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TMI Blog2015 (12) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer does not ipso facto justify furnishing of inaccurate particulars of income within the meaning of section 271(1)(c) of the Act, as held by the Hon’ble Supreme Court in the case of CIT vs. Reliance Petro Products Ltd., ( 2010 (3) TMI 80 - SUPREME COURT). In the present case, ostensibly, the payment of commission expenditure has been made by cheques and the requisite tax has also been deducted at source. The recipient has also confirmed receiving of commission payment from the assessee. The assertion of the appellant–assessee that similar payments made in the past have been allowed, is also not disputed by the Revenue. The aforesaid features of the claim do not establish that the claim made in the return of income was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O imposing penalty under section 271(1)(c) of the Income Tax Act, 1961(the Act) dated 29/03/2011 and dated 30/03/2011 for assessment years 2004-05 and 2006-07 respectively. 2. In both appeals, the solitary issue relates to the penalty imposed by the AO under section 271(1)(c) of the Act amounting to ₹ 3,50,528/- for A.Y 2004-05 and ₹ 1,22,400/- for assessment year 2006-07. Since the facts and circumstances leading to the imposition of penalty are identical in both the appeals, the appeal for assessment year 2004-05 is taken as lead case. 3. In this context, the brief facts are that the appellant is an individual, who is, inter-alia, deriving income from the business of export of stainless steel utensils in the name of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al before us. 4. Before us, Ld. Representative for the assessee contended that there was no justification for the levy of such penalty under section 271(1)(c) of the Act because assessee had made adequate disclosure and all the material necessary for the assessment was disclosed. The Ld. Representative for the assessee, further, pointed out that similar payments made to the said person in the earlier years stood allowed and that though the addition in the quantum proceedings has been sustained, but there was no justification for the levy of penalty under section 271(1)(c) of the Act, as there was neither concealment of income nor furnishing of inaccurate particulars of such income. 5. On the other hand, Ld. DR has justified the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices rendered by the said person as he could not produce the required details. This has formed the basis for the AO to levy penalty under section 271(1)(c) of the Act on the ground that assessee has furnished inaccurate particulars of income qua the commission payment within the meaning of section 271(1)(c) of the Act. 8. In our considered opinion, entire conspectus of facts emerging from record does establish that the assessee failed to substantiate the claim of expenditure on account of commission payment. So however, in order to hold the assessee guilty of furnishing inaccurate particulars within the meaning of section 271(1)(c) of the Act, it is imperative to demonstrate that assessee is found to have made an erroneous or a false ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer to levy penalty is based on the disallowance effected during the assessment proceedings, where the only failure of the assessee was non-substantiation of the claim for expenditure. In our view, merely because the expenditure on account of commission payment has been found to be unsubstantiated and disallowed in assessment proceedings, the same ipso facto does not justify levy of penalty under section 271(1)(c) of the Act. 8.1 Therefore, we set aside the order of CIT(A) and direct the AO to delete the penalty of ₹ 3,24,360/- imposed under section 271(1)(c) of the Act for assessment year 2004-05. 8.2 Since the facts and circumstances are similar in A.Y 2006-07, our decision in the appeal for A.Y 2004-05 shall apply mutati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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