TMI Blog2016 (1) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... 1997-1998, 1998-1999 and 2001 and 2002. 2. The brief facts of the case are as follows: 2.1) The respondent in the present appeals, (hereinafter referred to as the assessee ) had been engaged in the dealership and distribution of various industrial chemicals, which are being used in the textile industry. The assessment of the assessee, for the assessment years 1997-1998, 1998-1999 and 2001-2002, had been completed, disallowing the claim for deduction of commission, as expenditure paid to D.D.Vyas, Proprietor of M/s.Shree Narottam Agencies, Srinivas Vyas, Proprietor of M/s.Pushpak Sales Corporation and Manohar Vyas, Proprietor of M/s.Srinivasa Enterprises. 2.2) The Assessing Officer had concluded in the assessment that no services had been rendered, by the agent, for the payment of the commission. Such a finding was based on the survey conducted in the case of D.D.Vyas. The additions made in the assessment years had been upheld by the Income Tax Appellate Tribunal, in I.T.A.Nos.1236, to 1239/Mds/2006, dated 15.6.2007. On being satisfied that the assessee firm had concealed the particulars of its income and had furnished inaccurate particulars of such income, by claiming fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars of such income. 4. The learned counsel had further submitted that the Tribunal had failed to note that even though the payments of commission had been rooted through banking channels, the genuineness of the transactions is vital to prove that the payments had been made wholly and exclusively for the purpose of the business. He had further submitted that the Tribunal had failed to note that the assessee firm had concealed the particulars of income, by claiming bogus payments of commission. 5. It had been further submitted that the Tribunal had erred in holding that it is not the case of the Revenue that the payments claimed by the assessee were found to be bogus and that the assessee had not concealed particulars of income or furnished inaccurate particulars of income, as laid down in Section 271(1)(c) of the Income Tax Act, 1961. 6. It had also been submitted that the Tribunal had failed to note that the judgment of the Delhi High Court, in C.I.T. Vs. Zoom Communication P Ltd. (327 ITR 510), would apply to the facts of the present case. The learned counsel had further submitted that the quantum appeals filed by the assessee had become final. He had further sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In Tax Case Nos.1 and 2 of 1980, dated 29.6.1995, COMMISSIONER OF INCOME TAX Vs. CHANDRAKANT M.TOLIA, the Division Bench of this Court had held that the assessee, having produced the discharged hundis displaying the names and addresses of the creditors and the relevant books in respect of the hundi loans, the initial burden cast on the assessee, under the explanation to Section 271(1)(c), stood discharged and, thereafter, the Department having taken no steps to discharge the burden that shifted on it, the Tribunal was justified in deleting the penalty. 10.3 In Tax Case (Appeal) No.246 of 2007, dated 5.3.2014, COMMISSIONER OF INCOME TAX Vs. CHOLAMANDALAM INVESTMENT FINANCE CO. LTD., the Division Bench of this Court had held that, in order to invoke the penalty proceedings, under Section 271(1)(c), the Revenue should prove that the claim made was not sustainable in law and the assessee had made a concealment of the particulars of income. 10.4 In Tax Case (Appeal) No.504 of 2009, dated 12.11.2013, COMMISSIONER OF INCOME TAX Vs. GEM GRANITES, the Division Bench of this Court had held that, the Explanation to Section 271(1) raises a presumption of concealment, when a difference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad been received back, by the assessee or by anyone operating on its behalf. 14. From the facts available, it could be seen that the department had not shown anything to prove that the assessee had not incurred expenses, by way of payments of commission to D.D.Vyas and his sons. The disallowance was only on the ground that the sub-commissions claimed to have been paid by D.D.Vyas and his sons, to their sub-agents, were not genuine in nature. Based on the decision of the Supreme Court, in CIT Vs. Reliance Petroproducts Private Limited 322 ITR 158 (SC), it had been held that mere claim of deduction will not automatically attract a penalty, under Section 271(1) (c) of the Act. 15. It had also been held that mere failure of an assessee to explain satisfactorily the amounts shown as expenditure would not lead to imposition of the penalty, unless there are some materials to prove that the claim was false, as held by Income Tax Appellate Tribunal in the case of SUPER METAL INDUSTRIES Vs. DCIT 317 ITR (AT) 161 (Mumbai). 16. The allegation made by the department that the subagents were tea stall owners and soap sellers, who had been introduced by D.D.Vyas and his sons, for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Company [294 ITR 134 (Mad)], the Tribunal had dismissed the appeals filed by the Revenue. The Tribunal had also held, while dismissing the appeals filed by the Revenue, that no materials were brought on record before the Tribunal, by the Revenue, to show that the decisions relied on by the Tribunal, to arrive at its conclusions, were not applicable to the facts and circumstances of the present case. As such, the Tribunal had not found sufficient cause or reason to interfere with the order passed by the Commissioner of Income Tax (Appeals) and had rejected the claim made by the Revenue, while dismissing the appeals. 20. We are also of the view that the Revenue has not been in a position to show that the payments of commission made by the assessee, which is said to have been assessed to tax, were bogus in nature. Further, there is nothing on record to show that the assessee had concealed the particulars of its income or had furnished inaccurate particulars of such income. In such circumstances, we do not find any merit in the appeals filed by the Revenue. As such, the question of law raised in the present appeals is answered in favour of the respondent assessee and against the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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