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2012 (7) TMI 596

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....4,865   iv) ERP Software expenses Rs. 10,80,000   (b) The, CIT(A) failed to appreciate that the assessee company has clearly furnished inaccurate particulars of income, thereby attracting explanation 1 to section 271(l)(c) of the Act, 1961. Merely claiming that it had not concealed particulars of income or not furnished inaccurate particulars of income is not sufficient to prove that the assessee's case does not fall under the provisions of section 271(l)(c). Further, in the recent judgment in the case of Union of India and others vs. Dharmendra Textiles Processors and others - 306 ITR 277 (SC) the Hon. Apex Court has held that the Explanations appended to section 271(l)(c) of the Income-tax Act, 1961, indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing the return." The penalty u/s. 271(l)(c) was, therefore, rightly levied by the Assessing Officer. l(a). On the facts and in the circumstances of the case, the Ld. CIT.(A) erred in deleting the penalty of Rs.60,38,310/- levied u/s. 271(l)(c) of the Act on the following additions and excess claim of deduction u/s. 80HHC & 80IA confirmed by the CIT(A) - ....

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....wing additions and excess claim of deduction u/s. 80HHC & 80IA confirmed by the CIT(A) - i) Commission Payment Rs.23,21,500/- ii) Marketing expenses u/s.40A(2)(b) of the Act Rs.1,21,17,001/- (b) The CIT(A) failed to appreciate that the assessee company has clearly furnished inaccurate particulars of income, thereby attracting explanation 1 to section 271(l)(c) of the Act, 1961. Merely claiming that it had not concealed particulars of income or not furnished inaccurate particulars of income is not sufficient to prove that the assessee's case does not fall under the provisions of section 271(l)(c). Further, in the recent judgment in the case of Union of India and others vs. Dharmendra Textiles Processors and others - 306 ITR 277 (SC) the Hon. Apex Court has held that the Explanations appended to section 271(l)(c) of the Income-tax Act, 1961, indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing the return." The penalty u/s. 271(l)(c) was, therefore, rightly levied by the Assessing Officer. ITA No.1010/Ahd/2010 l(a). On the facts and in the circumstances of the case, the Ld. CIT.(A) erred in deleting the penalty....

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....ee filed its reply which was not acceptable to the A.O. and he imposed penalty of Rs.50,66,584/- u/s 271(1)(c) of the Act. Before Ld. CIT(A) assessee made following submissions in respect of each addition for which penalty was imposed by the A.O.:- "3.1.1 Regarding the commission payment of Rs.15,13,500/- to Nipun Finvest Pvt. Ltd., Assessing Officer in assessment order has stated that the terms of commission payment were decided by letter dated 19-05-1999 whereas the first payment of commission to the said party has been made prior to that i.e. in the month of April, 1999. The said Nipun Finvest Pvt. Ltd. is a regular agent of the appellant company and in earlier year also the commission has been paid by the appellant on sales affected through them. Merely, because the payment is made earlier to the letter dated 19-05-1999 fixing the terms, no disallowance can be made for the reason that the terms were already decided orally prior to the payment of commission. Further, regarding payment of commission of Rs.2,50,000/- to the said party the Assessing Officer has stated that commission has been credited in respect of business with Government of Gujarat during April, 1999 to March,20....

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....the reimbursement of salary to Gharda Chemicals Ltd. cannot be justified for the reason that the appellant has not gained anything from the services rendered by Dr. Bomi Patel and U. A. Maroo. The appellant, vide letter dated 31-01-2003, explained the Assessing Officer that Shri Bomi Patel is an M Sc. PhiD. having experience of over 10 years in chemical industry. Shri Bomi Patel has given his valuable services to the appellant, which has helped in improving the production, quality of product and also in reducing cost of manufacturing and therefore, the appellant thought that it would be beneficial and advantageous to the company to avail his services. Regarding U. A. Maroo, the Appellant explained that he is a Chartered Accountant and Company Secretary, has vast experience of around 20 years in the field of finance and legal matters and he is providing his valuable services in financial and legal issue to the appellant. In support of the same the appellant has also furnished copy of Board's resolution dated 5th February, 99 and in terms of said resolution the Board of the Appellant Company agreed to reimbursement of salary expenditure in respect of the above referred person to Ghar....

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....0/- for implementation of Software in terms of agreement and Rs.10,80,000/- has been paid to Gharda Chemicals Ltd. for training given by Gharda Chemicals Ltd. to the staff of appellant company for the operation of said software. Thus, expenditure in question is totally business expenditure fully allowable as revenue. It is submitted that disallowances are made in respect of bonafide claim of expenditure for which no penalty u/s 271(l)(c) can be levied. Reliance is placed on the following decisions: i) CIT v. Hotel Sabar P. Ltd. [264 ITR 381 (Guj)]   ii) CIT v. Harshvardhan Chemicals & Minerals Ltd. [259 (Guj)]   iii) CIT v. Skyline Auto Products P. Ltd. [271 ITR 335 (MP)]   iv) CIT v. Anand Water Meter Mfg. Co. [117 ITR 866 (P&H)   v) CIT v M.P.Narayanan [244 ITR 528 (Mad)]   vi) CIT v. Union Electric Corporation [281 ITR 266 (Guj)]"   6. After taking into consideration the submissions of the assessee, ld. CIT(A) deleted the penalty imposed by the A.O. Aggrieved by this order of ld. CIT(A) now Revenue is in appeal before us. 7. At the time of hearing, ld. D.R. submitted that ld. CIT(A) has failed to appreciate that the assessee company has clea....

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....Mad)]   vi) CIT v. Union Electric Corporation [281 ITR 266 (Guj)]   8. As far as penalty levied on salary of Rs.10,39,594/-, the assessee's contention was that in assessee's own case penalty imposed by the A.O. has been deleted by the Tribunal vide ITA No.345/Ahd/2009 in A.Y. 1999-00. In respect of penalty levied on marketing expenses u/s 40A(2)(b) of Rs.91,04,865/-, the penalty during the year 1999-2000 on similar facts has been deleted vide ITA No.272/Ahd/2009 in A.Y.1999-90. Therefore, during the year under appeal also, following these judgments of the Tribunal the order passed by ld. CIT(A) may kindly be upheld. 9. After hearing both the parties and perusing the record, we find force in the contention of ld. counsel of the assessee that in respect of commission paid to M/s Nipun Finvest Pvt. Ltd. and Mercury Enterprises and ERP Software expenses incurred on ERP software, the assessee has filed along with the return of income audit report and other relevant statements in support of such claims. During the course of assessment proceedings also, the assessee further submitted all the information and explanations as required by the A.O. from time to time to substantiat....