Penalty u/s 271(1)(c) up to 100% of tax evaded justified in case of excess stock found during survey

Kishore Kumar Vs DCIT (ITAT Hyderabad)

ITAT Hyderabad in case of excess stock of gold found during survey held that penalty u/s 271(1)(c) of the Income Tax Act up to 100% of the tax evaded is justified instead of 298% as upheld by CIT(A).

Facts- The assessee is an individual and engaged in the business of gold and pawn broking in the name and style of M/s. Jaidev Jewellers and Jawanmal Gulabchand Bankers respectively at Narsapuram wherein he is the proprietor. A survey operation u/s 133A of the I.T. Act, Act 1961 was conducted in the business premises of the assessee on 12.5.2013 and certain incriminating material was found and impounded. The case was selected up for scrutiny and statutory notice u/s 143(2) of the Act was issued and the assessment was completed u/s 143(3) assessing the income at Rs.23,45,438/-.

During the course of scrutiny proceedings, the assessee admitted the discrepancy in closing stock of gold. Further, he stated that the gross weight of gold ornaments includes stones, pearls and wax items which cannot be ignored as a contributing factor for such difference. Considering the submissions of the assessee, the value of excess stock of gold was worked out to Rs.12,12,959/- and added to the total income.

In appeal, the CIT (A) upheld the action of AO on the ground that the assessee could not prove that the stock did not pertain to him and that the assessee could not produce any material evidence in this regard.

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