TaxTMI 
TaxTMI 
2014 (1) TMI 1429
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....ssee is into the business of providing after sale services and for that services was being paid. The assessee in its P&L Account has shown total receipts of Rs.32,49,796/- and also declared an amount of Rs.12,41,831/- as commission. During assessment proceedings, the Assessing Officer observed that in fact the assessee had received a total sum of Rs.17,41,821/- as commission out of which it had reduced Rs.5,00,000/- as having been paid to M/s Jai Polypan (P.) Ltd. as commission for providing after sale services on its behalf. The assessee was asked to file confirmed copy of account of payee. From the copy of confirmation, the Assessing Officer observed that besides commission of Rs.5,00,000/-, a sum of Rs.10,20,000/- was also paid to the pa....
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....(A) did not accept the contention of assessee and upheld the penalty order. 4. Aggrieved, the assessee is in appeal before us. 5. At the outset, the Ld AR submitted that assessee has been making regular payments to the payee company for the last three years and Assessing Officer had not made any disallowance on such commission payment. Moreover, it was not a case where the amounts of commission were credited only as on the close of the year. Therefore, he submitted that expenditure was genuine business expenditure and considering the small nature of amount, the appeal before the High Court was not preferred. He further argued that Ld CIT(A) had deleted the addition made by Assessing Officer and has given the assessee relief therefore it b....
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....ade by the assessee. Moreover, he argued that rule of res judicata does not apply to income tax proceedings and every year is an independent year. Continuing his argument he submitted that assessee was inflating expenses for the last three years and when finally the case of the assessee was scrutinized u/s 143(3) of the Act, the Assessing Officer came to know about the fact of expenses being inflated. He further argued that payee was not in the same line of business and was not in a position to undertake the services. Therefore, the claim of the assessee was false. In view of the above, he argued that Ld CIT(A) has rightly upheld the penalty. 7. We have duly considered the rival contentions and gone through the record carefully. Section 27....
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....CIT to be false, or (B) such person offers an explanation which he is not able to substantiate and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him, then, the amount added or disallowed in computing the total income of such person as a result thereof shall, for the purposes of Clause (c) of this sub-section, be deemed to represent the income in respect of which particulars have been concealed". 8. A bare perusal of this section would reveal that for visiting any assessee with the penalty, the Assessing Officer or the Learned CIT(Appeals) during the course of any proceedings before them should....
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....n, the deeming fiction would come to play if the assessee failed to give any explanation with respect to any fact material to the computation of total income or by action of the Assessing Officer or the Learned CIT(Appeals) by giving a categorical finding to the effect that explanation given by the assessee is false. In the second situation, the deeming fiction would come to play by the failure of the assessee to substantiate his explanation in respect of any fact material to the computation of total income and in addition to this the assessee is not able to prove that such explanation was given bona fide and all the facts relating to the same and material to the computation of the total income have been disclosed by the assessee. These two....