Penalty U/s. 27(1)(c) cannot be levied for not following FIFO method

Pr. CIT Vs Prakash Mangilal Jain (Bombay High Court) Following FIFO or LIFO method cannot be the basis for levying penalty as per the provisions of section 271(1)(c) of the Act. In order to justify the levy of penalty, two factors must co-exist, (i) there must be some material or circumstances leading to the reasonable conclusion that the amount does represent the assessee’s income and the amount in question was disclosed by the assessee in his return. Explanation filed by the assessee about the disputed amount plays a vital role in deciding the justification of levying concealment penal...