ACIT, Patiala V. Sh. Raj Kumar Wadhwa, Patiala

ITA 123/CHANDI/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3797 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-04-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 03-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: ASHOK GOYALCA
• Keywords: Business income; Difference of opinion
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 123/CHD/2015 ASSESSMENT YEAR: 2006-07 THE ACIT, VS SMT. USHA WADHWA, CIRCLE, L/H OF LATE SHRI RAJ KUMAR WADHWA PATIALA. PROP. M/S LUCKY TRADERS, OPP. BRITISH CO-ED SCHOOL, LOWER MALL ROAD, PATIALA. PAN: AABPW6062H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K.MITTAL, DR RESPONDENT BY : SHRI SUDHIR SEHGAL & SHRI ASHOK GOYAL,CA DATE OF HEARING : 20.12.2016 DATE OF PRONOUNCEMENT : 30.12.2016 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY REVENUE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS) PATIALA DATED 15.12.2 014 FOR ASSESSMENT YEAR 2006-07 CHALLENGING THE CANCELLATION OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. 2 3. THE FACTS OF THE CASE ARE THAT IN THIS CASE, THE ASSESSING OFFICER MADE ADDITION OF RS. 41,14,518/- ON ACCOUNT OF DISALLOWANCE OF LIASONING COMMISSION. T HE LD. CIT(APPEALS) DELETED THE ADDITION, HOWEVER, ITA T CHANDIGARH BENCH CONFIRMED THE ORDER OF THE ASSESSI NG OFFICER IN MAKING THE ADDITION OF RS. 41,14,518/- O N ACCOUNT OF LIASONING COMMISSION. THE ASSESSING OFF ICER THEN IMPOSED THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT AGAINST THE ADDITION CONFIRMED OF RS. 41,14,518 /-. 4. THE ASSESSEE FILED DETAILED SUBMISSIONS BEFORE L D. CIT(APPEALS) WHICH HAVE BEEN REPRODUCED IN THE IMPUGNED ORDER IN WHICH THE ASSESSEE BRIEFLY EXPLAI NED THAT ASSESSEE IS INDIVIDUAL, HAD BEEN RUNNING THE BUSINESS OF RESALE OF CEMENT AT PATIALA AND WAS ACT ING AS HANDLING AGENT FOR M/S J.K. CEMENT WORKS, RAJASTHAN FOR HANDING ITS PRODUCTS DURING THE FINAN CIAL YEAR 2005-06 RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. AS HANDLING AGENT, THE ROLE OF ASSESSEE WA S TO GET THE CEMENT DISPATCHED BY M/S J.K. CEMENT WORKS FROM ITS MANUFACTURING UNIT AT RAJASTHAN, UNLOADED IN THE COMPANY GODOWNS AT PATIALA, BATHINDA AND RAJPUR A AND THEREAFTER GET THE SAME RELOADED FOR DIFFERENT DESTINATIONS AGAINST ORDERS PROCURED BY THE COMPANY . THE ASSESSEE WAS ACTING AS A SALE PROMOTER FOR M/S J.K. CEMENT WORKS AT SOUTHERN REGION OF PUNJAB AS WELL. THE ASSESSEE WAS FURTHER APPOINTED BY M/S SARVSHAKTIMAN TRADERS PVT. LTD. OF DELHI (STPL) [CHIEF SALE PROMO TER 3 FOR M/S J.K.CEMENT WORKS] AS SERVICE AGENT FOR THE STATE OF HARYANA FOR CATERING TO THE GOVERNMENT AND SEMI-GOVERNMENT ORGANIZATIONS AND OTHER INSTITUTION AL BUYERS. THE ROLE OF ASSESSEE WAS TO GET THE SUPPLY ORDERS FROM THESE ORGANIZATIONS RELEASED AT PRIORIT Y IN RESPECT OF ALLOCATIONS MADE AGAINST THE TENDER OFFE RS