| The Tax Publishers2019 TaxPub(DT) 7534 (Jp-Trib) INCOME TAX ACT, 1961
Section 271(1)(c)
Where assessee brought all relevant documentary evidences on record to show that commission paid by it, which was surrendered as bogus was not actually bogus but a genuine payment, then in absence of any contrary finding by AO, the said explanation would be regarded as bona fide and reasonable explanation under section 273B and hence, the penalty levied under section 271(1)(c) would not be sustainable.
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Penalty under section 271(1)(c) - Leviability - Assessee brought all relevant documentary evidences in support of genuineness of its claim -
A survey under section 133A was conducted in the case of assessee-company. During course of survey proceedings, director of the assessee-company in his statement recorded, surrendered certain amount on account of bogus claim of commission payment. Consequently, the AO initiated penalty proceedings under section 271(1)(c). Assessee contended that the said surrender was made on account of undue pressure and coercion on the part of Revenue and to buy peace as well as avoiding litigation. Accordingly, it concluded that it was not a case of any incriminating material found during course of survey disclosing any bogus claim of commission but it was a simple case of surrender made under the pressure of Revenue. Held: Although assessee surrendered certain amount during course of survey proceedings, however, it was found that the surrender was made to buy peace and avoid prolonged litigation. Further, it was found that commission payment was made through account payee cheques and those persons also offered commission income to tax in their returns of income. Therefore, as assessee brought all relevant evidences on record to show that the commission paid by it, which was surrendered as bogus was not actually bogus but a genuine payment, then AO, instead of going by the surrender made by the assessee, ought to have conducted an enquiry to verify the correctness of the documentary evidences filed by the assessee and genuineness of the claim. Even otherwise, when the surrender was not based on any incriminating material but it was only based on the statement recorded during survey, therefore, the evidentiary value of the statement recorded under section 133A in absence of corroborating evidence could not be a conclusive basis for holding the assessee liable for penalty proceedings under section 271(1)(c). Hence, the penalty levied under section 271(1)(c) was deleted.
REFERRED :
FAVOUR : In assessee's favour
A.Y. :
IN THE ITAT, JAIPUR BENCH
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