INCOME TAX ACT, 1961

Penalty under section 271(1)(c) - Concealment -Addition on the basis of examination of books of accounts -

Assessee-firm was engaged in business of stevedoring. Basic nature of business of assessee was loading of goods of various customers into liner/ships and unloading of cargo from liner/ships. Assessee had paid commission to its sixteen concerns and claimed deduction on same. Assessing Officer had examined commission payment in detail by examining books of account at time of assessment proceedings, making survey, taking statements and other examination of post survey proceedings and concluded that assessee had paid commission to said concerns without any services rendered by them and therefore, disallowed said expenditure. Held : Lower authorities found from records that commission expenses were not directly debited to commission account and it was not shown in profit and loss account along with other heads of expenditure. They also found that top executive officers of assessee had admitted that those sister concerns existed only on paper and accommodative bills were issued and assessee did not make any attempt to show genuineness of payments at time of survey or at time of assessment or at time of appellate proceedings. They, therefore, concluded that assessee had concealed particulars regarding commission, and had furnished inaccurate particulars of its income for claiming false expenses and, accordingly, levied penalty under section 271(1)(c). Hence lower authorities were justified in levying penalty upon assessee. While considering an appeal against an order made under section 271(1)(c) what is required to be examined is record which officer imposing penalty had before him and if that record can sustain finding about concealment, that would be sufficient to sustain penalty .

Income tax act 1961 section 27191)(c)

Decision : In favour of revenue
A.Y : 1998-99

Case law analysis:CIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158/ 189 Taxman 322 (SC). (para 9.5) distinguished on facts.