OF THE COMPANY M/S J.K. CEMENT WORKS SO ACCEPTED BY TH E GOVERNMENT AUTHORITIES AND TO ENSURE TIME SCHEDULE FOR SUPPLY AND TIMELY PAYMENTS AGAINST SUCH SUPPLIES. THE ASSESSEE IS ENGAGED IN THE ABOVE BUSINESS ACTIVITIE S FOR LAST MANY YEARS AND HAS BEEN MAINTAINING OFFICES AT PATIALA AND BATHINDA AND HAD OPENED ANOTHER OFFICE AT RAJPURA DURING THE YEAR UNDER CONSIDERATION WITH HI S OWN TEAM OF EMPLOYEES TO LOOK AFTER THE ACTIVITIES MAINLY IN STATE OF PUNJAB. HOWEVER, SERVICES IN THE STATE OF HARYANA AS SERVICE AGENT FOR CATERING TO THE GOVERN MENT AND SEMI GOVERNMENT ORGANIZATIONS AND OTHER INSTITUTIONAL BUYERS WERE PROVIDED/MANAGED THROUGH OTHER SERVICE PROVIDERS IN THAT STATE ALSO. THE ROL E OF THESE SERVICE PROVIDERS WAS TO GET THE PURCHASE ORD ERS RELEASED IN FAVOUR OF M/S J.K. CEMENT WORKS AT THE EARLIEST AND ENSURE THE TIMELY RELEASE OF PAYMENTS IN FAVOUR OF THE COMPANY. THEY WERE FURTHER RESPONSIB LE FOR GETTING SORTED OUT ANY KIND OF DISPUTE THAT MIG HT ARISE DURING THE EXECUTION OF THOSE SUPPLY ORDERS B Y THE COMPANY. THESE SERVICE PROVIDERS HAD BEEN ASSIGNED DIFFERENT AREAS. 4 4(I) THE ASSESSEE WAS TO GET THE SERVICE COMMISSION AT RS. 25/- PER TON OF CEMENT SO SUPPLIED AND HAD AGRE ED WITH THE SERVICE PROVIDERS TO PAY RS. 20/- PER TON AGAINST THE SERVICES TO BE PROVIDED BY THEM ON THE BASIS OF QUANTITY SUPPLIED DURING THE FINANCIAL YEAR IN T HE AREA SO ASSIGNED TO A PARTICULAR SERVICE PROVIDER. THIS ARRANGEMENT NEEDS TO BE APPRECIATED FROM THE POINT OF A PRUDENT BUSINESSMAN AS IT WAS NOT POSSIBLE FOR THE ASSESSEE BEING INDIVIDUAL TO HAVE HIS OWN OFFICE AT DIFFERENT PLACES IN STATE OF HARYANA AND TO CONTROL A LARGE NUMBER OF EMPLOYEES REQUIRED FOR LOOKING AFTE R ABOUT 200 SUCH CONSIGNEES OF DIFFERENT ORGANIZATION S AT THOSE PLACES. THE ASSESSEE PRODUCED ALL THE BOOKS OF ACCOUNT AND OTHER RECORDS TO SUBSTANTIATE THE EXPLANATION BEFORE THE AUTHORITIES BELOW. THE ASSE SSEE INCURRED THE EXPENSES FOR BUSINESS PURPOSES ONLY. 4(II) THE ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(APPEALS) AND ADDITION HAVE BEEN DELETED ACCEPTI NG THE EXPLANATION OF THE ASSESSEE THAT BUSINESS EXPEN SES INCURRED FOR RUNNING THE SERVICES IN THE STATE OF HARYANA FOR STPL DELHI. HOWEVER, ITAT HAS SET ASID E THE ORDER OF THE LD. CIT(APPEALS) AND UPHOLD THE ADDITION ON THE GROUND THAT ASSESSEE HAD NOT BEEN A BLE TO ESTABLISH THE LINK BETWEEN THE EXPENSES INCURRED AND SERVICES RENDERED. IT WAS ALSO SUBMITTED THAT NO SATISFACTION REGARDING CONCEALMENT HAVE BEEN RECORD ED BY THE ASSESSING OFFICER. THE PENALTY PROCEEDINGS ARE 5 DIFFERENT FROM ASSESSMENT PROCEEDINGS THEREFORE, PE NALTY NEED NOT TO BE IMPOSED IN EACH AND EVERY CASES. TH E ASSESSEE RELIED UPON SEVERAL DECISIONS IN SUPPORT O F HIS CONTENTION. THE ASSESSEE FURTHER SUBMITTED THAT HE HAS NOT FURNISHED INACCURATE PARTICULARS OF INCOME AND HAS NOT CONCEALED THE