Appeal allowed: Penalty under Income-tax Act canceled for disallowed commission claim

The Appellate Tribunal ITAT DELHI allowed the appeal against the penalty imposed under section 271(1)(c) of the Income-tax Act for the assessment year 2009-10. The penalty was canceled as the Tribunal found that the disallowance of commission claimed by the assessee did not warrant the imposition of penalty, considering compliance with TDS deductions and summons. The decision was based on the principle established in CIT Vs. Reliance Petroproducts Pvt.Ltd., emphasizing that the mere disallowance of a deduction claim does not automatically lead to a penalty under the Act.

---

---

Issues: Levy of penalty under section 271(1)(c) of the Income-tax Act, 1961.

Analysis:
The Appellate Tribunal ITAT DELHI heard an appeal against the order of the CIT(A)-VI regarding the assessment year 2009-10. The only ground raised in the appeal was against the penalty imposed under section 271(1)(c) of the Income-tax Act. The penalty was levied on the disallowance of commission claimed by the assessee. The Assessing Officer disallowed 25% of the total commission expenses after issuing notices to parties and receiving confirmations from some. The assessee's representative agreed to the disallowance to avoid prolonged litigation. The assessee contended that all parties had confirmed receiving the commission, TDS was deducted, and compliance with summons was done. The Tribunal agreed with the assessee's contention, citing the decision of the Hon'ble Apex Court in CIT Vs. Reliance Petroproducts Pvt.Ltd., where it was held that the mere non-acceptance of a deduction claim does not attract penalty under section 271(1)(c) of the Act. Therefore, the Tribunal canceled the penalty, deeming it not applicable in this case. The appeal of the assessee was allowed, and the decision was pronounced on 05.08.2016.

---