurate particulars of income not justified
A perusal of the penalty order reveals that the AO has rejected the contentions of the assessee on the basis that the addition made on account of difference in valuation closing stock and wrong claim of expenses is amounts to furnishing of inaccurate particulars of income. However, such difference on account of method of valuation does not lead that there was conscious or intention to conceal the income or furnishing of inaccurate particulars of income, when the assessee has offering income to the tune of Rs. 5.23 Crores. Therefore, we cannot assume that the assessee would indulge in furnishing of inaccurate particulars of income of Rs. 3.31 lacs. We find that the assessee has offered an explanation which is not found to be false and same has been substantiated , therefore, the case of the assessee is not covered by Explanation 1 to section 271(1)(c) of the Act, hence, we are of the considered opinion that penalty under section 271(1)(c) of the Act is not exigible in this case , we therefore, delete the same.