PARTICULARS OF INCOME BECAUSE ALL THE MATERIAL FACTS WERE DISCLOSED TO THE REVENUE AUTHOR ITIES. IT WAS SUBMITTED THAT MATERIAL PARTICULARS NAMELY, NAME AND ADDRESSES, PAYMENT MADE ON ACCOUNT OF LIASONING , PURPOSE OF PAYMENT HAD BEEN PLACED ON RECORD OF THE ASSESSING OFFICER. THE PERSONS WHO HAVE PROVIDED SERVICES IN STATE OF HARYANA WERE PRODUCED BEFORE ASSESSING OFFICER AND THEIR STATEMENTS HAVE BEEN RECORDED IN WHICH THEY HAVE ADMITTED THE RECEIPT OF PAYMENT FROM THE ASSESSEE. THUS, ALL THE MATERIAL FACTS WERE WITHIN THE KNOWLEDGE OF THE ASSESSING OFFICER. IT WAS FURTHER STATED THAT MERE MAKING OF CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF WILL NOT AMOUNT T O FURNISHING INACCURATE PARTICULARS REGARDING INCOME OF THE ASSESSEE. THE ASSESSEE RELIED UPON DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS RELIANC E PETROPRODUCTS PVT. LTD. 230 CTR 231. THE ASSESSEE, THEREFORE, PLEADED THAT PENALTY MAY BE CANCELLED. THE ASSESSING OFFICER IN THE REMAND REPORT REITERATED T HE FACTS STATED IN THE PENALTY ORDER. THE ASSESSEE IN THE REJOINDER REITERATED THE SAME FACTS. 6 5. THE LD. CIT(APPEALS) CONSIDERING MATERIAL ON RECORD AND RIVAL SUBMISSIONS, DELETED THE PENALTY. HIS FINDINGS IN PARA 4.4 AND 5 OF THE IMPUGNED ORDER AR E REPRODUCED AS UNDER : 4.4 I HAVE CONSIDERED THE SUBMISSIONS MADE. THE FACT S EMANATING FROM THE RECORD IS THAT THE APPELLANT WAS ENGAGED BY M/S SARVASHAKTIMAN TRADERS PVT. LTD. (THE CHIEF SALE PROMOTERS FOR JK CEMENT WORK) AS SERVICE A GENT FOR THE STATE OF HARYANA. AS CONTENDED THE SERVICES IN THE STATE OF HARYANA WERE MANAGED THROUGH OTHER SERVICE PROVIDERS/ SUB-AGENTS. THE A.O. HOWEVER DISALLOWED TH E EXPENDITURE CLAIMED BY THE APPELLANT AS INCURRED ON THE SERVICE PROVIDERS FOR PROVIDING SERVICES IN THE STATE OF HARYANA TO THE TUNE OF RS.41,14,518/-. DURING THE CO URSE OF ASSESSMENT PROCEEDING, THE APPELLANT SUBMITTED COMPL ETE DETAILS OF SUB-AGENTS. THE A.O., THEREAFTER, RECORD ED THE STATEMENTS OF THE SUB-AGENTS WHO CONFIRMED HAVING RECEIVED THE PAYMENT AFTER DEDUCTION OF TDS, SERVICE T AX ETC. HOWEVER, THE A.O. DISALLOWED THE EXPENSES ON THE GRO UNDS THAT THE SUB-AGENTS HAVE NOT COLLECTED THE PAYMENTS FROM THE PARTIES ON BEHALF OF THE APPELLANT. RATHER, IT WAS CONTENDED THAT THE PURCHASING AGENTS DIRECTLY ISSUED D RAFTS TO J.K. CEMENT. FURTHER DURING THE YEAR, THESE PARTI ES HAVE ALSO NOT SETTLED ANY DISPUTE CLAIMING THAT NO DISPUTE AROSE DURING THE YEAR. MOREOVER, IT WAS NOTED THAT THE PAY MENTS TO THE SUB-AGENTS WERE CLEARED ONLY IN THE MONTH OF MARCH'06 THROUGH THE LIASON WORK WAS CONTINUED DURING THE ENTIRE YEAR. THEREAFTER, THE ID. CIT(A) ALLOWED THE EXPENSES CLAIMED. THE ID. CIT(A) NOTED THAT THE SUB-AGENTS IN THESE STATEMENTS HAVE CONFIRMED RECEIPT OF COMMISSION BY A/ C PAYEE CHEQUES AFTER TDS AND SERVICE TAX IS ALSO LEVIED . IT WAS OBSERVED THAT THE SHORTCOMING NOTED