TaxTMI 
TaxTMI 
2010 (7) TMI 678
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.... Name of the sister concerns Amount (Rs.) (i) M/s J.M. Baxi & Co. 7,09,804 (ii) M/s Extra Cover Communication Ltd. 35,08,699 (iii) M/s Bulk Cargo Movers 5,73,870 (iv) M/s India containers terminal P. Ltd. 12,17,758 (v) M/s Varuna Management Services P. Ltd. 10,06,846 (vi) M/s Poly Marble Mfg. Co. P. Ltd. 16,70,368 (vii) M/s Arya Cellular Services (I) P. Ltd. 27,62,816 (viii) M/s Malgham Bros. 1,55,367 (ix) M/s Contfreight Shipping Agency (I) P. Ltd. 52,92,901 (x) M/s Thor Shipping Agencies P. Ltd. 8,600 (xi) M/s Taipan construction P. Ltd. 1,13,060 (xii) M/s Jaladhi Shipping Services (I) P. Ltd. 7,042 (xiii) M/s Arya Oilfield Services P. Ltd. (xiv) M/s Motorola Ace Communication Services P. Ltd. 34,600 1,71,49,967 All these concerns are associate concerns of the assessee. The commissions paid to said concerns were disallowed by the Assessing Officer. The major factor that weighed with the Assessing Officer for making the disallowance is the statement recorded during the co....
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....s such ground 5A and 5B are dismissed." 6. The Assessing Officer levied minimum penalty of Rs. 60,02,488 under section 271(1)(c) of the Act observing that it is amply clear that the assessee has furnished inaccurate particulars of its income by claiming false expenses. The Assessing Officer further noted that he was satisfied that the assessee has concealed particulars of income of an amount of Rs. 1,71,49,967. The explanation offered by the assessee was not substantiated. Penalty levied by Assessing Officer has been confirmed by the CIT(A) after discussion on each ground of appeal raised before him. 7. The ld. A.R. submitted that in quantum matter, the Assessing Officer, while making addition, has heavily relied upon the statement of Mr. S.K. Parekh. The ld. A.R. submitted that Mr. S.K. Parekh has retracted from his statement by filing an affidavit dated 12-1-2002 wherein it is clearly stated that the survey under section 133A of the Income-tax Act began at 11.00/11.30 a.m. on 5-10-2000 and it was late in the night approximately at 11.00 p.m. when his statement was recorded. The recording of his statement continued till 5.00 a.m. on 6-10-2000. It is also stated in the affida....
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.... penalty proceedings for the assessment years 1991-92 to 1997-98. The ld. A.R. submitted that everything was before the Assessing Officer and, therefore, penalty proceedings under section 271(1)(c) were not applicable. The ld. A.R. placed reliance on the recent judgment of the Supreme Court in the case of CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158 and also the decision of ITAT, Mumbai Bench "F", in ITA Nos. 4718 & 4719/Mum/vide order dated 6-4-2010. 8. The ld. D.R. submitted that the addition made by the Assessing Officer was about payments made to sister concerns on account of commission. The ld. D.R. submitted that it is important to note that payments were to sister concerns of the assessee which is having common staff, common directors, common administration, same address, etc. The ld. D.R. submitted that a survey was conducted wherein the department found that commission to 14 sister concerns was paid, against which the assessee was unable to show the nature of services rendered by them. The ld. D.R. further submitted that the top executive officers of the assessee had admitted that those sister concerns companies existed only on paper and accommodative bill....
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....d the learned representatives of the parties, perused the record and gone through the decisions cited. Before coming to the main issue we would like deal with the argument of the learned A.R. regarding retraction affidavit filed by Mr. S. K. Parikh. The contention of Learned Authorised Representative that Mr. S.K. Parikh retracted from his statement by filing an affidavit dated 12-1-2002 does not help to the assessee as the assessment was completed on much before that date of filing affidavit i.e. On 30-3-2001 and affidavit is dated 12-1-2002. The retraction was neither discussed by the Assessing Officer nor by the CIT(A) while deciding the quantum matter as well as the penalty matter. Further, the assessee did not filed any petition before us to admit additional evidence as per Rule 29 of the ITAT Rules. Such affidavit is self-serving document, particularly when the Assessing Officer has given full opportunity to the assessee to cross-examine Mr. Parikh, who is making retraction by an affidavit, the partner of the assessee did not choose to cross-examine. Though the Learned Authorised Representative at the time of hearing before us has pointed out that the assessee has filed MA be....
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....ent for attracting the civil liability. 9.2 While considering an appeal against an order made under section 271(1)(c) what is required to be examined is the record which the officer imposing the penalty had before him and if that record can sustain the finding there had been concealment, that would be sufficient to sustain the penalty. The Explanations added to section 271(1)(c) in that entirety also indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing returns. It is obvious that the penal provisions would operate when there is concealment of particulars of income or a failure of duty to disclose fully and truly particulars of income, imposed under the Act and the Rules thereunder. The duty is enjoined upon a person to make a correct and complete disclosure of particulars of his income and it is only when he fails in his duty by not disclosing particulars of his income or part thereof, he conceals the particulars of his income. The duty is enjoined upon him to make a complete disclosure of particulars of his income as well as a correct disclosure. Therefore, if the disclosure made of the particulars of income ....
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....ht to be evaded is levied at Rs 60,02,488." 9.4 The CIT(A) confirmed the penalty levied by the Assessing Officer after rejected assessee's legal grounds as well as grounds on merits. Before us, the Learned Authorised Representative has not much argued on the legal grounds; therefore, in this regard we confirm the order of the CIT(A). On merit, the admitted facts of the case are that the assessee claimed commission of Rs. 1,71,49,967 which was paid to sister concerns without services rendered by them. It is not a case where the assessee has claimed the commission expenses and Assessing Officer simply disallowed on presumption basis or made estimation of disallowance of the commission. The commission payments without services rendered has been detected by the Assessing Officer after thorough examination by exercising the powers provided in the Act. During the course of pendency of the assessment proceedings, a survey action under section 133A was carried out on 5-10-2000. Statements of Mr. S. K. Parikh, Mr. C. A. Alphonso & Mr. Cycrus Cooper, key persons of the assessee company were recorded during the course of survey. From the statements of these three persons, the Assessing Off....
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.... not show any disagreement with any part of the statements and confirmed the statements given by these persons. Mr. Krishna B. Kotak further clarified that the assessee firm do not make any payment like commission or other payments by whatever names called to any other parties (not being sister concerns of the assessee firm) from which the assessee gets business. He further stated that these parties never asked for any such payments." 9.5 On perusal of impugned penalty order of CIT(A) from page 2 Para 2.2, and the assessment order in Para 19 page 46 we notice that the CIT(A) and Assessing Officer both have recorded a fact that the commission expenses have not been directly debited to P&L account but same was found debited at the year end to the Vessel Account, which the assessee has opened for each vessel. They, further, noted that in the profit & loss account the account credited on account of Stevedores is the net amount received from each client. From these facts of the case, we noticed that the accounting entries passed by the assessee in its books of account are not in accordance with the principles of accountancy. As per the Accounting Principles, commission expenses requi....