2012 (2) TMI 96

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....NIL under the normal provisions of the Income Act, 1961 (in short the Act) and declared book profit u/s 115JB at Rs.25,88,74,602/-. However, the assessment was completed under normal provisions of the Act at a total income of Rs. Nil . after making various disallowances including the disallowance u/s 40A(2)(b) of Rs.45,53,400/- and after adjusting brought forward losses of Rs.32,11,60,633/- and under the provisions of section 115JB at Rs.36,39,37,264/- vide order dated 22.12.2006 passed u/s 143(3) (ii) of the Act. On appeal, the ld. CIT (A) while upholding the disallowance of Rs.45,53,400/- u/s 40A(2)(b) partly allowed the appeal . On further appeal before the Tribunal , the Tribunal while upholding the disallowance made by the AO and confi....

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....AO, CIT(A) even before the Tribunal and accordingly partly allowed the appeal .   4. Being aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us challenging in al l the grounds the sustenance of penalty of Rs.2,19,76,595/- imposed by the AO u/s 271(1)(c ) of the Act. 5. At the time of hearing, the ld. Counsel for the assessee after stating the facts of the case submits that the penalty has been sustained by the ld. CIT(A) only on the issue of sustenance of disallowance of Rs.45,53,400/- u/s 40A(2)(b) of the Act. In this regard, he submits that the assessee has made full disclosure of the payments made to the persons specified u/s 40A(2)(b) at page 33 read with page 77 of the tax audit report prepared u/s 4....

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.... Separate Chapter- X of the Act, therefore, the disallowance made by the AO u/s 40A(2)(b) is without any merit and for this proposition the reliance was also placed on the decision in Meteor Satellite Ltd. V/s Income-tax Officer (1980) 121 ITR 311(Guj). He further submits that in any case, the disallowance u/s 40A(2)(b) cannot be considered as concealment of income or furnishing inaccurate particulars of income so as to attract penalty u/s 271(1)(c) of the Act and for this proposition the reliance was also placed on Jhavar Properties (P) Ltd. V/s ACIT (2009) 124 TTJ (Mumbai) 858 and the decision of the Hon'ble Supreme Court in the case of CIT V/s Rel iance Petroproducts Pvt. Ltd. (2010) 322 ITR 158(SC). He therefore, submits that the penalt....

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.... on estimate basis at the rate of 5% as against 12.5% claimed by the assessee. The said disallowance of commission was confirmed by the ld. CIT(A) and also by the Tribunal. Thus, there is no dispute that the disallowance of commission is purely on estimate basis. 8. In order to apply the provisions of section 271(1)(c) there has to be concealment of particulars of income, secondly the assessee must have furnished inaccurate particulars of income. 9. In a recent judgment of the Hon'ble Apex Court in CIT vs. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158(SC) Their Lordships, after considering various decisions including Di l ip N. Shroff vs. JCIT (2007) 291 ITR 519(SC), Union of India vs. Dharamendra Textile Processors (2008) 306 I....