ESSJAY ENTERPRISES, MUMBAI v. ASST CIT 18 & 19, MUMBAI

ITA 7110/MUM/2012 | 2003-2004
Pronouncement Date: 27-10-2016 | Result: Allowed

Appeal Details

RSA Number 711019914 RSA 2012
Assessee PAN AAAFE0563G
Bench Mumbai
Appeal Number ITA 7110/MUM/2012
Duration Of Justice 3 year(s) 10 month(s) 28 day(s)
Appellant ESSJAY ENTERPRISES, MUMBAI
Respondent ASST CIT 18 & 19, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 27-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 27-10-2016
Date Of Final Hearing 12-08-2014
Next Hearing Date 12-08-2014
Assessment Year 2003-2004
Appeal Filed On 29-11-2012
Judgment Text
E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH MUMBAI BEFORE SHRI C.N. PRASAD JUDICIAL MEMBER AND SHRI RAMIT KOCHAR ACCOUNTANT MEMBER ./ I.T.A. NO. 7110 /MUM/2012 ( / ASSESSMENT YEAR : 2003-04) M/S ESSJAY ENTERPRISES 509 PANCHRATNA OPERA HOUSE MAMA PARMANDAND MARG MUMBAI 400 004. / V. THE ASSTT.COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 18 & 19 MUMBAI. ./ PAN : AAAFE 0563 G ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI S.C. TIWARI & MS. RUTUJA PAWAR REVENUE BY : SHRI SUNIL KUMAR AGARWAL DR / DATE OF HEARING : 08-08-2016 / DATE OF PRONOUNCEMENT : 27-10-2016 / O R D E R PER RAMIT KOCHAR ACCOUNTANT MEMBER THIS APPEAL FILED BY THE ASSESSEE BEING ITA NO. 7110/MUM/2012 IS DIRECTED AGAINST THE APPELLATE ORDER DATED 26 TH SEPTEMBER 2012 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 39 M UMBAI (HEREINAFTER CALLED THE CIT(A)) FOR THE ASSESSMENT YEAR 2003- 04 THE APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARISING FROM THE PENALTY ORDER DATED 28 TH OCTOBER 2009 PASSED BY THE LEARNED ASSESSING OFFI CER (HEREINAFTER CALLED THE AO) U/S 271(1)(C) OF THE INCOME TAX ACT 1961 (HEREINAFTER CALLED THE ACT). ITA 7110/MUM/2012 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME TAX APPELLATE TRIBUNAL MUMBA I (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) CENTRAL VI MUMBAI ERRED IN CONFIRMING THE PENALTY OF RS.11 95 050/ - U/S. 271 (1)( C) LEVIED BY THE LEARNED A.O. WITHOUT APPRECIATI NG THE FACT THAT YOUR APPELLANT HAS NOT CONCEALED ANY PARTICULARS OF INCOM E. 1.1 YOUR APPELLANT SUBMITS THAT THE LEARNED A.O. MADE T HE FOLLOWING ADDITIONS. A) ON ACCOUNT OF LOSS OF GOLD ON MFG. RS. 58 55 8/- B) ON ACCOUNT OF VALUATION OF DIAMONDS RS.22 76 454 /- TOTAL RS. 23 25 012 ------------------- 1.2 YOUR APPELLANT SUBMITS THAT ANY ADDITION MADE TO THE CLOSING STOCK WILL BECOME THE OPENING STOCK OF NEXT YEAR AND HE NCE THE PROFIT OF THE NEXT YEAR WILL REDUCE TO THAT EXTENT. 1.3 YOUR APPELLANT SUBMITS THAT YOUR APPELLANT HAS MAINTA INED QUANTITY -WISE STOCK AND THERE IS NO DIFFERENCE IN THE STOCK. THE LEARNED A.O. WHILE PASSING THE ORDER HAS ADOPTED THE AVERAG E RATE OF STOCK AND PURCHASE PRICE WITHOUT GIVING TECHNICAL OR COMMERCIA L REASON. 1.4 YOUR APPELLANT SUBMITS THAT THE VALUE SHOWN BY YOUR APPELLANT IS CORRECT HOWEVER THE LEARNED A.O. WHILE PASSING OR DER ENHANCE THE VALUE OF THE STOCK AND MADE THE ADDITION. 1.5 THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THIS A SPECT AND OUGHT NOT TO HAVE CONFIRMED THE LEVY OF PENALTY. 1.6 YOUR APPELLANT FURTHER SUBMITS THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE PENALTY LEVIED U/S 271 (1)(C) BE DELETED. 1.7 YOUR APPELLANT THEREFORE SUBMITS THAT THE PENALTY OF RS. 11 95 050/- LEVIED U/S 271(1)(C) BE DELETED. 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) READ WITH SECTION 143(2) OF THE ACT IT WAS OBSERVED BY THE A.O. THAT THE ASSESSEE HAS UNDERVALUED THE CLOS ING STOCK OF DIAMONDS BY RS. 22 76 454/-. THE A.O.S ASSESSMENT ORDER IS RE PRODUCED AS UNDER:- ITA 7110/MUM/2012 3 VALUATION OF CLOSING STOCK OF DIAMONDS: DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AS SESSEE WAS SPECIFICALLY ASKED TO GIVE THE QUANTITATIVE TALLY O F CONSUMPTION OF' VARIOUS RAW MATERIALS DURING THE YEAR BY ADOPTING S TANDARD QUANTITY OF CONSUMPTION REQUIRE IN PRODUCTION OF ON E UNIT OF FINISHED GOODS THEN MULTIPLYING