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TMI Blog2015 (6) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty is reduced from ₹ 7,50,000 to ₹ 3,70,260 - Decided partly in favour of assessee. - ITA No.4387/Mum/2013 : Asst.Year 2007-2008 - - - Dated:- 13-2-2015 - Shri D Karunakara Rao And Shri Amit Shukla JJ. For the Appellant : Shri D.J.Shukla For the Respondent : Shri Sacchidanand Dubey ORDER Per Amit Shukla (JM) : This appeal has been preferred by the Revenue against the impugned order dated 27.12.2012, passed by the Commissioner of Income-tax (Appeals) - 7, Mumbai, in relation to the penalty proceedings u/s 271(1)(c) for the assessment year 2007-2008. 2. The assessee is mainly aggrieved by levy of penalty of ₹ 7,50,000 u/s 271(1)(c) on account of disallowance of alleged fictitious payment of commission to various persons for sums aggregating to ₹ 11,00,000. 3. Brief facts are that the assessee is an indenting agent for various foreign principals and is also engaged in trading in merchandise, chemicals, etc. The assessee has disclosed sales at ₹ 91.20 lakh and has derived commission of ₹ 1.01 crore. The Assessing Officer (A.O.) during the course of assessment proceedings noted that the assessee has debited an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a, Taxation Manager and the representative of the assesseecompany, who was given an opportunity to cross examine Shri Yogesh Shah. However, the assessee declined to cross-examine the said witness. After the statement of Shri Yogesh Shah, the assessee vide letter dated 29.12.2009 admitted that the payment disclosed on account of commission were accommodation entries and the same was offered to tax after stating as under:- As regards the statement of Mr.Yogesh H Shah, we have made further enquiries in the matter. It appears that the transaction in relation to the business promotion expenses amounting to ₹ 11 lakhs were arranged / carried out by the then Vice President (Marketing) and the Manager (Accounts) of the company who have since left the company. It is now understood that the said expenses are of a doubtful nature and hence in order to buy peace, we offer the said amount for taxation on the understanding that no penalty will be levied. We submit for your honour s kind consideration that the company was incorporated on 04/08/1943 more than 66 years ago. In the entire history of the company, no such accommodation transaction has taken place and there has been no occasi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee-company had made a bogus claim of expenditure, which has resulted into suppression of income. It was in the nature of accommodation entry, which has been duly brought on record by the A.O. in the form of statement recorded on oath of one of the persons. The assessee s explanation cannot be held to be bonafide in the light of the material on record. Accordingly he confirmed the penalty levied by the A.O. 4. Before us the learned Counsel, filed an application for admission of fresh evidence, which is a copy of complaint lodged with the Senior Inspector of Police, Marine Drive Police station, against Mr.Vibhakar and Mr.Vernekar, who have misappropriated the funds of the assessee-company. He submitted that these two employees of the assessee-company had cheated and committed fraud in the account of the assessee-company by inflating the expenses and debiting bogus payments. Immediately when the assessee came to know about such a fraud, they have been terminated from the services. Besides that, he submitted that so far as the assessee is concerned, it was under a bonafide belief that payments debited are genuine and it was not aware of the cheating and misappropriation done ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not rendered any services, but has gone to the extent of saying that the payment received by the assessee was in the nature of accommodation entry provided by him and he does not know the assessee-company or any person related to the said company. He submitted that the cheque was brought to him by a broker in the market and after clearing of the cheque he has returned part of the amount to the broker. At that stage also the assessee did not cross-examine the said witness. When confronted with such an adverse material on record, the assessee offered the said expenditure of commission payment as income. The explanation of the assessee before the A.O. was that the said payment was arranged by the then Vice-President (Marketing) and the Manager (Accounts), who have committed fraud and have left the job and at the same time the assessee has tried to justify the payment on the ground that the payment has been made through account payee cheques, confirmation of the parties have been furnished, etc. Now before us, the explanation given by the learned Counsel is that the police complaint has been filed against the said two persons for misappropriation of funds, who had indulged in cheat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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