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TMI Blog2013 (6) TMI 553X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the relevant facts of the case are that the assessee is engaged in the business of investment and trading of shares and filed the return declaring the total income of Rs. 9,44,070/-. During the scrutiny proceedings u/s 143(3) of the Act, AO made addition of Rs. 47,55,000/- which was claimed by the assessee as allowable expenditure under the Research & Development (R & D) charges account. Relevant facts of this addition are given in para 4 of the assessment order. Assessee claimed these amounts in the books as amounts paid to M/s Premium Investment (Rs. 5 lacs) and Swiss Consultancy (Rs. 42.04 lacs) for equity research done for assessee on various scrips. Considering the fact that the assessee failed to discharge the initial onus by not furnishing the proof of payment, copy of the bills and the details of services rendered, AO held that the assessee failed to furnish the basic details in support of the claim. AO also observed that the details furnished by the assessee are found to be incomplete and not credible. Assessee could not file the details relating to research done by the said parties for the assessee. AO also found that the purchase and sale details required concilable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee in respect of expenses incurred for the purpose of the business of the assessee. In this respect, it is duty of the assessee to prove the genuineness of expenses. However, in this case the assessee has failed to prove that the above expenses were incurred for the purpose of the business. Considering the above fact that the amount of Rs. 5,51,000/- has been 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." 4. The addition made by the AO was subsequently confirmed by the CIT (A) and the ITAT vide ITA No.4012/Mum/2009 (AY: 2005-06) dated 28.1.2011. Para 11 of the Tribunal's order is relevant in this regard. 5. On perusal of the details placed before the Tribunal, vide the order cited supra, Tribunal came to the conclusion that the reports submitted by the parties are hardly any reports of research and the Tribunal reproduced the said relevant para 11 to demonstrate that the said reports are merely day-to-day information which is easily available in news papers like Economic Times or from internet. The relevant extracts reads as follows:- "T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amounts were expended for business purposes. The reply of the assessee is no acceptable as only business expenses can be claimed and even the Ld CIT(A) has concern that it is a case of bogus payments to reduce tax liability." 6.1. Thus, Assessing Officer levied penalty of Rs. 17,39,973/-. Aggrieved with the above order of the penalty, assessee filed an appeal before the CIT(A). 7. During the proceedings before the first appellate authority, on the penalty issue, CIT (A) considered the explanation of the assessee and held that the assessee reduced his income by an amount of Rs. 47,55,000/-. In the process, CIT (A) relied on the Apex Court judgment in the case of Union of India vs. Dharmendra Textile Processors [2008] 306 ITR 277 for the proposition of 'strict liability' as well as 'mens rea' and concluded as under:- "2.4. In the facts of the case it is seen that the appellant has not voluntarily offered the disallowance of Rs. 47,55,000/- for taxation, and has offered an explanation which is both false and non bana fide one and it is hit directly to Explanation 1 to section 271(1)(c). Hence, I am of the considered view that the appellant has concealed / furnished inaccurate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 45 SOT 22 (URO) (Page 74-75) 5. IDBI Ltd. vs. DCIT 42 SOT 325 (Mum) (Page 54-56) 6. Hindalco Industries Ltd. vs. ACIT 41 SOT 254 (Mum) (Page 52-61) 7. Pfizer Pharmaceuticals (India) (P) Ltd. vs. DCIT 135 TTJ 337 (Page 70- 73)" 10. On the other hand, Ld DR mentioned that the assessee failed to evidence the claim with regard to the Research and Development payments made to Swiss Consultancy and M/s. Premium Investments and the assessee's books suffer from discrepancies with regard to Swiss Consultancy. The said discrepancies are not reconciled even till date. Bringing our attention to the letter filed by the assessee addressed to the AO dated 27.11.2012, Ld DR mentioned that this letter is written after the Tribunal's order on quantum additions and also after impugned order dated 10.1.2012. It is self-serving letter which should be ignored. Ld DR further brought our attention to the order of the Tribunal in general and para 11 in particular and stated that it is finding of the fact of the Tribunal that the parties merely accommodated the assessee's claim of transactions, therefore, assessee from the beginning was having an intention to reduce the income to the department and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons in quantum proceedings. It is the finding of fact that the transaction in question constitutes 'sham transaction'. In effect, the above details supports the allegation of the AO that the assessee has deflated the income by debiting the impugned claims. Further, the discrepancies between the sundry debtors' account of the assessee qua the Swiss Consultancy are beyond the reconciliation. Assessee's request for one more opportunity at this point of time ie November, 2012 cannot be seen as a genuine attempt for reconciliation in view of the principle of limitations. The services rendered by the parties have not been evidenced with corroborative evidences to demonstrate the requirement of impugned payments to the parties. Considering the overall factual matrix of the case ie discrepancies in the books of account, absence of reliable research reports, lack of original bills, the facts brought in by the Tribunal it is a case of issue of accommodation bills etc, we are of the opinion that the penalty confirmed by the CIT (A) does not call for any interference. Accordingly, grounds raised by the assessee are dismissed. 14. In the result, the appeal of the assessee is dismissed. Order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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