IT WITH TOTAL NUMB ER OF PIECES OF THAT PARTICULAR ITEM PRODUCED DURING THE YEAR. THE STANDARD CONSUMPTION SO ARRIVED AT SHOULD THEN BE COMPARED W ITH ACTUAL CONSUMPTION OF VARIOUS RAW MATERIALS FOR THE PRODUC TION OF FINISHED GOODS DURING TILE YEAR AND THE DISCREPANCY BETWEEN THE STANDARD CONSUMPTION AND ACTUAL CONSUMPTION OF RAW MATERIALS SHOULD BE COMPARED AND EXPLANATION OFFERED FOR THE DISCREPANCIES IF ANY. IT WAS FURTHER ASKED TO GIVE THE DETAILS OF QUANTITY OF VARIOUS RAW MATERIALS WHICH GOES INTO M ANUFACTURE OF ONE UNIT OF FINISHED GOODS LIKE GOLD DIAMONDS ETC . OF VARIOUS CARATS. IN RESPONSE THE ASSESSEE FAILED TO GIVE ANY EXPLAN ATION IN RESPECT OF THE CONSUMPTION OF RAW MATERIAL AND DISC REPANCIES IN CONSUMPTION AS PER STANDARD CONSUMPTION AND ACTUAL CONSUMPTION. IN THIS REGARD ON CLOSE SCRUTINY OF TH E STATEMENT GIVING QUANTITATIVE DETAILS OF STOCK OF RAW MATERIA LS AND FINISHED GOODS AS PER ANNEXURE 'F' TO THE TAX AUDIT REPORT I N FORM 3CD IT IS NOTICED THAT THE ASSESSEE HAS GIVEN THE FOLLOWIN G PARTICULARS IN RESPECT OF DIAMONDS:- STOCK CARAT VALUE(IN RS) RATE PER CARAT(RS.) OPENING STOCK 951.100 37 02 605 3892.97 PURCHASES 335.02 2 32 23 760 6936.18 ISSUED FOR JEWELLERY MANUFACTURING 199.44 24 18 909 12128.50 CLOSING STOCK 1086.68 36 07 456 3319.70 EVEN CURSORY LOOK AT THE ABOVE TABLE WILL MAKE IT C LEAR THAT THE ASSESSEE HAS VALUED THE CLOSING STOCK AT THE RA TES LOWER THAN THE PURCHASE PRICE OR OPENING STOCK. IT IS ALSO NOT ED THAT THE DIAMONDS ISSUED FOR MANUFACTURE OF JEWELLERY IS VAL UED AT A SUBSTANTIALLY HIGH RATES COMPARED TO THE COST OF OP ENING STOCK AND PURCHASES MADE DURING THE YEAR. FOR EXAMPLE TH E OPENING STOCK OF DIAMONDS IS VALUED AT THE RATE OF RS. 3892 .97 PET CARAT AND THE PURCHASES ARE MADE AT THE RATE OF RS. 6936. 18 CARATS ITA 7110/MUM/2012 4 WHEREAS THE DIAMONDS ISSUED FOR JEWELLERY IS VALUED AT RS. 12128.50 PER CARAT. IN THE WHOLE PROCESS THE ASSES SEE HAS INCREASED THE MANUFACTURING COST OF JEWELLERY MANUF ACTURED OUT OF THE ISSUED DIAMONDS AS ALSO THE VALUATION OF CL OSING STOCK OF DIAMONDS IS VALUED LESS TO THAT EXTENT THEREBY REDU CING THE PROFIT. THE DISCREPANCY FOUND AS TABLED ABOVE WAS S HOWN TO THE ASSESSEE AND REQUESTED FOR EXPLANATION FOR HIGHER R ATE OF DIAMONDS ISSUED FOR MANUFACTURING AND A LOWER RATE ADOPTED FOR VALUATION OF CLOSING STOCK. IN RESPONSE; THE ASSESSEE VIDE LETTER DATED 09.01.2 006 SUBMITTED AS UNDER:- 'WE HAVE OPENING STOCK OF DIAMONDS 951.10 CTS. AMOU NTING TO RS. 37 02 605/- AND WE HAVE PURCHASED DURING THE YEAR THE DIAMONDS OF 335.02 CTS. AMOUNTING TO RS. 23 23 760/-. THE AVERAGE RATE COMES TO RS. 6 936/-. IF YOUR HONO UR SEE THE DETAILS OF PURCHASES MADE ARE FROM RS. 3 500/- PER CTS. TO RS. 18 000/- PER CTS. WHICH DEPENDS UPON COLOUR CLARITY CUT AND CARATS. THE DIAMONDS ARE PURCHASED IN LOTS OR PACKETS WHICH ARE MIXED DIAMONDS AND AFTER BUYIN G DIAMONDS WE ASSORT DIAMOND FROM THE PACKET INTO DI FFERENT QUALITY AND SIZES. THE GOODS ARE THEN ISSUED TO THE KARIGARS FROM THESE ASSORTMENTS TO MAKE A PARTICULAR PIECE O F JEWELLERY. DEPENDING ON THE TYPE OF JEWELLERY TO BE MADE BETTER/WEAKER QUALITY GOODS AND SMALLER/BIGGER SIZE S OF DIAMONDS ARE ISSUED AND REST IS KEPT IN STOCK FOR O THER JEWELLERY TO BE MADE LATER. THE STOCK WHICH ARE BAL ANCE ARE BASICALLY LOWER QUALITY OF DIAMONDS WHICH ARE NORMA LLY ISSUE FOR MANUFACTURING AS AND WHEN LOW COST JEWELL ERY DEMANDS BY THE CUSTOMER. WHEN STOCK IS TAKEN IT IS VALUED COST OR MARKET PRICE WHICH IS LOWER. THE VALUES ARE BASICALLY TYPICAL AND DEPEND UPON THE CARAT QUALIT Y CLARITY AND CUT. LOOKING THE ABOVE FACTS THE VALUE IS DETERMINED AN D TAKEN IN CLOSING STOCK IS CORRECT'. THE SUBMISSION MADE BY THE ASSESSEE IS DULY CONSIDE RED. THE ASSESSEE DID NOT MAKE AN ATTEMPT TO EXPLAIN AS TO W HY THE VALUATION OF DIAMONDS ISSUED FOR MANUFACTURED ITEMS MADE AT THE RATE ABNORMALLY HIGH THAN THE PURCHASE PRICE OR THE COST OF OPENING STOCK. FURTHER THE ASSESSEE FAILED TO SUBS TANTIATE THE ITA 