IN INCOME TAX APPELLATE TRIBUNAL BENCH, CHENNAI BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ITA No.433/Mds/2016 Assessment Year : 2009-10 Shri. Mahaveer Chand, Joint Commissioner of Income Tax, Proprietor: M/s. Arihant Jewellers, v. Range II, Madurai. No.38/145, North Usman Road, T.Nagar, Chennai 600 017. PAN : AEOPM0188B (Appellant) (Respondent) Appellant by : Shri. D.Anand, Advocate Respondent by : Shri. Shiva Srinivas Date of Hearing : 28.07.2016 /Date of Pronouncement : 15.09.2016 ORDER PER N.R.S. GANESAN, JUDICIAL MEMBER: This appeal of assessee is directed against order of CIT(A) -2, Chennai dated 11.11.2015 and pertains to Assessment Year 2009-10. 2 I.T.A. No.433/Mds/2016 2. Shri. D.Anand, learned counsel for assessee submitted that CIT(A) confirmed penalty levied by Assessing Officer under Section 271(1)(c) of Act. According to learned counsel, there was survey in premises of M/s.Arihant Jewellers under Section 133A of Act on 26.06.2008. assessee is proprietor of M/s.Arihant Jewellers. During course of survey operation, revenue authorities found that stock of gold jewellery as per books of account was 22,305.129 grams. On physical verification, revenue authorities found only 20,250.830 gms. of gold jewellery. According to revenue, there was shortage of 2054.299 grams of gold jewellery. assessee explained before assessing officer, shortage was due to non consideration of jewellery given to customers on approval basis on date of survey. assessing officer however rejected claim of assessee and levied penalty. 3. Referring to order of assessing officer, learned counsel for assessee submitted that revenue authorities also found excess cash of Rs.8,41,077/-. assessee explained before assessing officer that excess cash was advance received from customers against goods given on approval basis. This explanation of assessee also was rejected by assessing officer without any reasonable cause. Therefore, assessee according to 3 I.T.A. No.433/Mds/2016 learned representative discharged his obligation. Hence, there cannot be any penalty under Section 271(1)(c). Referring to judgment of Madras High Court in CIT Vs. Gem Granites reported in (2013) 86 CCH 0160 ChenHC, copy of which is filed by assessee submitted that when assessee offered explanation with regard to shortage of gold jewellery and excess cash, burden of proof shifts on shoulders of revenue. If revenue could not agree with explanation of assessee, then it is for revenue to prove that there was concealment of particulars of income or assessee has furnished inaccurate particulars of his income. onus which was shifted on revenue was not discharged. Therefore, CIT(A) is not justified in confirming penalty levied by Assessing Officer. 4. On contrary, Shri Shiva Srinivas, learned representative for department submitted that, admittedly during course of survey operation, revenue authorities found shortage of gold jewellery and excess cash. Therefore, presumption is that assessee has sold jewellery outside books of accounts and attempt was made to conceal assessee s income. assessee claimed before assessing officer that assessee voluntarily offered excess gold jewellery and excess cash found for taxation. This explanation of assessee was not accepted by assessing officer. shortage of gold jewellery and excess cash was 4 I.T.A. No.433/Mds/2016 found by revenue authorities only during course of survey conducted by revenue in premises of assessee. Therefore, it cannot be considered that assessee has voluntarily offered value of deficient stock in gold jewellery and excess cash found during course of survey operation. Therefore, CIT(A) has rightly confirmed penalty levied by Assessing Officer. 5. We have considered rival submissions on either side and also perused material available on record. During course of survey operation, statement was recorded from assessee. Assessing Officer in fact extracted answer of assessee at paragraph 3 of impugned order of assessment. assessee explained before assessing officer even at time of survey that deficient stock in gold jewellery was because of gold jewellery given to customers on approval basis. With regard to excess cash, assessee explained during examination under Section 131 of Income Tax Act that it was received from customers to whom jewellery was given on approval basis. This is statement made by assessee during course of survey operation. Therefore, it cannot be said that assessee has not offered any explanation for deficiency in gold jewellery and excess cash found during course of survey operation. Therefore, burden of proof shifts on shoulder of revenue as found by Madras High Court in case of Gem 5 I.T.A. No.433/Mds/2016 Granites cited supra. It is for revenue to investigate further and find out whether explanation offered by assessee was true or not. assessing officer has not taken any pain to make further investigation in order to ascertain correctness of explanation offered by assessee. Therefore, this Tribunal is of considered opinion that he levy of penalty on assessee is not justified. 6. It is well settled principles of law that assessment proceedings and penalty proceedings are separate and independent. Even though, assessee agrees for addition in assessment proceedings, assessing officer was expected to re-examine material available on record during penalty proceedings. In case before us, assessing officer as well as CIT (A) found that deficient stock and excess cash was found during course of survey operation. Therefore, it is not case of voluntary disclose. This Tribunal is of considered opinion that when assessee explained before assessing officer that jewellery was given to customers on approval basis and advance money was collected and this was not found to be false by assessing officer, there is no justification for levy of penalty by Assessing Officer under Section 271(1)(c) of Act. 6 I.T.A. No.433/Mds/2016 7. In view of above discussion, this Tribunal is unable to uphold orders of lower authorities. Accordingly, orders of both authorities below are set aside and penalty levied by assessing officer as confirmed by CIT(A) under Section 271(1)(c) is deleted. 8. In result, appeal of assessee stands allowed. Order pronounced on 15th September, 2016 at Chennai. Sd/- Sd/- (D.S. Sunder Singh) (N.R.S. Ganesan) Accountant Member Judicial Member Chennai, Dated, 15th September, 2016. sp. Copy to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT, 5. DR 6. GF. Mahaveer Chand v. Joint Commissioner of Income-tax, Range-II, Madurai