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TMI Blog2010 (7) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... , Y.P. Trivedi and Usha Dalal for the Appellant. Mohamed Usman for the Respondent. ORDER A.L. Gehlot Accountant Member. - This is an appeal by the assessee against the order of CIT(A), Cerntral-VIII, Mumbai, relating to the assessment year 1998-99, dated 2-11-2007. 2. The ground raised in the appeal is that the CIT(A) erred in confirming the levy of penalty of Rs. 60,02,488 imposed under section 271(1)( c ) of the Act. 3. The brief facts of the case are that the assessee firm is engaged in the business of stevedoring. The basic nature of business of the assessee is loading of goods of various customers into the liner/ships and unloading of cargo from liner/ships. During the assessment proceedings, the Assessing Officer noticed that the assessee has paid a commission of Rs. 1,71,49,967 to following 14 concerns: Name of the sister concerns Amount (Rs.) ( i ) M/s J.M. Baxi Co. 7,09,804 ( ii ) M/s Extra Cover Communication Ltd. 35,08,699 ( iii ) M/s Bulk Cargo Movers 5,73,870 ( iv ) M/s India containers terminal P. Ltd. 12,17,758 ( v ) M/s Varuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r concerns and the same has been upheld by the learned CIT(A). The counsel for the assessee Shri Y.P. Trivedi stated that the said commission has been credited in the profit and loss account of the sister concerns and the same has been paid as per the debit notes raised. Alternatively, he submitted that no disallowance should be made to the extent of income shown by the sister concern and to the extent taxes have been paid by the said parties. On the other hand, learned DR relied on the orders of the lower authorities. 22. We have heard the rival submissions. The assessee has not been able to prove that actual services have been rendered by the sister concern for which the commission have been paid. The taxes paid by the said sister concerns does not mean that the assessee should be allowed the deduction without any evidence of services being rendered to the said sister concerns. We uphold the disallowances made by the lower authorities. As such ground 5A and 5B are dismissed. 6. The Assessing Officer levied minimum penalty of Rs. 60,02,488 under section 271(1)( c ) of the Act observing that it is amply clear that the assessee has furnished inaccurate particulars of its inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .K. Parekh, then Chief Accountant/Finance Manager of the assessee, recorded on 5-10-2000 under section 133A of the Act, who stated that services were not rendered by the sister concerns without appreciating the fact that the said statement was retracted by him vide his affidavit made on 12-1-2002. In the said affidavit, it has been specifically mentioned that his statement was given after arduous survey operation lasting till late night, when he was completely exhausted and had become nervous. The ld. A.R. submitted that the money paid had never come back to the assessee. The payments made were genuine payments. The ld. A.R. submitted that the statement recorded at the time of survey has no evidentiary value. The ld. A.R., in support of his contention, relied upon the judgment of Kerala High Court in the case of Paul Mathews Sons v. CIT [2003] 263 ITR 101. It is also the submission of the ld. A.R. that the Assessing Officer himself has dropped penalty proceedings for the assessment years 1991-92 to 1997-98. The ld. A.R. submitted that everything was before the Assessing Officer and, therefore, penalty proceedings under section 271(1)( c ) were not applicable. The ld. A.R. p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a fit case for penalty under section 271(1)( c ). The ld. D.R. further submitted that the technical objection regarding recording of statement of Mr. Parekh and others also does not help the assessee. As regards the contention of the ld. A.R. that money had not come back to the assessee, the ld. D.R. submitted that the said contention has no significance when the assessee made a bogus claim by way of book adjustment. The ld. D.R. submitted that dropping of penalty proceedings for earlier years also does not help the assessee as the same were dropped considering the relevant facts. The CIT(A) has discussed this issue in detail in his order. The ld. D.R. submitted that there is no substance in the submission of the ld. A.R., in respect of double taxation as the assessee did not furnish any relevant calculation. The ld. D.R., while concluding his arguments, submitted that it is a fit case for levy of penalty to curb such practice adopted by the assessee. 