7110/MUM/2012 5 CLAIM OF VALUATION OF CLOSING STOCK OF DIAMONDS AT THE RATE MUCH LOWER THAN THE PURCHASE PRICE OR COST OF OPENING ST OCK. THE ASSESSEE'S' CONTENTION THAT THE DIAMONDS ARE PURCHA SED IN LOTS OF DIFFERENT CARETS IS NOT AND SELECTED ITEMS ARE USED IN JEWELLERY AND THE BALANCE DIAMONDS ARE OF LOWER QUALITY IS NO T SUPPORTED BY NECESSARY EVIDENCE SINCE AS SEEN FROM THE PURCHA SE BILL OF DIAMONDS PRODUCED BY THE ASSESSEE THE DIFFERENT TY PES OF DIAMONDS ARE NOT MENTIONED BUT ONLY A TOTAL WEIGHT OF DIAMONDS IN CARETS IS SHOWN AND THE TOTAL PRICE OF SUCH DIAM ONDS IS MENTIONED IN THE PURCHASE BILL. IN THE ABSENCE OF D ETAILS DIFFERENT TYPE OF DIAMONDS PURCHASED IT IS NOT KNOWN AS TO W HAT QUANTITY OF A PARTICULAR TYPE OF DIAMONDS IS PURCHASED BY TH E ASSESSEE. IN SUCH A CASE IT WAS VERY MUCH ESSENTIAL ON THE PART OF THE ASSESSEE TO MAINTAIN A DETAILED RECORD OF STOCK OF DIAMONDS GIVING DIFFERENT CATEGORY WISE DIAMONDS WITH QUANTITY RAT E AND VALUE. THE ASSESSEE IS NOT MAINTAINING ANY SUCH STOCK REGI STER. AS GIVEN ABOVE THE ASSESSEE HAS INCREASED THE COST OF PRODUCTION OF JEWELLERY BY INCREASING THE VALUE OF DIAMONDS UT ILIZED IN SUCH JEWELLERY. ALSO THE VALUATION OF CLOSING STOCK OF DIAMONDS HAS BEEN DONE AT THE COST LOWER THAN THE COST TO THE AS SESSEE. THIS HAS BEEN DONE FOR NO OBVIOUS REASON. IT IS REQUIRED TO BE NOTED THAT THE ASSESSEE HAS VALUED THE DIAMONDS PER CARAT IRRESPECTIVE OF THE QUALITY OF DIAMONDS. FURTHER THE ASSESSEE A LSO KNOWS THE QUALITY AND QUANTITY OF DIAMONDS LYING IN THE OPENI NG STOCK VALUES OF WHICH ARE KNOWN TO HIM. AS MENTIONED ABOV E THE ASSESSEE IS NOT MAINTAINING THE PROPER STOCK REGIST ER IN RESPECT OF SUCH A VALUABLE ITEM OF JEWELLERY. BY NOT MAINTAINI NG THE PROPER STOCK REGISTER WHICH WILL GIVE THE DETAILS OF QUALI TY QUANTITY RATES AND VALUES OF DIAMONDS LYING IN THE STOCK IT IS OP EN TO THE ASSESSEE TO MANIPULATE THE THINGS BY ASSIGNING THE VALUES OF DIAMOND AS PER ITS WISH AND WILL AND AS CONVENIENT TO IT TO THE DIAMONDS LYING IN THE CLOSING STOCK. WITHOUT PREJUDICE TO THE ABOVE DISCUSSION IT WAS V ERY ESSENTIAL ON THE PART OF THE ASSESSEE TO SHOW THAT THE VALUE OF DIAMONDS WHICH IS A COSTLY RAW MATERIAL OF THE ASSESSEE ISS UED FOR JEWELLERY AS WELL AS THE VALUES OF DIAMONDS LYING IN THE CLOS ING STOCK IS THE TRUE VALUE. IN THE ABSENCE OF THE SAME I DECLINE T O ACCEPT THE VALUATION DONE BY THE ASSESSEE IN RESPECT OF THE DI AMONDS LYING IN THE CLOSING STOCK. I THEREFORE PROCEED TO ADOPT THE AVERAGE RATE AT WHICH THE DIAMONDS WERE PURCHASED DURING THE REL EVANT PREVIOUS YEAR AND THE OPENING STOCK WHICH WORKS OU T TO RS. 5 414.57 PER CARAT. ACCORDINGLY THE VALUATION OF C LOSING STOCK OF ITA 7110/MUM/2012 6 DIAMONDS IS CALCULATED AT RS. 58 83 910/-. THE DIFF ERENCE OF RS. 22 76 454/- IS ADDED TO THE TOTAL INCOME. THE A.O. INITIATED THE PENALTY PROCEEDINGS U/S 271( 1)(C) OF THE ACT FOR FILING INACCURATE PARTICULARS OF INCOME AND ALSO ISSUED N OTICE ASKING THE ASSESSEE TO EXPLAIN AS TO WHY PENALTY U/S 271(1)(C) OF THE A CT SHOULD NOT BE LEVIED. IN REPLY THE ASSESSEE SUBMITTED THAT THE A.O. HAD MADE ADDITIONS IN RESPECT OF THE ASSESSMENT YEAR 2003-04 AS UNDER:- A) ON ACCOUNT OF LOSS OF GOLD ON MFG. RS. 48 5 58/- B) ON ACCOUNT OF VALUATION OF DIAMONDS RS. 22 76 454/- TOTAL RS. 23 25 012/- ________________ IT WAS SUBMITTED BY THE ASSESSEE THAT THE LD. CIT(A ) DELETED THE ADDITION ON ACCOUNT OF LOSS OF GOLD ON MANUFACTURING RS. 48 558 /- IN APPEAL AGAINST QUANTUM ASSESSMENT ORDERS WHILE THE A.O. MADE ADDI TIONS OF RS. 22 76 451/- IN THE ASSESSMENT YEAR 2003-04 TO THE C LOSING STOCK ON ACCOUNT OF UNDERVALUATION OF THE STOCK AS AT 31-03-2003 WHI CH WILL BECOME OPENING STOCK AS AT 01-04-2004 AND THE PROFIT WILL REDUCE BY RS. 22 76 451/- IN THE NEXT YEAR I.E. ASSESSMENT YEAR 2004-05 THUS INCREA SE IN VALUATION OF STOCK IN ONE YEAR WAS NEUTRALIZED IN THE IMMEDIATE NEXT YEAR AND DOES NOT RESULT IN INCREASE IN THE PROFIT HENCE NO CONCEALMENT OF IN COME. IT WAS SUBMITTED THAT INSPITE OF THE ADDITION MADE BY THE A.O. OF RS . 