2006 (4) TMI 446

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..... he Income-tax Act, 1961. 2. Briefly stated, the facts are that the return of income was filed by the assessee declaring an income of Rs. 22,940; but the assessment was completed by the Assessing Officer by disallowing commission payment of Rs. 3,17,835 to M/s. Panna International and Rs. 49,289 to Shri J.A. Soares and completed the assessment at a total income of Rs. 3,90,310. Penalty proceeding under section 271(1)( c ) was initiated. Addition made by the Assessing Officer has been upheld by the Tribunal in quantum appeal. The Assessing Officer levied penalty of Rs. 4,97,026 at the rate of 200 per cent of tax sought to be evaded by holding that in view of the statements recorded on oath of Shri R.P. Kothari, Senior Partner of M/s. Pann .....

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..... that a clear finding is given by the Assessing Officer that Shri R.P. Kothari, Senior Partner of M/s. Panna International could not show that any services were rendered by M/s. Panna International to the assessee-company as he was not able to produce any documentary evidence in support of the services rendered. Regarding the other party, i.e., Shri J.A. Soares, it is noted by the Assessing Officer that in his statement recorded on oath, Shri J.A. Soares has confirmed that he did not know the assessee and he has not rendered any services to the assessee for any remuneration or commission. It was submitted that in view of this clear finding given by the Assessing Officer, levy of penalty is justified. Reliance was placed on the following .....

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..... usudhanan ( supra ) relied upon by learned DR of the revenue is not applicable in the present case because in that case, penalty has been deleted by the Tribunal for the reason that in notice for initiating penalty proceedings, the assessee was not intimated about the proposed action under Explanation 1 ( b ) to section 271(1)( c ) and under these facts, it was held by Hon ble Apex Court that Explanation to section 271(1)(c) is a part of section 271 and, hence, when the notice is issued under section 271(1)( c ), no express invocation of the Explanation to section 271 in the notice under section 271 is necessary before the provisions of Explanation are applied. In the present case, this is not the dispute as to whether the Explanat .....

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