TMI Blog1994 (9) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... or in the alternative to produce the lady for cross-examination. The assessee expressed its inability to produce the lady but agreed to revise the return and said revised return was filed on 17-1-1986 by adding to the earlier returned figure the amount of commission. The ITO initiated penalty proceedings under section 271(1)(c) in respect of the aforesaid amount. 2. In the course of the penalty proceedings subsequently the assessee stated that the revised return was filed voluntarily with a view to avoid litigation and to buy peace. It was further stated that the lady had refused to cooperate with the assessee. The further submission was in the direction of contending that the payment of commission represented genuine expenditure for business purposes and did not represent the undisclosed income of the assessee. 3. The Assessing Officer, however, rejected the aforesaid submissions and took note of the assessment records as also the notings on the order sheet whereby the company had been directed to file the confirmation of the lady. A note was also taken to the effect that there was no compliance with the aforesaid directions although numerous opportunities had been allowed. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12-1984 which was a date long after the close of the accounts of present assessment year and filing of the return. It was also pointed out that the original return for the assessment year under appeal was filed on 29-6-1983 and the assessment was completed much later, i.e., 31-1-1986. The submission, in other words, was that while filing the return for the assessment year 1983-84, the assessee was under the bona fide belief that the claim being genuine would be allowed as had been done in the assessment years 1979-80 to 1981-82 and the rejection of the claim in assessment year 1982-83, was not under its contemplation. 8. At this stage the learned counsel stated certain facts before the Tribunal which do not appear in the orders of the tax authorities either in the penalty proceedings or in the quantum proceedings. These were that the lady was the mother of one Shri Balbir Mathur who was the buying agent of a foreign company, namely, Rahmanan Co. It was further stated that there was no written agreement between the assessee and, Shri Balbir Mathur but on his oral instructions the said commission was being paid to his mother in India and that the said Shri Balbir Mathur resided o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 440 (Raj.) (4) Mahavir Metal Works v. CIT [1973] 92 ITR 513 (Punj. Har.) (5) CIT v. E. V. Rajan [1985] 151 ITR 189 (Mad.) (6) CIT v. Sri Venkateswara Textiles [1985] 153 ITR 687 (Mad.). 11. We have examined the rival submissions and have also perused the material on record to which our attention had been invited by the parties during the course of the hearing. In our opinion, the entire complexion of the case changes as a result of the facts stated by the learned counsel before the Tribunal for the first time and which we have already mentioned in an earlier part of our order. To add to the aforesaid facts, the learned counsel conceded before us that the lady had not rendered any services to the company whatsoever but she was a nominee of her son for collecting commission on his behalf. Then again, there is a clear admission to the fact that such an arrangement was worked out between the company and Shri Balbir Mathur only to bye-pass the FERA provisions. These facts lead to no other conclusion but the one that the payment of commission was a sham and made-up affair between the assessee-company and Shri Balbir Mathur and relevant facts which were in the special knowled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce arose mainly on account of additions and disallowances which were not contemplated. It was further contended that the estimate of income which had been filed was true to the best of the assessee's knowledge and belief and no penalty was required to be imposed. 13. The aforesaid submissions were rejected by the Assessing Officer on the ground that most of the additions made at the assessment stage had been confirmed in further appeal. In the final analysis, he proceeded to impose a penalty of Rs. 26,850 representing 20% of the 'difference". 14. In further appeal, the CIT(A) reduced the penalty to Rs. 13,425 being 10% of the shortfall as against 20% imposed by the Assessing Officer. 15. Before us the learned counsel reiterated the arguments advanced before the tax authorities and these being in the direction of contending that the income estimated for the purposes of advance tax was correct and the subsequent increase in the said income was entirely due to the additions and disallowances which were not anticipated. It was also pointed out that the assessment order for assessment year 1982-83 was passed well after the due date for filing the estimate for the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X
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