22 76 451/- THE TAXABLE INCOME WAS NIL ON ACCOUNT OF BUSINESS LOSS AS PER T HE RETURN OF INCOME OF RS. 6 87 207 AND SET OFF OF BROUGHT FORWARD LOSS OF RS. 16 37 810/-. THE ASSESSEE SUBMITTED THAT IT HAS DULY FILED ALL THE DETAILS OF PURCHASES SALES VARIOUS EXPENSES DEBITED TO P&L ACCOUNT AND THEY WERE VERIF IED BY THE AO WITH THE RETURN OF INCOME FILED BY THE ASSESSEE. HENCE IT W AS SUBMITTED THAT THE ASSESSEE HAS MAINTAINED PROPER BOOKS OF ACCOUNTS AN D SUBMITTED THE REQUIRED DETAILS WHICH WERE DULY VERIFIED BY THE A. O. AND NO DISCREPANCY WAS FOUND. THUS IT WAS SUBMITTED THAT NEITHER THE ASS ESSEE HAS FURNISHED ITA 7110/MUM/2012 7 INACCURATE PARTICULARS OF INCOME NOR CONCEALED ANY INCOME. IT WAS SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED THE FOLLOWING PARTICULARS IN RESPECT OF DIAMONDS:- STOCK CARAT VALUE(IN RS) RATE PER CARAT(RS.) OPENING STOCK 951.100 37 02 605 3892.97 PURCHASES 335.02 2 32 23 760 6936.18 ISSUED FOR JEWELLERY MANUFACTURING 199.44 24 18 909 12128.50 CLOSING STOCK 1086.68 36 07 456 3319.70 IT WAS SUBMITTED THAT THERE IS NO DISPUTE IN RESPEC T OF QUANTITATIVE RECORDS OF OPENING STOCK PURCHASES ISSUED FOR JEWELLERY MANU FACTURING AND CLOSING STOCK . IT WAS SUBMITTED THAT ALL THE QUANTITATIVE FIGURES SUBMITTED BY THE ASSESSEE WERE ACCEPTED BY THE A.O. AND HENCE NO INA CCURATE PARTICULARS WERE FURNISHED BY THE ASSESSEE. IT WAS SUBMITTED THAT V ALUATION OF THE CUT AND POLISHED DIAMONDS IS HIGHLY COMPLEX AND THE VALUE I S ASSIGNED ITEM-WISE WHILE THE A.O. ADOPTED THE AVERAGE RATE OF OPENING STOCK AND PURCHASE PRICE WITHOUT GIVING ANY TECHNICAL OR COMMERCIAL REASONS. IT WAS SUBMITTED THAT THE RATE PER CARAT OF DIAMOND VARIES AND THE AVERAG E RATE ADOPTED BY THE A.O. CANNOT BE APPLIED. IT DEPENDS ON CLARITY LOOKS AN D SHAPE ETC. EVEN THE PIECE OF SAME SIZE WILL HAVE DIFFERENT VALUATION ON ACCOU NT OF SIZE SHAPE CUT CLARITY LOOK ETC. . THE QUANTITY REMAINS THE SAME BUT AS PER THE REQUIREMENT OF THE CUSTOMERS THEY GO ON MIXING ALL THE STOCK A ND THEN MAKE ASSORTMENT DEPENDING UPON SIZE SHAPE CUT CLARITY LOOKS ETC . THIS ACTIVITY TAKES LOT OF TIME AND IT IS NOT POSSIBLE AND PRACTICABLE TO KEEP DETAILED RECORDS OF EACH ASSORTMENT AND IS A IMPOSSIBLE TASK. AGGRIEVED BY THE ASSESSMENT ORDER OF THE A.O.IN QUANTUM IT WAS SUBMITTED THAT THE ASS ESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) BUT WAS NOT SATISFIED WITH TH E ORDER OF THE LD. CIT(A) IN QUANTUM PROCEEDINGS AND WANTED TO FILE FURTHER APPE AL BEFORE THE TRIBUNAL. HOWEVER MR. SAMEER JHAVERI ONE OF THE PARTNER WAS NOT FEELING WELL AND EXPIRED ON 08-05-2009 AND THE WIFE OF MR. SAMEER JH AVERI HAD TO LOOK AFTER HER MINOR DAUGHTER AND AGED MOTHER IN LAW HENCE SHE WAS NEITHER INTERESTED ITA 7110/MUM/2012 8 IN PURSUING THE BUSINESS NOR FURTHER LITIGATION. I T WAS SUBMITTED THAT THE ASSESSEE HAS NOT FURNISHED ANY INACCURATE PARTICULA RS AND THE ADOPTION OF THE AVERAGE RATE BY THE AO IS SUBJECTIVE AND NOT THE CO NCLUSIVE PROOF OF FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE . THE A.O. IN PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT OBSERVED THAT THE ASSESSEE IS NOT MAINTAINING PROPER STOCK REGISTER IN RESPECT OF DIA MOND JEWELLERY AND HENCE IT IS POSSIBLE TO MANIPULATE THE THINGS CONVENIENTL Y AS REGARDS THE DIAMONDS LYING IN THE CLOSING STOCK. THE A.O. OBSERVED THAT IT WAS VERY ESSENTIAL TO SHOW THE TRUE VALUE OF THE DIAMONDS LYING IN THE CL OSING STOCK. IT WAS OBSERVED BY THE AO THAT LEARNED CIT(A) HAS CONCLUDE D THAT IF THE ASSESSEE IS HONEST IT COULD AT LEAST GIVE SEPARATE INDICATION IN RESPECT OF THE WEIGHT AND VALUE OF VERY HIGH VALUE DIAMONDS SEPARATELY IN THE PURCHASE INVOICES/STOCK REGISTER TO DISTINGUISH THEM FROM CHEAPER LOT AND H ENCE THE LEARNED CIT(A) ALSO CONFIRMED ADDITION IN QUANTUM ASSESSMENT. WITH RESPECT TO THE CONTENTION OF THE ASSESSEE THAT NO PENALTY U/S 271( 1)(C) OF THE ACT CAN BE LEVIED AS THE INCOME IS REDUCED TO NIL ON ACCOUNT