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2016 (5) TMI 685 - ITAT MUMBAIPenalty u/s 271(1)(c) - commission income receipt - Held that:- No penalty is leviable in the instant case keeping in view peculiar facts and circumstances of the case as set out above, as there is no deliberate attempt or positive act on the part of the assessee firm to conceal income or furnish in-accurate particulars of income. The bona-fide claim was made by the assessee firm based on the terms and condition of the agency agreement and the method of accounting was consistently followed based on the bona-fide belief that the commission income will become due to the assessee firm and right to receive will be vested in favour of the assessee firm only when the foreign principals have got their payments from Indian Buyers for products supplied by the foreign principals to the Indian Buyers and any deductions by the Indian Buyers in the payments due to the foreign principals will lead simultaneously deduction in the commission income of the assessee firm as per terms of agency agreement, But the said explanation did not found favour with the Revenue as in their view , the commission has already accrued to the assessee in terms of provisions of the Act and the same is exigible to tax . Thus, the assessee came out with an bona-fide explanation for substantiating the claim made by it in the return of income filed with the Revenue which was not accepted by the Revenue but it did not made the assessee firm liable for penalty u/s 271(1)(c) of the Act. There is a difference of opinion between the assessee firm and A.O. and the claim of the assessee firm was not accepted by the A.O. Mere non-acceptance of the bona-fide claim of the tax-payer by the Revenue does not call for imposition of penalty within the ambit of provisions of Section 271(1)(c) of the Act , more-so the assessee firm came forward with a bona-fide explanation to substantiate its claim and hence the case of the assessee is not hit by explanation 1 to Section 271(1)(c) of the Act. - Decided in favour of assessee
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