TMI Blog2013 (6) TMI 553X X X X Extracts X X X X X X X X Extracts X X X X ..... , lack of original bills, the facts brought in by the Tribunal it is a case of issue of accommodation bills etc, penalty confirmed by the CIT (A) does not call for any interference. Against assessee. - I.T.A. No.1946/M/2012 - - - Dated:- 15-5-2013 - Shri D. Manmohan And Shri D. Karunakara Rao, AM,JJ. For the Appellant : Sh. Dalpat Shah For the Respondent : Sh. Manoj Kumar, CIT-DR ORDER Per D. Karunakara Rao, AM:- This appeal filed by the assessee on 22.3.2012 is against the order of the CIT (A)-8, Mumbai dated 10.1.2012 for the assessment year 2005-06. 2. In this appeal, assessee raised the only effective ground which read as under: "1. The Ld CIT (A) erred in confirming the penalty levied u/s 272(1)(c) of Rs. 17,39,973/- by the ITO-4(2)(1), Mumbai on the ground of furnishing of inaccurate particulars of income. The said CIT (A) erred in not considering the fact that the claim for R D expenditure was bona fide one and with supporting evidences. The Ld CIT (A) erred in not considering the fact that merely rejection of a claim for expenditure does not result into any concealment of income as held by the Hon'ble Supreme Court in the case of CIT vs. Reliance P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure is incurred for the purpose of business of the assessee. Thus, AO made addition of Rs. 42,04,000/- paid to Swiss Consultancy and Rs. 5,51,000/- paid to Premium Investment and the details are as follows:- "Addition with regard to Swiss Consultancy of Rs. 42,04,000/- 4.13. In view of all the above discussion and after considering the fact and details available on record, it is concluded that, the assessee has failed to establish that the amount of Rs. 42,04,000/-, debited by the assessee to the Profit and Loss Account, as Research and Development expenses, has been incurred for the purpose of assessee business, hence, Rs. 42,04,000/- is disallowed and added to the total income of the assessee. Penalty proceedings u/s 271(1)(c) is initiated separately for furnishing inaccurate particulars and concealment of income. Addition with regard to Premium Investment of Rs. 5,51,000/- 5.3. In spite of repeated opportunities, the assessee neither submitted the details of the research made by M/s. Premium Investment, the copy of such research report, nor the details of utilization of such research information. Even the basic details, ie for which equity the research was made, has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act vide his order dated 25.3.2011 in respect of the above addition of Rs. 47,55,000/-. Para 4.1 and 5 of the penalty order read as under: "4.1. The Ld CIT (A) has confirmed the addition of Rs. 47,55,000/- vide order No.IT/CIT(A)IV/Cir4/227/2007-08 dated 15.5.2009. The Ld CIT (A) had given various opportunities to the assessee to establish that the expenses on Research and Development were genuine expenses. However, addition was confirmed for the following reasons: ..... e) In the books of Swiss Consultancy the amount shown against the assessee is Rs. 21,02,400/- whereas in the books of the assessee it is Rs. 39,84,130/-. f) Details of payments to Swiss Consultancy shows that no payments were made in relevant year but in the subsequent year. g) The work done by these concerns for the assessee was not research but something that could be done at normal reading of newspapers. h) The long delay in payments to these concerns strengthen the view that it is a case of bogus payments to reduce tax liability. 5. Comments on reply filed by assessee in response to notice u/s 271(1) r.w.s. 274 of the Act filed on 21.3.2011: The assessee has merely said that the disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the said fees and payment to both the entities were by cheque only. iv) M/s. Swiss Consultancy had explained the facts aide a letter during the assessment proceedings and submitted copies of bills, debit notes, ledger a/c of appellant and their return of income filed. The AO neither gave any opportunity to the appellant to reconcile the discrepancy in the closing balance nor the copy of the ledger a/c filed by the party. v) The AO erred in deriving a notional amount of brokerage income as on day trading the rate of brokerage is much lesser than on delivery as determined by the Bombay Stock Exchange. Further, earning of lesser income in comparison to expenditure cannot be the reason of disallowance. vi) It is submitted that merely because of disallowance of expenses does not tantamount to concealment of income or furnishing inaccurate particulars of income particularly when the appellant has substantiated the claim by furnishing all the particulars and details. vii) the appellant relied upon following decisions: 1. Dhirajlal Maganlal shah vs. ITO 125 ITD 313 (Ahd) (TM) (Page 65-69) 2. Equest India (P) Ltd. vs. ITO 41 SOT 225 (Mum) (Page 62 to 64) 3. CIT vs. Relia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ws papers and therefore, they do not amount of R D services. The books of account are not in tune with the book entries of the parties. With so much of discrepancies still left to be reconciled by the Assessee, the genuineness of the parties and the transactions is rightly found as sham transactions. Further, the Tribunal's finding is that it is a case of issuing of accommodation bills by the Swiss Consultancy and M/s. Premium Investments. With these facts, this is a fit case for levy of penalty. 13. We have examined the divergent view of the parties in dispute with assistance of the papers filed before us. There is no dispute on the issue that the penalty proceedings are independent in nature qua the penalty proceedings. However, the facts established by the Tribunal shall have the bearing on the penalty proceedings more so when the assessee is no forthcoming with the details of the services rendered by the impugned parties to the assessee during the year. Why the assessee paid to the Swiss Consultancy and M/s. Premium Investments and what are the business or professional or research services rendered by them to become entitled for the impugned payments. In our view, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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