O F BUSINESS LOSS CANNOT BE ACCEPTED FOR THE REASON THAT SECTION 271(1)(C) OF T HE ACT WAS AMENDED W.E.F. 01.04.2002 I.E. FROM ASSESSMENT YEAR 2002-03 ONWARD S ACCORDING TO WHICH PENALTY U/S 271(1)(C) OF THE ACT CAN BE LEVIED EVEN IF THE ASSESSED INCOME IS NEGATIVE. THUS THE A.O. CONCLUDED THAT THE ASSESSE E CONCEALED THE PARTICULARS OF INCOME BY FURNISHING INACCURATE PART ICULARS OF INCOME IN RESPECT OF VALUATION OF CLOSING STOCK WHEREBY THE A O LEVIED PENALTY U/S 271(1)(C) OF THE ACT OF 150% OF THE AMOUNT OF TAX S OUGHT TO BE EVADED BY THE ASSESSEE WHICH COMES TO RS. 11 95 050/- VIDE PENA LTY ORDER DATED 28-10- 2009 . 4. AGGRIEVED BY THE PENALTY ORDER U/S 271(1)(C) OF THE ACT DATED 28.10.2009 PASSED BY THE A.O. THE ASSESSEE FILED ITS FIRST APPEAL BEFORE THE LD. CIT(A). ITA 7110/MUM/2012 9 5. BEFORE THE LD. CIT(A) THE ASSESSEE REITERATED T HE SUBMISSIONS WHICH WERE MADE BEFORE THE A.O.. THE A.O TOOK THE VIEW T HAT IN THE ABSENCE OF PROPER STOCK REGISTER DETAILING THE VALUE OF SUCH H IGHLY PRICED ITEMS IT WAS NOT POSSIBLE TO ASCERTAIN THE QUALITY QUANTITY RA TES AND VALUES OF DIAMONDS LYING IN STOCK IT IS OPEN FOR THE ASSESSEE TO EAS ILY MANIPULATE THE VALUE OF THE DIAMONDS BY ASSIGNING VALUES AS PER ITS WHIM AND FA NCY. THE ASSESSEE CONTENDED THAT ANY ADDITION MADE TO THE CLOSING STO CK WOULD BECOME THE OPENING STOCK OF THE NEXT YEAR AND AS SUCH IT HAS G OT NO EFFECT ON THE TAX. IT WAS CONTENDED THAT THERE ARE DIFFERENT GRADES OF DI AMONDS WHICH ARE ALMOST 6000 TO 8000 GRADES BASED ON CUT CLARITY CARAT AN D COLOUR AND IN ORDER TO GET ADVANTAGE OF BETTER PRICING THE ASSESSEE ALWAY S PURCHASED MIXED LOTS OF DIAMONDS WHICH CONTAINED BOTH GOOD AND LOWER QUALIT Y OF DIAMONDS. THE ASSESSEE SUBMITTED THAT THE PURCHASE BILL DID NOT S HOW THE VALUE OF EACH INDIVIDUAL DIAMOND AND IT WAS NOT PRACTICALLY FEASI BLE TO BE SHOWN AS SUCH. IT WAS SUBMITTED THAT THE ASSESSEE ALWAYS USED BETTER DIAMONDS OUT OF PURCHASES OF THE MIXED LOTS AND THE LOWER QUALITY D IAMONDS WERE ALWAYS RETAINED IN STOCK WHICH RESULTED IN THE CLOSING INV ENTORY BEING LOWER THAN THE AVERAGE PURCHASE PRICE. THUS THE ASSESSEE SUBMITTE D THAT BONA-FIDE EXPLANATIONS WERE SUBMITTED AND HENCE IT COULD NOT BE SAID THAT THE ASSESSEE CONCEALED ITS INCOME BY FURNISHING INACCURATE PARTI CULARS OF INCOME AND PENALTY COULD NOT BE LEVIED U/S 271(1)(C) OF THE AC T AND PRAYED FOR DELETION OF PENALTY LEVIED BY THE AO. THE ASSESSEE ALSO RAISED LEGAL ARGUMENTS BEFORE THE LEARNED CIT(A) AS UNDER: A) THAT PENALTY PROVISIONS ARE PENAL IN NATURE SOM E AMOUNT OF CULPABLE NEGLIGENCE OR WILLFUL OMISSION MUST BE EST ABLISHED BEFORE PENALTY IS IMPOSED. ITA 7110/MUM/2012 10 B) THE PENALTY CAN BE IMPOSED ONLY IF IT IS SHOWN T HAT THE EXPLANATION OFFERED IS NOT MERELY IMPROBABLE AND UNSATISFACTORY BUT INCORRECT AND FALSE. C) THE PENALTY PROCEEDINGS ARE SEPARATE AND DISTINC T FROM ASSESSMENT PROCEEDINGS. THE FINDINGS GIVEN IN THE ASSESSMENT P ROCEEDINGS THOUGH RELEVANT ARE NOT MATERIAL ALONE TO JUSTIFY THE IMPO SITION OF PENALTY. THERE SHOULD BE FURTHER MATERIAL TO JUSTIFY THE IMP OSITION OF PENALTY BY FINDING THAT THERE IS CONCEALMENT OF INCOME OR FURN ISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. IT WAS SUBMI TTED THAT IN THE CASE OF THE ASSESSEE ALL THE NECESSARY FACTS HAVE BEEN DISCLOSED AND HENCE THERE IS NO CONCEALMENT OF INCOME. D) PENALTY WILL NOT BE EXIGIBLE MERELY BECAUSE AN A DDITION IS MADE ON ESTIMATE BASIS AND SINCE THERE IS DIFFERENCE OF OPI NION AS REGARDS THE ESTIMATION OF INCOME IT COULD NOT BE SAID THAT THE ASSESSEE HAD CONCEALED PARTICULARS OF INCOME. E) IT WAS SUBMITTED THAT SINCE ALL THE FACTS WERE D ISCLOSED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS NO PENA LTY IS EXIGIBLE. THE LD. CIT(A) AFTER CONSIDERING THE FACTS OF THE CASE ASSESSMENT ORDER OF THE AO AND SUBMISSIONS OF THE ASSESSEE REJECTED THE CO NTENTIONS OF THE ASSESSEE AND OBSERVED THAT FROM THE DETAILS OF THE QUANTITA TIVE PARTICULARS OF STOCK AS FURNISHED BY THE ASSESSEE