TMI Blog2013 (5) TMI 716X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the highest fact finding authority Assessee knew that there was no agreement for payment of commission for the year under consideration with both the companies and that the claim made was not true, even then it tried to convince both the appellate authorities that claim made by it was genuine. Therefore, it can safely be held that the claim made by the assessee was not only wrong, but also false and it was persisted with for a very long time. The assessee had not furnished any satisfactory explanation as to why a prima facie inadmissible claim was made in the return. In favour of revenue. - ITA No. 4545/Mum/2003 - - - Dated:- 1-5-2013 - Sh. I. P. Bansal And Rajendra,JJ. For the Petitioner : Shri O. P. Meena Shri Shrihari M. Iyer For the Respondent : Shri Dinesh Vyas ORDER Per Rajendra, A. M. Challenging the order dt. 28-03-2003 of CIT(A)-XXIV, Mumbai, Assessing Officer (AO) filed the following Grounds of Appeal:- 1.On the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in deleting the penalty levied u/s. 271(1)(c) by the A.O. on the assessee for concealment of particulars of income and furnishing inaccurate particulars of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment with GTSL was not renewal beyond AY.1994-95. Before the AO, assessee conceded that there was no agreement between it and GTSL. AO held that the assessee made a bogus claim of expenditure which was not for the purpose of business for the year under consideration. As a result, he disallowed sum of Rs. 31.10 Lakhs and added back the same to the income of the assessee. Similar was the finding of the AO with regard to overriding commission paid to NCL. AO held that assessee had not produced any evidence to show that NCL had rendered any service to the assessee-company. Accordingly, AO held that the assessee had made a bogus claim of expenditure amounting to Rs. 30.93 Lakhs and disallowed the same. Assessee preferred an appeal before the First Appellate Authority (FAA) and matter travelled up to the ITAT. Confirming the order of the FAA and dismissing the appeal of the assessee, Tribunal held as under:- "66.Ground No.14 is directed against the decision of the CIT(A) the disallowance of the confirming the disallowance of the overriding commission of Rs. 62,04,067/- paid during the previous year. This is the aggregate of Rs. 30,93,410/- paid to M/s. Neeraj Consultants Limited and Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the factual findings recorded by the income tax authorities. We therefore confirm the disallowance and dismiss the ground." 3.1. Meanwhile AO initiated penalty proceedings u/s.271(1)(c) of the Act, as he was of the opinion that assessee had furnished inaccurate particulars of income. In response to Show Cause Notice issued by the AO assessee submitted that no penalty proceedings u/s. 271(1)(c) were initiated in respect of payment of overriding commission of Rs. 30.93 Lakhs to NCL. Before the AO, assessee claimed that in the FY.1997-98, as soon as the decision to terminate the agreement with GTSL was taken an amount of Rs. 31.10 Lakhs provided in the account was immediately reversed and was offered to tax in the AY. 1998-99 which proved the bonafide of the assessee. After considering the submissions of the assessee, AO held that assessee-company had failed to discharge its primary onus of payment of commission, that assessee had not produced the party to whom commission was paid, that no evidence was produced to show that services rendered by GTSL or NCL. AO further held that assessee had claimed an expenditure which was not genuine and it had failed to establish the genuineness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commission paid by the appellant was really bogus. As a result, penalty of Rs. 26.67 Lakhs levied by the AO was deleted by the FAA. 5. Before us, Departmental Representative (DR) submitted that assessee had not proved rendering of service by both the NCL and GTSL, that without proving of incurring of expenditure assessee had made a false claim, that assessee had filed inaccurate particulars of its income, that AO had rightly levied penalty u/s.271(1)(c) of the Act,he relied upon the cases of Goel M.G.Gases P.Ltd.,(ITA No.58/2008 dt.19.10.2012 Hon'ble High Court of Delhi); Sanghvi Swiss Refills P. Ltd.,(ITA/250/ 2011 dt. 20.11.2012-Hon'ble High Court of Bombay); Dass Trading Company(IT Appeal No. 221/2006 dt.21-07-2009 of Hon'ble High Court of Delhi) and Pearey Lal Sons (EP) Ltd.,[177 Taxman 302 (Punj Har)]. Authorised Representative (AR) submitted that AO had not specified the charge and held thus violated the condition precedence for imposition of penalty, that Penalty Order was result of non-application of mind by the AO, that when claim made was based on bonafide belief, penalty should not have been levied, that merely because the assessee had claimed the expenditure it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me and material to the computation of his total income have been disclosed by him, then, the amount disallowed in computing the total income of such person as a result thereof shall, for the purposes of section, be deemed to represent the income in respect of which particulars have been concealed. 7. In this case return of income was filed in November, 1997 and claim about the overriding commission was made by the assessee, though the agreement for paying the same had already lapsed. Original agreements for making payments for overriding commissions were up to the period of 31.03.1995 only and after last date of that financial year same were not renewed. Both the parties had not rendered any services to the assessee during the year under consideration, even then assessee- company claimed that an expenditure amounting to Rs.62.04 Lakhs was paid to them. Not only it was claimed before the AO, but the issue was agitated up to the level of the Tribunal by the assessee. There is no doubt that assessee wanted that claim made by it should be allowed, even though proof of rendering of services by NCL and GTSL or existence of agreements was lacking. Clearly, a false claim was not only mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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