TaxTMI 
TaxTMI 
2015 (2) TMI 505
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....hereafter referred to as Act). 2. The brief facts - for the purposes of the present appeal - are that for Assessment Year (AY) 2001-02, the assessee, which used to supply technical equipments to Government agencies, claimed certain expenditure of Rs. 69,67,886/- as commission to one M/s Simoco and Rs. 2,65,32,114/- as professional and technical fees to the same concern. The Assessing Officer (AO) did not accept these expenditures, and computed the total income at Rs. 4,79,23,280/-. The assessee was unsuccessful before the appellate Commissioner and ITAT. Even this Court refused to frame the substantial question of law and dismissed its appeal under Section 260A. 3. In the meanwhile, the AO had initiated proceedings by issuing show cau....
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....ocuments, including the copy of appointment letter as well as the confirmation from the payee i.e. STSAL. It also cannot be over looked that STSAL was a MNC at that point of time and this transaction stands confirmed by them. Thus, I find that the appellant has furnished prima facie justifiable explanation which stands supported by various documentary evidences as mentioned in the penalty order as well as in the submissions made by the ld. AR, as incorporated above. All these facts show that it is a case where a prima facie explanation has been given and all relevant facts and other information has been brought on record by the appellant. Thus, although additions may be sustained in quantum proceedings, it is not a fit case for invoking pro....
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....e said claim, has duly furnished necessary documentary evidences to support his explanation; therefore, on these facts, although the additions may have been sustained, I am of the considered opinion that these facts and circumstances do not invite the provisions of section 271(1)(c) of the I.T. Act." 4. The ITAT upheld the CIT (A)'s determination in the impugned order upon Revenue's appeal. It was held as follows:- "5. We have considered the facts of the case and submissions made before us. The facts are that the assessee has been supplying Radio (wireless) equipments to various Government organizations under DGS&D rate contract. In this year, the assessee inter-alia debited sale commission of Rs. 90,27,060/- and professional ....
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.... in regard to procuring sales orders or rendering services to the buyers. The test of human probabilities has been invoked for making the disallowance. 5.1 The AO has also levied penalty in respect of these disallowances. The penalty has been deleted by the ld. CIT(Appeals). The case of the ld. DR is that no further evidence has been adduced by the assessee in the course of penalty proceedings. Therefore, there is no further advancement after the receipt of the decision of Hon'ble Delhi High Court in quantum appeal. The explanation furnished by the assessee that the expenditure has been incurred in the course of business has not been substantiated. Therefore, penalty is leviable on the facts and in the circumstances of the case. On t....
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....in which it has been held that the levy of penalty is a civil liability, which has to be decided on the basis of the provision contained in section 271(1)(c) and Explanations thereto. This decision is a binding precedent. In view of this decision, the revenue is not required to establish mens rea and what is to be seen is whether the explanation furnished by the assessee is bona fide or not. For the sake of ready reference, the relevant portion of the judgment is reproduced below:- "It is of significance to note that the conceptual and contextual difference between section 271(1)(c) and section 276C of the Income-tax Act was lost sight of in Dilip N.Shroff's case [2007] 8 Scale 304 (SC). The Explanations appended to section 271(1)(c)....
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....he enquiries were made from Simoco and its books and returns were apparently scrutinized. These showed that the amounts received by the said concern were reflected. That apart, TDS deductions and deposits were also made in respect of the fees and amounts paid to the Simoco. Furthermore, Simoco was itself owned by third concern, i.e., Phillips UK. The assessee had explained the need to engage Simoco, i.e., that its ability to market its products, was restricted on account of lack of technical expertises and personnel. To substantiate this, it relied upon the response given by various government agencies/users, which had, in fact, stated that Simoco's representative used to visit it on behalf of the assessee. 7. This Court is of the op....