THE A.O. HAD OBSERVED TH AT THERE WAS A CLEAR DISCREPANCY IN THE MANNER IN WHICH THE STOCK WAS BE ING VALUED ESPECIALLY WHEN IT COULD BE CLEARLY SEEN THAT THE CLOSING STOC K WAS VALUED AT AN ABNORMALLY LOW RATE VIS-A-VIS THE COST OF OPENING S TOCK/PURCHASE PRICE/ITEMS OF DIAMONDS ISSUED FOR MANUFACTURE. THERE APPEARS T O BE A CASE FOR UNDER VALUATION OF CLOSING STOCK THEREBY LEADING TO UNDER -STATEMENT OF PROFIT FOR THE ITA 7110/MUM/2012 11 YEAR. FOR THE YEAR UNDER CONSIDERATION THE RATE PE R CARAT WAS SHOWN AT RS.3319.70 AS AGAINST THE AVERAGE RATE OF RS. 12 12 8.50 PER CARAT IN RESPECT OF' DIAMONDS ISSUED FOR MANUFACTURE OF JEWELLERY. A T THE SAME TIME THE AVERAGE RATE OF PURCHASE OF DIAMONDS DURING THE YEA R WAS AT RS. 6936.18 PER CARAT. THE LEARNED CIT(A) OBSERVED THAT ONLY EXPLAN ATION COMING FROM THE ASSESSEE IS THAT THE DIAMONDS WERE PURCHASED IN MIX ED LOTS THE STOCK AS HELD CONTAINS LOWER QUALITY DIAMONDS AND THAT THE P URCHASE BILLS DO NOT CONTAINED THE DETAILED PARTICULARS SUCH AS THE QUAL ITY RATE ETC. OF THE ITEMS BUT ONLY THE TOTAL WEIGHT AND THE TOTAL VALUE AND H ENCE NOT FEASIBLE TO FURNISH FINER DETAILS. THE LEARNED CIT(A) OBSERVED THAT THE RE IS MERIT IN CONTENTIONS OF THE AO THAT THERE IS AN AMPLE SCOPE TO THE ASSESSEE TO MANIPULATE THE VALUES WITH REGARD TO VALUATION OF STOCK. THE ASSESSEE HAS NOT PRODUCED ANY CREDIBLE EVIDENCE OR MATERIAL IN ORDER TO SUBSTANTI ATE THE VALUATION/ EVIDENCE QUANTITATIVE PARTICULARS AS FURNISHED BY THE ASSESS EE ALONG WITH THE RETURN OF INCOME FILED WITH THE REVENUE. THE ASSESSEE HAVING NOT FURNISHED THE DETAILS OF QUALITY QUANTITY RATE AND VALUE OF DIAMONDS LYING IN THE STOCK THE ASSESSEE HAS CONFOUNDED ITS POSITION GIVING ROOM FO R MISGIVINGS AS REGARDS THE VALUATION CARRIED OUT BY THE ASSESSEE. THE LEA RNED CIT(A) ALSO REJECTED THE CONTENTION OF THE ASSESSEE THAT THE ADDITION SO MADE IS REVENUE NEUTRAL AND HENCE NOT LIABLE FOR PENALTY AS EACH ASSESSMENT YEAR IS DISTINCT AND SEPARATE AND TAXABLE INCOME HAS TO BE COMPUTED FOR EACH YEAR AND DUE TAXES PAID THEREON. THE LD. CIT(A) HELD THAT THE ASSESSEE IS DUTY BOUND TO FURNISH ALL THE PARTICULARS OF ITS INCOME. THE INACCURATE P ARTICULARS IN THE RETURN OF INCOME RESULTED IN TO UNDERSTATEMENT OF THE TOTAL I NCOME CHARGEABLE TO TAX THUS LEADING TO CONCEALMENT OF INCOME. THUS THE L D. CIT(A) CONFIRMED/SUSTAINED THE PENALTY OF RS. 11 95 050/- LEVIED BY THE A.O. U/S 271(1)(C) OF THE ACT FOR FURNISHING OF INACCURATE P ARTICULARS OF INCOME BY THE ASSESSEE VIDE APPELLATE ORDERS DATED 26/09/2012. ITA 7110/MUM/2012 12 6. AGGRIEVED BY THE APPELLATE ORDERS DATED 26/09/20 12 PASSED BY THE LD. CIT(A) THE ASSESSEE FILED SECOND APPEAL BEFORE TH E TRIBUNAL. 7. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THA T THE LD. CIT(A) REJECTED THE CONTENTIONS OF THE ASSESSEE WITH RESPECT TO THE ADDITION MADE ON ACCOUNT OF ESTIMATES OF VALUATION OF DIAMONDS. THE LD. CIT (A) VIDE ORDERS DATED 10-02- 2009 IN QUANTUM PROCEEDINGS PARTLY ALLOWED THE APPE AL OF THE ASSESSEE WHILE REJECTED THE CONTENTIONS OF THE ASSESSEE WITH RESPE CT TO ADDITIONS TO CLOSING STOCK BASED ON DIFFERENCE IN VALUATION OF CLOSING S TOCK AND ONE OF THE PARTNERS OF THE ASSESSEE FIRM MR. SAMEER JAVERI WAN TED TO CONTEST THE APPELLATE ORDER OF THE LD. CIT(A) IN QUANTUM PROCEE DINGS HOWEVER HE WAS NOT KEEPING WELL AND EXPIRED ON 8-5-2009 AND SINCE HIS WIFE HAD TO LOOK AFTER HER MINOR DAUGHTER AND AGED MOTHER-IN-LAW SHE WAS NOT INTERESTED IN BUSINESS AND ALSO DID NOT CONTINUE THE LITIGATION. THE ADDI TIONS WERE ALTHOUGH NOT ACCEPTED BY THE ASSESSEE IN QUANTUM PROCEEDINGS B UT THE SAME WERE ACCEPTED BY THE ASSESSEE UNDER THE ABOVE CIRCUMSTAN CES. IT WAS SUBMITTED THAT THE INCREASE IN THE VALUATION OF CLOSING STOCK IN ONE YEAR IS NEUTRALIZED IN THE IMMEDIATE NEXT YEAR BY AN HIGHER OPENING STOCK BY EQUIVALENT AMOUNT AND DOES NOT RESULT ULTIMATELY IN THE INCREASE IN P ROFITS SO THERE IS NO CONCEALMENT OF INCOME. IT IS SUBMITTED THAT THE AS SESSEE HAD PURCHASED