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TMI Blog2008 (2) TMI 895X X X X Extracts X X X X X X X X Extracts X X X X ..... nd assessment was made. That assessment was challenged in appeal, and on further appeal, there were remands also. However, the assessments have acquired finality on dismissal of D.B. IT Appeal Nos. 36 of 2003 and 34 of 2003. 3. In the assessment order, made by the AO, the last para reads as under : Assessed at ₹ 38,34,610 accordingly. Issue demand notice and challan. Give credit for TDS as per certificate on file. Charge interest under ss. 201 and 217(1A). Issue penalty notice under s. 271(1)(c) for concealing the particulars of income and under s. 273(2)(c) for non-filing of higher estimate. In compliance thereof, notice was issued to the assessee, and the assessee appeared, and contested proceedings. The notice related to the payment of two amounts, being a payment of ₹ 2 lacs to M/s Radha Kishan Bal Kishan Muchhal of Indore, and the payment of ₹ 3 lacs to M/s Pyroff Packaging (P) Ltd. of Bombay. These payments were disallowed, as they were found to be of other than business consideration, and were added in the income of the assessee. From a look at the order of the Dy. CIT, Annex.1, it transpires, that since this involved concealment/furnishing of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , that in the case of CIT vs. Suresh Chandra Mittal (2001) 170 CTR (SC) 182: (2001) 251 ITR 9(SC), the AO had detected payment of commission claimed, which was not paid. Then in para 39, all that has been said by the Tribunal is, as under : 39. After having discussed the factual and legal position, we have come to the conclusion that the commission paid to the persons mentioned in the order was not for business consideration and no services had been rendered by these two persons to the assessee. Therefore, the assessee has concealed the particulars of its income. The penalty is leviable under s. 271(1)(c) of the Act. The CIT(A) had grossly erred in cancelling the penalty levied by the AO under s. 271(1)(c) of the Act. The order of the CIT(A) is reversed and that of the AO is revived/sustained. 8. Assailing the impugned judgment, it is contended by the learned counsel for the appellant, that for initiating proceedings for penalty, according to language of s. 271(1), the AO, or the CIT(A), or the CIT, in the course of any proceedings, should be satisfied about any person, having concealed the particulars of his income, or having furnished inaccurate particulars of such income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was erroneously set aside by the learned CIT, and has rightly been restored by the learned Tribunal. Disallowance of the deductions claimed by the assessee, and imposition of penalty, were entirely independent proceedings, and since the present is a clear case of concealment of particulars of income, and resultant furnishing of inaccurate particulars of income, penalty has rightly been imposed. 10. We have considered the submissions, and gone through the record available, so also the provisions of s. 271, and the judgment cited by the learned counsel for the assessee, being Dilip N. Shroff vs. Jt. CIT (2007) 210 CTR (SC) 228: (2007) 6 SCC 329. 11. For ready reference, we may quote the provisions of s. 271(1)(c), which reads as under : 271(1) If the AO or the CIT(A) or the CIT in the course of any proceedings under this Act, is satisfied that any person' .............. (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty.... In our view, a bare reading of this section does clearly show that it contemplates existence of satisfaction on the part o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llate file of the assessment matters, do show that there was a bona fide dispute going on between the assessee and the Department about the justifiability of the payments made, and it is very significant to note here that it is not the finding of any of the authorities that the payment was not made to the persons concerned. The precise finding in the assessment proceedings is that the payment was not made for business purposes, as it is not shown that the recipients did, or could render, any business advantage to the assessee. In such circumstances, when the payment has factually been made by the assessee, the question only was as to whether he is entitled to deduction or not, and may be that the authorities found that the assessee is not entitled to deduction, resultantly the addition in the income was made but then, for initiating penalty proceedings, that by itself, is not enough; and beyond that, namely the deduction claimed by the assessee has not been allowed, there is nothing more to show as to why the penalty proceedings should be initiated against the assessee. In this very judgment, in Dilip N. Shroff's case (supra), the Hon'ble Supreme Court has dealt in detail, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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