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TMI Blog2017 (9) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... re only reproducing the grounds involved in ITA No. 5766/Del/2014 (AY 2003-04) which read as under:- "1. The Ld. CIT(A) erred in law and on facts in confirming the levy of penalty of Rs. 86,92,330/- u/s. 271(1)(c) of the Act ignoring the facts, evidences and submissions placed on record. Thus the levy of penalty u/s. 271(1)(c) should be deleted. 2. The appellant craves the leave to add, substitute, modify, delete or amend all or any ground of appeal either before or at the time of hearing." 3. The brief facts of the case are that the assessee had declared an income of Rs. Rs. 4,78,820/- which was processed under section143(1) of the Income Tax Act, 1961 (hereinafter referred as the Act). In this case Survey under section133A of the Act was conducted on 10.02.2006 in the case of M/s Uzind Corporation and during survey it was noticed that M/s Uzind Corporation is GSA of Uzbekistan Airways and the assessee receives commission at 7% of the cost of tickets and Cargo Freight in addition to his regular salary. M/s. Uzind Corporation had credited commission of Rs. 2,75,94,701/- in the books for the year under consideration while the commission offered for taxation by the assessee wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer stating that the provisions of Section 28(v)(a) are applicable to the case of the assessee. The Hon'ble Delhi High Court however vide its order ITA 602/2010,607/2010 and 921/2011 dated 30.09.2012 reversed the decision of the ITAT stating that the commission amount was clearly part of salary and not covered under the definition under section 17 of the Act. The Assessing Officer issued a show cause for levy of penalty to the assessee, in response the assessee claimed as per page 2 to 5 of the penalty order that as per agreement dated 15.03.2002 between the assessee and M/s.Uzind Corporation the assessee was receiving amounts from M/s.Uzind Corporation in Dual capacity i.e. as salary and as non complete fee for not taking away the business of the firm. The assessee claimed that in case of the assessee taking away the business he was under an obligation to give similar amounts to M/s.Uzind Corporation. The payment received by the assessee was for not providing any service to the said firm but for not getting transferred the GSA in his name. The amount received by the assessee was not on account of his skill to handle Air Lines Business but for the benefit of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acknowledgement of return as on 31.3.2003; AY 2004-05 & 2005-06 alongwith its enclosures; photocopy of chart showing the year-wise details of non-compete fees and list of cases relied upon by the assessee. In view of above facts and circumstances of the present case, she requested that by following the aforesaid decisions the penalty in dispute may be cancelled and appeal of the assessee may be allowed and accordingly, stay applications may be dismissed. 5. On the contrary, Ld. DR relied upon the orders of the authorities below. 6. We have heard both the parties and perused the orders passed by the Revenue Authorities alongwith the relevant records available with us and the copy of the decisions of ITAT and higher authorities filed in the shape of Paper Books. It is an admitted fact that assessee had declared an income of Rs. Rs. 4,78,820/- which was processed under section143(1) of the Income Tax Act, 1961 and Survey under section133A of the Act was conducted on 10.02.2006 in the case of M/s Uzind Corporation and during survey it was noticed that M/s Uzind Corporation is GSA of Uzbekistan Airways and the assessee receives commission at 7% of the cost of tickets and Cargo Freigh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Income Tax(A) by treating the same as part of salary income. However, the ITAT vide its Order passed in ITA Nos.2311 to 2313/0el/ for A.Y. 2003-04 to 2005-06 reversed the order of Ld. CIT(A) and the Assessing Officer stating that the provisions of Section 28(v)(a) are applicable to the case of the assessee. The Hon'ble Delhi High Court however vide its order ITA 602/2010,607/2010 and 921/2011 dated 30.09.2012 reversed the decision of the ITAT stating that the commission amount was clearly part of salary and not covered under the definition under section 17 of the Act. The Assessing Officer issued a show cause for levy of penalty to the assessee, in response the assessee claimed as per page 2 to 5 of the penalty order that as per agreement dated 15.03.2002 between the assessee and M/s.Uzind Corporation the assessee was receiving amounts from M/s.Uzind Corporation in Dual capacity i.e. as salary and as non complete fee for not taking away the business of the firm. The assessee claimed that in case of the assessee taking away the business he was under an obligation to give similar amounts to M/s.Uzind Corporation. The payment received by the assessee was for not pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition, it becomes apparent that the addition is certainly debatable. In such circumstances penalty cannot be levied u/s. 271(1)(c) as has been held in several cases including Rupam Mercantile vs. DCIT (2004) 91 ITD 237 (Ahd.) (TM)] and Smt. Ramila Ratilal Shah vs. ACIIT (1998) 60 TTJ (Ahd) 171). The admission of substantial question of law by the Hon'ble High Court lends credence to the bonafides of the assessee in claiming deduction. Once it turns out that the claim of the assessee could have been considered for deduction as per a person properly instructed in law and is not completely debarred at all, the mere fact of confirmation of disallowance would not per se lead to the imposition of penalty. Since the additions, in respect of which penalty has been upheld in the present proceedings, have been held by the Hon'ble High Court to be involving a substantial question of law, in our considered opinion, the penalty is not exigible under this section. We, therefore, order for deletion of penalty." 6.2 The Hon'ble High Court of Mumbai against the order of the ITAT dated 18.3.2011, as aforesaid in the case of CIT vs. Nayan Builders & Developers Pvt. Ltd. in ITA No. 415/2012 vide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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