DIAMONDS IN LOTS WHICH WERE MIXED / ASSORTED DIAMON DS AND AFTER BUYING THE DIAMONDS THE ASSESSEE ASSORT DIAMONDS FROM THE PAC KETS INTO DIFFERENT QUALITY AND SIZES AND THE DIAMONDS ARE ISSUED FROM THESE ASSORTMENTS TO MAKE A PARTICULAR PIECE OF JEWELLERY HENCE THE VA LUE OF THE DIAMONDS IS DETERMINED AS PER COST OR MARKET PRICE WHICHEVER IS LOWER. THE A.O. HAS APPLIED AVERAGE RATE WHICH IS NOT CORRECT AND THE A DDITIONS HAVE BEEN MADE ARBITRARILY. THE LD. COUNSEL SUBMITTED THAT ALL TH E DETAILS WERE SUBMITTED BEFORE THE AUTHORITIES BELOW OF THE VARIOUS JEWELLE RIES MADE OUT OF THE DIAMONDS. THE LD. COUNSEL DREW OUR ATTENTION TO TH E REPLIES SUBMITTED BEFORE ITA 7110/MUM/2012 13 THE AUTHORITIES BELOW WHICH ARE PLACED AT PAPER BOO K PAGE 68 TO 110 AND ALSO PAGE 37 TO 54 OF PAPER BOOK FILED WITH THE TRIBUNAL AND SUBMITTED THAT NO ADDITION CAN BE MADE ON THIS ACCOUNT. HE ALSO DREW OUR ATTENTION TO THE TAX AUDIT REPORT FILED AND SUBMITTED THAT THE AUDITORS HAVE DULY VERIFIED ALL THE RECORDS. IT WAS SUBMITTED THAT IT IS NORMAL TO HAVE DIFFERENT RATES PER CARAT OF DIAMOND. HE SUBMITTED THAT CLOSING STOCK OF THIS YE AR WOULD BECOME THE OPENING STOCK OF THE NEXT YEAR AND AS SUCH IT HAS G OT NO EFFECT ON THE TAX AND NO PREJUDICE IS CAUSED TO THE REVENUE. THE LD. COUN SEL SUBMITTED THAT THE ALLEGATION OF NOT MAINTAINING THE RECORDS IS NOT CO RRECT. THERE ARE DIFFERENT TYPES OF DIAMONDS WHICH ARE OF 6000-8000 GRADES AND THE RATE OF DIAMOND ALSO VARIES DEPENDING UPON THE SIZE SHAPE CUT CL ARITY LOOK ETC. AND IT IS NOT POSSIBLE TO KEEP SEPARATE RECORDS OF DIAMOND AS THE RE ARE LARGE TYPES OF DIAMOND. AS PER THE REQUIREMENT OF THE CUSTOMERS T HEY GO ON MIXING ALL THE STOCK AND THEN MAKE ASSORTMENT DEPENDING UPON SIZE SHAPE CUT CLARITY LOOKS ETC.. THIS ACTIVITY TAKES LOT OF TIME AND IT IS NOT POSSIBLE AND PRACTICABLE TO KEEP DETAILED RECORDS OF EACH ASSORTMENT WHICH I S AN IMPOSSIBLE TASK. THE ADDITIONS HAVE BEEN MADE ON SUSPICION WHICH IS NOT SUSTAINABLE IN THE EYES OF LAW AND MORE-SO NO PENALTY IS EXIGIBLE KEEPING I N VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE. THE LD. COUNSEL RELIED O N THE FOLLOWING JUDICIAL DECISIONS:- 1. CIT V. RELIANCE PETROPRODUCTS (P) LTD. (2010) 32 2 ITR 158 (SC) 2. UNION OF INDIA V. RAJASTHAN SPINNING & WEAVING M ILLS (2009) 224 CTR 0001 (SC). 3. DILIP N. SHROFF V. JCIT (2007) 291 ITR 0519 (SC) 8. THE LD. D.R. SUBMITTED THAT THE ASSESSEE HAS NOT MAINTAINED PROPER STOCK REGISTER AND HIGHER RATES ARE APPLIED FOR ISS UE OF DIAMOND FOR MANUFACTURING JEWELLERY WHILE CLOSING STOCK IS VALU ED AT LOWER VALUE LEADING TO ITA 7110/MUM/2012 14 LOWER PROFIT BEING OFFERED FOR TAX. THE LD. CIT(A) S APPELLATE ORDER IN QUANTUM WAS ACCEPTED BY THE ASSESSEE AND NO APPEAL HAD BEEN FILED BEFORE THE TRIBUNAL. THE LD. D.R. RELIED ON THE ORDERS OF AUT HORITIES BELOW. 9. IN THE LD. COUNSEL FOR THE ASSESSEE IN THE REJO INDER SUBMITTED THAT THIS IS THE ONLY YEAR WHEN THE ADDITIONS HAVE BEEN MADE BY THE REVENUE BASED ON VALUATION OF STOCK AND IN NONE OF THE OTHER YEARS A NY ADDITIONS HAVE BEEN MADE BY THE REVENUE ON THIS ACCOUNT. 10. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND AL SO PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE CASE LAWS RELIED UPON. WE HAVE OBSERVED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DIA MONDS WHEREBY THE ASSESSEE PURCHASES ASSORTED DIAMONDS DEPENDING UPON SIZE SHAPE CUT CLARITY LOOK ETC. WHICH IS STATED TO BE A NORMAL BUSINESS PRACTICE FOLLOWED BY THE ASSESSEE. THE ASSESSEE HAS PRODUCED THE RELEVA NT RECORDS BEFORE THE AUTHORITIES BELOW FOR RECONCILING THE QUANTITIES OF DIAMOND DEALT WITH. IT IS ALSO STATED THAT THERE ARE 6000-8000 GRADES OF DIAM ONDS DEPENDING UPON SIZE SHAPE CUT CLARITY LOOK ETC. AND IT IS ST ATED BY THE ASSESSEE THAT IT IS NOT POSSIBLE AND PRACTICABLE TO KEEP DETAILED SEPAR ATE RECORDS OF EACH GRADE/VARIETY OF DIAMOND. THE ASSESSEE HAS STATED T HAT FROM THE ASSORTED DIAMONDS SO PURCHASED WHEREIN IN THE PURCHASE INVOI CE THERE