TaxTMI 
TaxTMI 
2010 (2) TMI 782
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....58,860/-. In the return, the assessee had shown a sum of Rs.2,56,59,783/- as received towards Termination of Agency Agreement dated 23.7.1999 with M/s DEGUSSA. This income was however not included as part of the income. In the tax audit report with regard to the above amount, the following observations were made by the auditors: i) Clause 13 : Amounts not credit to the PandL account Sub clauses ii) Clause (a) Rs.2,56,59,783.94 received compensation from DEGUSSA A.G for termination of agency arrangement credited to Capital Account of Partners. Note:- The firm is advised that the amount received is in consideration of the undertaking by it for reframing from competition and non promotion, either directly or in....
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....e has furnished inaccurate particulars of income and therefore, penalty u/s 271(C)(1) is exigible on the facts of the present case. Accordingly, the AO levied penalty of Rs.98,79,017/-. The assessee preferred appeal before the CIT(A) before whom written submissions were filed. 3 Written submissions filed before the CIT(A) have been recorded in para 4 of the order of the CIT(A). After considering the submissions and perusing the relevant material on record, the CIT(A) also concluded that provisions of section 271(1)(c) are attracted as the assessee has furnished inaccurate particulars. The CIT(A) also held that the compensation received by the assessee was on account of cancellation of agency agreement and the amount was exigible to ....
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....r book. It was further submitted the Tribunal has categorically held that provision of section 28(ii)(c) are not attracted on the facts of the present case. The findings are recorded by the Tribunal at page 21 of its order decided in ITA No.8183/M/2003 vide order dated 11.12.2008. It was submitted that though the Tribunal has held that the provision of sec. 28(ii)(c) are not attracted; however, part of the receipts were treated as business receipt and part of the receipts were treated not taxable. Accordingly, 25% of the compensation was treated related to the restrictive covenant which is not taxable and the balance 75% was treated as taxable by treating the same as revenue receipts. The findings are recorded in para 6.4 at page 25 and 26 ....
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....findings. 4.2 On the other hand, the ld DR placed reliance on the orders of the authorities below. It was further submitted that the assessee is dealing in treating of various products and not manufacturing; therefore, the amount received by the assessee is business income. The AO was correct in treating the receipt as business receipt. The Tribunal has also confirmed the action of the AO in part; therefore, to that extent, the penalty is leviable. In reply, the ld counsel of the assessee stated that all the details relevant to these receipts were disclosed while filing the return and therefore, it cannot be said that any inaccurate particulars or any part of income has been concealed by the assessee. 5 We have heard the riv....
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....itted the appeal in Income Tax Appeal no.800 of 2009 vide order dated 2.7.2009. Copy of the admitting the appeal is placed on record. Various Benches of the Tribunal have held that where the Hon'ble High Court has admitted the appeal in that case no penalty u/s 271(1)(c) is leviable. 5.2 It is also a matter of fact that the penalty proceedings are distinct to the quantum proceedings as held by the Supreme Court in the case of T Ashok Pai in 292 ITR 11. It has been held that; "penalty proceedings are independent proceedings. Since penalty proceedings are independent of the quantum proceedings, the matter has to be considered afresh in the light of the applicable penalty provisions." 6 Similar view has been expressed b....
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....la fide as to attract levy of penalty u/s.271(1)(c)." 9.1 In the case of N.S. Narula in 106 Taxman 123, the Tribunal has held that; "it is also a well settled principle of law that assessment proceedings are entirely different from penalty proceedings and if the penalty proceedings are initiated u/s.271(1)(c) without invoking the Explanation, then the onus is on the Revenue to discharge and prove that the assessee concealed the income. Having regard to the above facts and in particular the reference u/s.256(2) granted by the High Court, it could not be said that the decision itself was finally sustained. There was, therefore, no reason to hold that the assessee had concealed the particulars of income". 10 The decisi....