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2014 (6) TMI 370 - AT - Income TaxDeletion of penalty u/s 271(1)(c) of the Act 15% disallowance of commission payment Held that - Following M/s. Transport Corporation of India Ltd. Versus Asstt. Commissioner of Income-tax 2013 (10) TMI 870 - ITAT HYDERABAD - imposition of penalty u/s 271(1)(c) on disallowance sustained by ITAT being 15% on commission payment, has deleted the penalty by holding that such disallowance having been made on estimation and on the basis of material furnished by the assessee itself, there cannot be any concealment of income or furnishing of inaccurate particulars of income in terms of section 271(1)(c) of the Act - Disallowance out of commission payments sustained by the Tribunal is merely by estimation of the excess amount of expenditure which the assessee might have been claimed by the assessee - disallowance has been made on the basis of the material furnished by the assessee itself also in COMMISSIONER OF INCOME-TAX Versus RELIANCE PETROPRODUCTS PVT. LTD. 2010 (3) TMI 80 - SUPREME COURT - every disallowance of an expenditure/exemption claimed by the assessee in the return cannot automatically lead to the conclusion that assessee has concealed the income or furnished inaccurate particulars of income thus, the order of the CIT(A) is upheld Decided against Assessee.
Issues Involved:
- Appeal against deletion of penalties under section 271(1)(c) of the Income Tax Act for assessment years 2000-01 to 2004-05. - Imposition of penalty based on disallowance of commission payments. - Challenge to penalty orders before the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal (ITAT). - Application of legal principles regarding concealment of income or furnishing inaccurate particulars of income. - Consistency in decisions across assessment years. Analysis: 1. The appeals were filed by the department against the deletion of penalties imposed under section 271(1)(c) of the Income Tax Act for the assessment years 2000-01 to 2004-05. The penalties were deleted by the Commissioner of Income Tax (Appeals) for these years based on the disallowance of commission payments made by the Assessing Officer during the assessment proceedings. 2. The Assessing Officer had disallowed a percentage of commission payments claimed by the assessee for various assessment years. The Commissioner of Income Tax (Appeals) upheld part of the disallowance, leading to the initiation of penalty proceedings under section 271(1)(c) by the Assessing Officer. The assessee contended that there was no concealment of income or furnishing of inaccurate particulars as full disclosure was made regarding the commission payments. 3. The Income Tax Appellate Tribunal (ITAT) considered the appeals and held that the disallowance of commission payments was based on estimation and material provided by the assessee, not indicative of concealment or inaccurate particulars of income. The ITAT emphasized that penalty cannot be imposed solely based on differences in estimation between the Assessing Officer and the Tribunal without evidence of willful or gross negligence on the part of the assessee. 4. The ITAT referred to legal precedents to support its decision, highlighting that penalty under section 271(1)(c) requires proof of concealment or furnishing inaccurate particulars of income. The ITAT concluded that in the absence of such proof and considering the nature of the business and accounting methods, the penalty was not justified. The ITAT canceled the penalties for all the assessment years under appeal. 5. The Commissioner of Income Tax (Appeals) followed the ITAT's decision in the assessee's case for the assessment year 2005-06 and deleted the penalties for all the assessment years under consideration. The department challenged this decision before the ITAT, which upheld the CIT(A)'s order based on consistency in decisions and legal principles regarding concealment of income. 6. Ultimately, the ITAT dismissed the department's appeals, affirming the deletion of penalties for the assessment years 2000-01 to 2004-05. The ITAT emphasized that every disallowance of an expenditure claimed by the assessee does not automatically imply concealment of income or furnishing inaccurate particulars of income, as per legal precedents and the provisions of the Income Tax Act.
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