9. We have heard the learned representatives of the parties, perused the record and gone through the decisions cited. Before coming to the main issue we would like deal with the argument of the learned A.R. regarding retraction af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from the latin concelare which implies con+celare to hide. Webster in his New International Dictionary equates its meaning to hide or withdraw from observation, to cover or keep from sight; to prevent the discovery of; to withhold knowledge of . The offence of concealment is thus a direct attempt to hide an item of income or a portion thereof from the knowledge of the income-tax authorities. In Webster s Dictionary, the word inaccurate has been defined as under : not accurate, not exact or correct; not according to truth; Erroneous; as an inaccurate statement, copy or transcript 9.1 In addition to main provisions of concealment has concealed the particulars of his income or has furnished inaccurate particulars of such income there are deemed to represent the income in respect of which particulars have been concealed. The deemed concealment is provided in explanations. The penalty under the said section is a civil liability. Wilful concealment is not an essential ingredient for attracting the civil liability. 9.2 While considering an appeal against an order made under section 271(1)( c ) what is required to be examined is the record which the officer imposing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso confirmed the addition holding that the assessee has not been able to prove that actual services rendered by the sister concerns for which the commission have been paid. The Assessing Officer levied penalty under section 271(1)( c ), the relevant finding of the Assessing Officer is reproduced as below : Thus, it is amply clear that the assessee had furnished inaccurate particulars of its income by claiming false expenses. 12. In view of the foregoing discussions, I am satisfied that the assessee has concealed the particulars of income of an amount of Rs. 1,71,49,967. The explanation offered by the assessee is not substantiated. I am therefore; satisfied that it is a fit case for levy of a penalty. Tax sought to be evaded on income of Rs. 1,71,49,967 works out to Rs. 60,02,488. The penalty leviable at the rate of 100 per cent works out to Rs. 60,02,488 which is minimum and maximum penalty at the rate of 300 per cent works out to Rs 1,80,07,464. Penalty at the rate of 100 per cent of tax sought to be evaded is levied at Rs 60,02,488. 9.4 The CIT(A) confirmed the penalty levied by the Assessing Officer after rejected assessee s legal grounds as well as grounds on merits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any material evidence, neither before revenue authorities nor before us to show that claim of the assessee a bona fide claim. Contrarily, Mr. Krishna B. Kotak, partner of the assessee firm was given opportunity on 11-8-2000 to cross-examination the persons whose statements were recorded at the time of survey but Mr. Krishna B. Kotak did not want to avail that opportunity and he did not cross-examine. Mr. Krishna B. Kotak accepted the contents of the statement given by those persons. Some of the Para of his statement reproduced by the CIT(A) in his order at page 9, for the purpose of ready reference, the relevant Para reproduced as under : During the post survey investigation the statement of Shri Krishna B Kotak, partner of the assessee firm and one of the director in all the above companies mentioned in the earlier part of this order was recorded on oath, on 11-10-2000. After going through the statements of Shri S K Parikh, Mr. C. A. Alphanso and Mr. Cyrus Cooper (recorded on 5-10-2000), he did not show any disagreement with any part of the statements and confirmed the statements given by these persons. Mr. Krishna B. Kotak further clarified that the assessee firm do not ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed by the assessee are inaccurate in the sense that the assessee claimed the commission expenditure against which no services rendered. The commission expenditure claim of the assessee is not accordingly true claim, not accurate, not exact or correct; it is an erroneous and it is as an inaccurate statement of the commission claim. It is neither a case of interpretation of any provision of the statutes nor it is case of two views on the issue. We do not find force in the submissions of the learned AR, that in earlier years penalty under section 271(1)( c ) were imitated on the similar disallowance but the Assessing Officer himself has drops those penalties. We find that in these years the Assessing Officer drop the penalty proceeding as the assessments were quested by the ITAT on the ground that notices under section 148 of the Act were not in accordance with law. When the assessee furnished inaccurate particulars of the income, such case is squarely covered by the provisions of section 271(1)( c ) and penalty is accordingly leviable. In the return of income, it is the claim of the assessee that the assessee has incurred commission expenses. The heavy burden is on assessee particu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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