M/S. CSB SOLUTION PVT. LTD.,NEW DELHI vs. ACIT, NEW DELHI
In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that agreeing to an ad-hoc disallowance to buy peace does not automatically attract penalty under Section 271(1)(c). The penalty was cancelled, following the Apex Court's decision in CIT vs. Reliance Petroproducts Pvt. Ltd.
What were the facts?
The assessee claimed commission expenses, and during assessment, the AO disallowed 25% of the claim due to non-response from some parties to a notice. The assessee's representative agreed to this ad-hoc disallowance to avoid litigation.
What were the issues?
Whether penalty under Section 271(1)(c) is attracted merely because an assessee agrees to an addition/disallowance to avoid litigation, despite having documentary evidence for the claim.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
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- CIT v. Reliance Petroproducts Pvt. Ltd.2,228 citing322 ITR 158 · 2010 · SC · Read judgment
Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL
Before: SHRI BEFORE SHRI G.D. AGRAWALG.D. AGRAWALG.D. AGRAWAL & G.D. AGRAWAL & AND & SHRI SUDHANSHU SRIVASTAVA HRI SUDHANSHU SRIVASTAVA
PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP :- PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP This appeal by the assessee for the assessment year 2009-10 is directed against the order of learned CIT(A)-VI, New Delhi dated 19th February, 2014.
The only ground raised in this appeal by the assessee is against the levy of penalty of `4,34,230/- u/s 271(1)(c) of the Income-tax Act, 1961.
We have heard the arguments of both the sides and have perused the material placed before us. We find that penalty has been levied on the disallowance of commission of `14,05,278/-. From a perusal of the assessment order, we find that the assessee has claimed
2 ITA-2353/Del/2014 the commission expenses amounting to `56,21,113/-. During assessment proceedings, the Assessing Officer, in order to verify the claim of the assessee, issued notice u/s 133(6) to ten parties, out of which, six parties sent the confirmation. However, no reply was received in respect of four parties. When these facts were brought to the assessee’s representative, he agreed for the adhoc disallowance of 25% of total commission claimed by the assessee. Thus, 25% of the total commission expenses amounting to `14,05,278/- was disallowed. It was contended by the learned counsel for the assessee appearing before us that the assessee’s authorized representative accepted the disallowance of 25% of the commission so as to buy peace and to avoid long drawn litigation. He stated that the assessee has furnished confirmation of all the parties to whom the commission was paid. TDS was duly deducted from all the persons. That summon issued u/s 133(6) was duly complied with and six persons confirmed having received the commission. Merely because four persons did not furnish reply to the Assessing Officer in response to summons, it cannot be said that the claim of the commission by the assessee was not genuine. That merely because the assessee agreed for the addition, it, in no way, saddle the assessee with the penalty u/s 271(1)(c) of the Act.
After considering the facts of the case and arguments of both the sides, we entirely agree with the contention of the learned counsel for the assessee. In our opinion, it is not a fit case for levy of penalty u/s 271(1)(c). While doing so, we draw support from the decision of Hon’ble Apex Court in the case of CIT Vs. Reliance Petroproducts Pvt.Ltd. – (2010) 322 ITR 158 (SC). As per Hon’ble Apex Court, merely because the assessee’s claim for any deduction is not accepted by the Revenue, penalty u/s 271(1)(c) of the Act is not attracted. On the facts
3 ITA-2353/Del/2014 of the case, the above decision of Hon’ble Apex Court would be squarely applicable. Respectfully following the same, we cancel the penalty levied u/s 271(1)(c) of the Act.
In the result, the appeal of the assessee is allowed. Decision pronounced in the open Court on 05.08.2016.
More judgments on Section 271(1)(c)
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