BY THE A.O. ARE ONLY PROCEDURAL IN NATURE AND NOT OF SUBSTANCE AND T HAT THE A.O. CAN'T DECIDE THE QUANTUM OF COMMISSION BEING GIVEN TO SUB--AGENTS. HOWEVER, HON'BLE ITAT DISALLOWED THE EXPENDITURE CONFIRMING THE ORDER PASSED BY THE A.O. T HE APPELLANT HAS FURTHER SUBMITTED THAT THE ISSUE IS DEB ATABLE AS ON SAME SET OF FACTS DIFFERENT VIEWS ARE TAKEN B Y 7 DIFFERENT AUTHORITIES AND ALSO BECAUSE ON SAME SET O F FACTS THE APPEAL IS ADMITTED IN HON'BLE HIGH COURT IN ASSESSM ENT YEAR 2007-08 AND RELIED ON VARIOUS CASE LAWS. THUS, IN THIS CASE, FIRSTLY IT IS NOTED THAT THE AP PELLANT HAS DISCLOSED ALL FACTS. THE SUB-AGENTS ALSO APPEARED BE FORE THE A.O. AND CONFIRMED RECEIPT OF COMMISSION WHICH WAS SUBJECT TO TDS AND SERVICE TAX ALSO. FURTHER, THE LD. CIT(A) A LLOWED THE EXPENSE BUT SUBSEQUENTLY THE EXPENSE WAS DISALLOWED BY THE HON'BLE ITAT. IT IS ALSO NOTED THAT IN A.Y. 2005-06, IN THE ORIGINAL SCRUTINY PROCEEDINGS, THE A.O. ALLOWED SIMI LAR EXPENSES. THUS, IT ALSO IS NOTED THAT ON SAME SET O F FACTS, DIFFERING VIEWS ARE TAKEN BY THE DIFFERENT AUTHORIT IES. IN THIS CASE THEREFORE THE APPELLANT HAS DISCLOSED ALL FACTS AND THE SUB- AGENTS HAVE ALSO CONFIRMED RECEIPT OF THE COMMISSIO N ON WHICH TDS AND SERVICE TAX IS DEDUCTED AND THE ISSUE IS DEB ATABLE AS ON SAME SET OF FACTS, THE A.O. IN A.Y. 2005-06 ORIGINA L PROCEEDINGS HAS NOT MADE ANY ADDITION & ID. CIT(A) IN A.Y. 2006-07 HAS ACCEPTED THE SUBMISSION OF THE APPELLANT. LOO KING INTO THE FACTS OF THE CASE AND SUBMISSION MADE THER EFORE IN MY OPINION, PENALTY SHOULD NOT BE LEVIED IN THIS CASE. RELIANCE IS MADE ON THE CASE O/CITUS. RELIANCE PETROPRODUCTS PVT. LTD. 230 CTR 331 (SC). PENALTY LEVIED IS, THEREFORE, CANCELLED . 5. IN T HE RESULT, THE APPEAL IS ALLOWED. 6. THE LD. DR RELIED UPON ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT ASSESSEE FAILED TO SUBSTANTIATE LIASONING COMMISSION EXPENSES. THE CL AIM OF THE ASSESSEE IS NOT BONAFIDE, THEREFORE, EXPLANA TION-I TO SECTION 271(1)(C) OF THE ACT IS CLEARLY ATTRACTE D. THE LD. DR SUBMITTED THAT HON'BLE HIGH COURT HAS ALSO CONFIRMED THE ORDER OF THE TRIBUNAL IN CONFIRMING T HE ADDITION ON MERITS VIDE JUDGEMENT DATED 18.07.2013 IN 8 THE CASE OF RAJ KUMAR WADHWA VS CIT, PATIALA IN IT APPEAL NO. 117 OF 2012. COPY OF THE JUDGEMENT OF TH E HIGH COURT IS PLACED ON RECORD. THE LD. DR SUBMITT ED THAT PENALTY IS STRICTLY A CIVIL LIABILITY AND RELI ED UPON DECISIONS OF HON'BLE SUPREME COURT IN THE CASE OF DHARMENDRA TEXTILE & PROCESSORS 306 ITR 277 AND ATU L MOHAN BINDAL 317 ITR 1. THE LD. DR ALSO RELIED UPO N DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SHIV NARAIN KHANNA 107 ITR 542 ON THE PROPOSITION THAT SAME MATERIAL COULD BE USED IN PEN ALTY PROCEEDINGS ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE FOR THE PURPOSE OF LEVY OF THE PENALTY. 