ARE NO SEPARATE MENTION OF DIFFERENT ASSORTED DIAMONDS T HE ASSESSEE ISSUES DIAMOND OF HIGHER GRADES FIRST AND APPLIES ESTIMATE D RATES FOR ISSUE BASED ON VALUATION WHILE THE STOCK LEFT IN THE CLOSING STO CK IS OF INFERIOR QUALITY WHICH IS VALUED AT LOWER RATES. THE REVENUE HAS REJECTED THIS CONTENTION OF THE ASSESSEE BUT HAS MADE ANY ENQUIRY TO BRING ON RECOR D ANY EVIDENCE TO CONTROVERT THE SAME. THE REVENUE HAD MADE ADDITION TO THE CLOSING STOCK OF THE IMPUGNED ASSESSMENT YEAR ON THE CHARGE OF UNDER VALUATION OF VALUE OF CLOSING STOCK OF DIAMOND BY APPLYING AVERAGE RATES WHILE THE ASSESSEE HAS APPLIED RATES BASED ON VALUE OF GRADE/VARIETY OF D IAMONDS IN STOCK BY ITA 7110/MUM/2012 15 APPLYING COST OR MARKET VALUE WHICH EVER IS LOWER O F THE RELEVANT GRADE/VARIETY OF DIAMOND. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE AVERAGE RATE CANNOT BE APPLIED IN THE MANNER AS APPLIED BY REVENUE AND NO COGENT ADVERSE MATERIAL HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO DISPROVE THE BASIS OF VALUATION ADOPTED BY THE ASSE SSEE FOR VALUING STOCK OF DIAMOND BASED ON VARIETY/GRADE OF DIAMOND. NO ENQUI RIES OR EXAMINATIONS HAVE BEEN CONDUCTED BY THE REVENUE TO VALUE THE CLO SING STOCK OF DIAMONDS BASED ON GRADES/VARIETY OF DIAMOND AND MERELY APP LIED THE AVERAGE RATES KNOWING WELL THAT THERE ARE AS MANY 6000-8000 GRADE S/VARIETIES OF DIAMOND WHEREIN PRICE OF DIAMOND SUBSTANTIALLY VARIES FROM ONE GRADE TO THE OTHER HENCE THE ADDITIONS AS MADE BY THE AO IN QUANTUM ITSELF ARE NOT PRIMA-FACIE NOT SUSTAINABLE. IN ANY CASE THE ASSESSEE DID NOT FILE SECOND APPEAL WITH THE TRIBUNAL WITH RESPECT TO QUANTUM ASSESSMENT AND ACC EPTED THE APPELLATE ORDER OF LEARNED CIT(A) PARTLY ALLOWING THE APPEAL IN QUANTUM ASSESSMENT OWING TO THE REASON THAT THE PARTNER OF THE ASSESSE E MR SAMEER JHAVERI WAS NOT WELL AND ULTIMATELY EXPIRED ON 08-05-2009 AND T HE WIFE OF THE SAID MR. SAMEER JHAVERI WAS NOT INTERESTED IN PERSUING THE B USINESS AS WELL LITIGATION WITH THE REVENUE. IN ANY CASE THE CLOSING STOCK O F THIS ASSESSMENT YEAR WOULD BECOME THE OPENING STOCK OF THE NEXT YEAR AND ULTIMATELY IT HAS GOT NO EFFECT ON THE TAXES PAYABLE TO REVENUE AND REVENUE EFFECT IS TAX NEUTRAL AS THERE IS NO LOSS TO THE REVENUE. WE HAVE OBSERVED T HAT THE ASSESSEE HAS MAINTAINED SUFFICIENT RECORDS WHICH WERE PRODUCED B EFORE THE AUTHORITIES BELOW WHILE THE REVENUE HAS NOT BROUGHT ON RECORD COGENT AND SPECIFIC ADVERSE MATERIAL TO DISPROVE THE CONTENTIONS OF THE ASSESSEE . IN OUR CONSIDERED VIEW THE PENALTY LEVIED BY THE A.O. AND AS CONFIRMED/SUSTAINED BY LEARNED CIT(A) IS NOT SUSTAINABLE IN THE EYES OF LAW KEEPING IN VIEW PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE AND TH E BONAFIDE EXPLANATIONS SUBMITTED BY THE ASSESSEE AS SET-OUT ABOVE WHICH IS A PLAUSIBLE AND POSSIBLE BONA-FIDE EXPLANATION AND IS COVERED BY EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT . FURTHER WE HAVE OBSERVED THAT THE ASSESS EE HAS MADE FULL ITA 7110/MUM/2012 16 DISCLOSURE AT THE TIME OF FILING RETURN OF INCOME A ND IT COULD NOT BE SAID THAT THE ASSESSEE HAD CONCEALED PARTICULARS OF INCOME OR HAD FURNISHED IN- ACCURATE PARTICULARS OF INCOME TO BE BROUGHT WITHIN THE MANDATE OF PENALTY PROVISIONS AS ARE CONTAINED IN SECTION 271(1)(C) OF THE ACT. HENCE THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT AND AS CO NFIRMED/SUSTAINED BY THE LEARNED CIT(A) IS HEREBY ORDERED TO BE DELETED. WE ORDER ACCORDINGLY. 11. IN THE RESULT APPEAL FILED BY THE ASSESSEE IN ITA NO. 7110/MUM/2012 FOR THE ASSESSMENT YEAR 2003-04 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH OCTOBER 2016. # $% &' 27-10-2016 ( ) SD/- SD/- (C.N. PRASAD) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED [ .9../ R.K. R.K. R.K. R.K. EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED MUMBAI 4. : / CIT- CONCERNED MUMBAI 5. =>( 99?@ ?@ $ / DR ITAT MUMBAI E BENCH 6. (BC D / GUARD FILE. / BY ORDER = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) $ / ITAT MUMBAI