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2015 (12) TMI 282 - AT - Income TaxPenalty u/s 271(1)(c) - failure to substantiate the claim of expenditure on account of commission payment - Held that:- The entire conspectus of facts emerging from record does establish that the assessee fail. So however, in order to hold the assessee guilty of “furnishing inaccurate particulars” within the meaning of section 271(1)(c) of the Act, it is imperative to demonstrate that assessee is found to have made an erroneous or a false claim. Clearly, failure to substantiate a claim cannot be equated to a case of making of a false or an erroneous claim. In fact, the mere making of a claim, which is not found sustainable by the Assessing Officer does not ipso facto justify furnishing of inaccurate particulars of income within the meaning of section 271(1)(c) of the Act, as held by the Hon’ble Supreme Court in the case of CIT vs. Reliance Petro Products Ltd., ( 2010 (3) TMI 80 - SUPREME COURT). In the present case, ostensibly, the payment of commission expenditure has been made by cheques and the requisite tax has also been deducted at source. The recipient has also confirmed receiving of commission payment from the assessee. The assertion of the appellant–assessee that similar payments made in the past have been allowed, is also not disputed by the Revenue. The aforesaid features of the claim do not establish that the claim made in the return of income was not a bonafide claim. While there may be justifiable reasons for disallowing the claim of expenditure, so however, that by itself cannot be a ground for levy of penalty under section 271(1)(c) of the Act. It is a well settled proposition that the assessment proceedings and the penalty proceedings are independent proceedings and the finding in the assessment proceedings are not conclusive so as to govern the penalty proceedings, though such findings in the assessment proceedings may be a relevant criteria. Notably, in the present case, the entire case set-up by the Assessing Officer to levy penalty is based on the disallowance effected during the assessment proceedings, where the only failure of the assessee was non-substantiation of the claim for expenditure. In our view, merely because the expenditure on account of commission payment has been found to be unsubstantiated and disallowed in assessment proceedings, the same ipso facto does not justify levy of penalty under section 271(1)(c) of the Act. - Decided in favour of assessee.
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