TaxTMI 
TaxTMI 
2015 (12) TMI 282
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.... respectively. 2. In both appeals, the solitary issue relates to the penalty imposed by the AO under section 271(1)(c) of the Act amounting to Rs. 3,50,528/- for A.Y 2004-05 and Rs. 1,22,400/- for assessment year 2006-07. Since the facts and circumstances leading to the imposition of penalty are identical in both the appeals, the appeal for assessment year 2004-05 is taken as lead case. 3. In this context, the brief facts are that the appellant is an individual, who is, inter-alia, deriving income from the business of export of stainless steel utensils in the name of his proprietary concern, M/s. Cherry International. In the course of assessment proceedings for assessment year 2004-05, the AO noticed that the assessee had claimed deductio....
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....ause assessee had made adequate disclosure and all the material necessary for the assessment was disclosed. The Ld. Representative for the assessee, further, pointed out that similar payments made to the said person in the earlier years stood allowed and that though the addition in the quantum proceedings has been sustained, but there was no justification for the levy of penalty under section 271(1)(c) of the Act, as there was neither concealment of income nor furnishing of inaccurate particulars of such income. 5. On the other hand, Ld. DR has justified the order of CIT(A) sustaining the penalty under section 271(1)(c) of the Act on the ground that the assessment proceedings clearly established that assessee's claim of payment of commissi....
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....hat assessee has furnished inaccurate particulars of income qua the commission payment within the meaning of section 271(1)(c) of the Act. 8. In our considered opinion, entire conspectus of facts emerging from record does establish that the assessee failed to substantiate the claim of expenditure on account of commission payment. So however, in order to hold the assessee guilty of "furnishing inaccurate particulars" within the meaning of section 271(1)(c) of the Act, it is imperative to demonstrate that assessee is found to have made an erroneous or a false claim. Clearly, failure to substantiate a claim cannot be equated to a case of making of a false or an erroneous claim. In fact, the mere making of a claim, which is not found sustainab....