By TIOL News Service

AHEMDABAD, MAR 22, 2018: THE issue is - Whether escape of any offender from the penal laws, will give right to other similarly placed accuseds to plead equality and protection from prosecution. NO IS THE ANSWER.

Facts of the case:

The Assessee companies, engaged in wholesale trading of iron sheets, have filed their returns for AY 2008-09 declaring total income at Rs.1,24,650/- and Rs.2,10,050/-, in the case of M/s. H S Steel and M/s. Volga Steel respectively. Consequent to the same, a survey u/s 133A was conducted at the business premises of assessees, wherein inventory of stock was prepared after physical verification at a value of Rs.45,36,120/- in the case of M/s. H S Steel and Rs.43,25,880/- in the case of M/s. Volga Steel. However, it was found that in the books of accounts, the assessees have accounted stock at Rs.20,35,105/- in the case of M/s. H S Steel and Rs.18,25,355/- in the case of M/s. Volga Steel. Thus, there was excess stock of Rs.25,01,015/- and Rs.25,00,525/- in the case of M/s. H S Steel and M/s. Volga Steel respectively, which resulted in additions of these excess stocks. In addition, the AO also levied penalty of Rs.8,84,599/- u/s 271(1)(c).

Tribunal held that,

++ a perusal of inventory of stock would indicate that the stock statement was prepared after physical verification. The partners have put their signatures after verifying the correctness of the stock statement. The assessee is simply denying about the availability of excess physical stock at the time of survey. They are harping upon the purchase bills and sales bills and entries made in the stock register. It is pertinent to observe that the surveys and searches are the last resorts with the Revenue to verify the actual position on the spot. The allegation against the assessee(s) is that they were not accounting total purchases in their books. That is why excess physical stock was available on a particular day when the survey was carried out. These allegations cannot be refuted by merely just saying that the alleged calculation made at the time of survey is wrong. It is for the assessee to prove how it is wrong either by direct evidence or by circumstantial evidence. One of the ways available with the assessee would be to retract the statement as well as to file a complaint against the survey team before the higher authorities itself. The survey team was not having power to get declaration as well as arrest the assessee. The partners should have not put their signatures on the inventory of stock prepared by the survey team. Now, with the help of simple denial, they cannot say that excess stock was not found. Moreover, in the present case, the addition was not made on the basis of alleged admission in the statement, but on the basis of excess physical stock found at the time of survey which was accepted by the partners during the survey by putting their signatures on the inventory. Therefore, contention of assessee cannot be accepted;

++ as far as levy of penalty is concerned, there is no explanation at the end of assessee as to what prompted in the minds of the partners for not disclosing the excess stock admitted during the course of survey in the return of income. As far as the contention of AR that in the case of M/s. Volga Steel, the CIT(A) has deleted the penalty, this Tribunal is of the view that there is no negative equity in law namely if a person could not be caught for infringement of law, then one who caught has right to plead equity on the ground that such and such person was not punished for infringement of law.

(See 2018-TIOL-424-ITAT-AHM)