TaxTMI 
TaxTMI 
TaxTMI 
2017 (8) TMI 274
X X X X Extracts X X X X
X X X X Extracts X X X X
....addition of Rs. 41,14,518 on account of the liasoning commission. The Assessing Officer then imposed the penalty under section 271(1)(c) of the Act against the addition confirmed of Rs. 41,14,518. 4. The assessee filed detailed submissions before the learned Commissioner of Income-tax (Appeals) which have been reproduced in the impugned order in which the assessee briefly explained that the assessee is individual, had been running the business of resale of cement at Patiala and was acting as handling agent for M/s. J. K. Cement Works, Rajasthan for handing its products during the financial year 2005-06 relevant to the assessment year under appeal. As the handling agent, the role of the assessee was to get the cement dispatched by M/s. J. K. Cement Works from its manufacturing unit at Rajasthan, unloaded in the company godowns at Patiala, Bathinda and Rajpura and thereafter get the same reloaded for different destinations against the orders procured by the company. The assessee was acting as a sale promoter for M/s. J. K. Cement Works at the southern region of Punjab as well. The assessee was further appointed by M/s. Sarvshakiman Traders Pvt. Ltd. of Delhi (STPL) (chief sale promo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....addition have been deleted accepting the explanation of the assessee that the business expenses incurred for running the services in the State of Haryana for STPL Delhi. However, the Income- tax Appellate Tribunal has set aside the order of the learned Commissioner of Income-tax (Appeals) and uphold the addition on the ground that the assessee had not been able to establish the link between the expenses incurred and services rendered. It was also submitted that no satisfaction regarding concealment have been recorded by the Assessing Officer. The penalty proceedings are different from the assessment proceedings therefore, penalty need not to be imposed in each and every cases. The assessee relied upon several decisions in support of his contention. The assessee further submitted that he has not furnished inaccurate particulars of income and has not concealed the particulars of income because all the material facts were disclosed to the Revenue authorities. It was submitted that the material particulars namely, the names and addresses, payment made on account of liasoning, the purpose of payment had been placed on record of the Assessing Officer. The persons who have provided servic....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Thereafter, the learned Commissioner of Income-tax (Appeals) allowed the expenses claimed. The learned Commissioner of Income- tax (Appeals) noted that the sub-agents in these statements have confirmed receipt of commission by account payee cheques after TDS and service tax is also levied. It was observed that the shortcoming noted by the Assessing Officer are only procedural in nature and not of substance and that the Assessing Officer could not decide the quantum of commission being given to sub-agents. However, the hon'ble Income-tax Appellate Tribunal disallowed the expenditure confirming the order passed by the Assessing Officer. The appellant has further submitted that the issue is debatable as on the same set of facts different views are taken by different authorities and also because on the same set of facts the appeal is admitted in the hon'ble High Court in the assessment year 2007-08 and relied on various case law. Thus, in this case, firstly it is noted that the appellant has disclosed all facts. The sub-agents also appeared before the Assessing Officer and confirmed the receipt of commission which was subject to TDS and service tax also. Further, the learned ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is of the facts and circumstances of the case for the purpose of levy of the penalty. 6(i) On the other hand, the learned counsel for the assessee reiterated the submissions made before the authorities below. He has referred to the paper book 1 which is the details of liasoning commission paid during the assessment year under appeal. Paper book 2 to 8 are the copies of the bills raised by the parties for the purpose of charging commission and service tax. Paper book 9 is details of liasoning DS and D received and paid for the years 2002-03 to 2005-06. Paper book 17 to 30 are the copies of the statements of the sub-agents recorded by the Assessing Officer at the assessment proceedings in which they have confirmed the receipt of liasoning commission from the assessee. The learned counsel for the assessee submitted that the assessee is carrying on the same business activities in the past as well as in the assessment year under appeal. The parties in the earlier year were different but the modus operandi of the business of the assessee is the same. Therefore, the claim of the assessee cannot be said to be incorrect or false for claiming the liasoning expenses. He has submitted that th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecisely noted that the assessee has failed to explain with evidence the nature of services rendered by the sub-agent. The Tribunal also noted that the onus is upon the assessee to establish that the expenses have been incurred for the purpose of business. The order of the Tribunal has been confirmed by the hon'ble High Court. In the background of these facts, it is clear that the assessee in the earlier years was doing the same business activities and in the earlier year, the assessee in the profit and loss account has shown the business income on liasoning by declaring the net income on liasoning in the profit and loss account. The details of the same are placed on record. The assessee produced the sub-agents before the Assessing Officer for examination and their statements have been recorded in which they have confirmed the receipt of commission from the assessee which were subjected to TDS and service tax charges. The assessee also produced copies of the bills raised by the sub-agents which are supported by their statements. The authorities below, however, did not accept the explanation of the assessee because the assessee failed to prove what services, the sub- agents have ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rt : Held, dismissing the appeal, that there was full disclosure of all relevant material. It could not be said that the conduct of the assessee attracted the provisions of section 271(1)(c). The cancellation of penalty was justified." (ii) The hon'ble Supreme Court in the case of CIT v. Reliance Petro products Pvt. Ltd. [2010] 322 ITR 158 (SC) held as under (headnote) : "A glance at the provisions of section 271(1)(c) of the Income-tax Act, 1961 suggests that in order to be covered by it, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The meaning of the word 'particulars' used in section 271(1)(c) would embrace the details of the claim made. Where no information given in the return is found to be in correct or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars. In order to expose the assessee to penalty, unless the case is strictly covered by the provisions, the penalty provision cannot be invoked. By no stretch of imagination can making an incorrect claim tanta mount to furnishing inaccurate particulars. There can be no ....