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2013 (11) TMI 670 - AT - Income TaxPenalty u/s. 271(1)(c) - Onus of proving bonafides transaction - excessive or unreasonable payments to a person specified u/s.40A(2)(b), - Held that:- The assessee’s only defense is that the disallowance as finally sustained by the tribunal is on an estimate basis. There is no law that penalty cannot be levied where the income or the disallowance under reference involves estimation. - The tribunal in the instant case made the estimation in the absence of any specific data or information being led by the assessee in explanation of his case The burden to prove that the price paid is not excessive or unreasonable, particularly where made to a person specified u/s.40A(2)(b), and more so once a prima facie case is made out by the Revenue, as in the instant case, is on the assessee - If it is presumed that the assessee entered the distribution arrangement as there were no takers for distribution, that itself would be reason enough for him to become guarded and make an informed decision on a proper consideration of all the facts, i.e., acting independent of APPL, the producer, in which he is a director. In fact, as observed earlier, being a part of APPL, he would only be well aware of the market rates being quoted for the film. The assessee, has been clearly unable to make out any case in this regard. He, in fact, enters the agreement on MG basis, rather than on a revenue sharing basis, assuming all the risk. That the assessee had earned confirmed profits from another project/business, further indicts his case qua bona fides, vindicating the Revenue’s stand. The assessee has thus failed to make a case on both the parameters - decision in the instant case, based on the well settled jurisprudence in the matter, rests on the finding of the fact of the assessee having not furnished any explanation, much less a valid one, qua the reasonableness of the purchase price in the facts and circumstances of the case. Further, he has also not explained his conduct, which clearly, given the surrounding facts and circumstances, indicts the bona fides of the transaction - Decided against Assessee.
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