6(I) ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSE E REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW. HE HAS REFERRED TO PB-1 WHICH IS DETAILS OF LIASONING COMMISSION PAID DURING ASSESSMENT YEAR UNDER APPEAL. PB-2 TO 8 ARE COPIES OF THE BILLS RA ISED BY THE PARTIES FOR THE PURPOSE OF CHARGING COMMISSION AND SERVICE TAX. PB-9 IS DETAILS OF LIASONING DS & D R ECEIVED AND PAID FOR THE YEARS 2002-03 TO 2005-06. PB-17 T O 30 ARE THE COPIES OF THE STATEMENTS OF THE SUB-AGENTS RECORDED BY THE ASSESSING OFFICER AT ASSESSMENT PROCEEDINGS IN WHICH THEY HAVE CONFIRMED RECEIPT OF LIASONING COMMISSION FROM THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEE IS CARRYING ON SAME BUSINESS ACTIVITIES IN PAST AS WEL L AS IN ASSESSMENT YEAR UNDER APPEAL. THE PARTIES IN EA RLIER 9 YEAR WERE DIFFERENT BUT MODUS-OPERANDI OF BUSINESS OF THE ASSESSEE IS SAME. THEREFORE, CLAIM OF THE ASSE SSEE CANNOT BE SAID TO BE INCORRECT OR FALSE FOR CLAIMIN G LIASONING EXPENSES. HE HAS SUBMITTED THAT SUB-AGEN TS HAVE DULY RAISED BILLS FOR COMMISSION AND SALES HAV E ACTUALLY BEEN MADE. THE ASSESSEE HAD DEDUCTED TDS ON SUCH PAYMENTS FOR COMMISSION AND SERVICE TAX PROVISIONS ARE ALSO COMPLIED WITH BY THE COMMISSION AGENT. THE ASSESSEE AT THE ASSESSMENT STAGE PROVID ED EACH AND EVERY MATERIAL AND HAS NOT CONCEALED ANY PARTICULARS OF INCOME. THE ASSESSEE DISCLOSED ALL THE MATERIAL FACTS BEFORE THE AUTHORITIES BELOW AND ADD ITION IS MADE MERELY ON DIFFERENCE OF OPINION. THE LD. C OUNSEL FOR THE ASSESSEE RELIED UPON FOLLOWING DECISIONS ON THE PROPOSITION THAT NO PENALTY COULD BE LEVIED EVEN IF ADDITION HAS BEEN CONFIRMED BY THE HIGHER AUTHORITI ES : I) CIT VS BAL KISHAN DHAWAN, HUF (ITA NO. 183/13 HON'BLE PUNJAB & HARYANA HIGH COURT (PB-29) II) CIT VS AJAIB SINGH & CO. 253 ITR 630 (P&H) (PB-34). III) CIT VS MEHTA ENGINEERS LTD. 219 CTR 285 (P&H) (PB-38). IV) CIT VS SANGRUR VANASPATI MILLS LTD. 303 ITR 53 (P&H) ( PB-40) 6(II) THE LD. COUNSEL FOR THE ASSESSEE ALSO FILED COMPARATIVE CHART OF LIASONING COMMISSION PAID IN 10 ASSESSMENT YEAR UNDER APPEAL AS WELL AS IN PRECEDIN G ASSESSMENT YEARS 2002-03 TO 2005-06 SUPPORTED BY TH E TRADING AND PROFIT & LOSS ACCOUNT FOR ALL THESE YEA RS IN WHICH ASSESSEE HAS SHOWN NET INCOME BY LIASONING. HE HAS SUBMITTED THAT IN FINANCIAL YEAR 2002-03 AND 20 03- 4, THE RETURNED INCOME HAVE BEEN ACCEPTED UNDER SECTION 143(1) AND IN FINANCIAL YEAR 2004-05 THE RETURNED INCOME HAVE BEEN ACCEPTED, LATER ON DISALLOWANCE HAS BEEN MADE UNDER SECTION 148 OF THE ACT. THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT LD. CIT(APPEALS) ON PROPER APPRECIAT ION OF FACTS AND MATERIAL ON RECORD RIGHTLY DELETED THE PENALTY. 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS. IT IS NOT IN DISPUTE THAT ASSESSING OFFICER DISALLOWED THE LIASO NING COMMISSION FOR THE AMOUNT IN QUESTION BUT THE LD. CIT(APPEALS) DELETED THE ADDITION BY ACCEPTING THE EXPLANATION OF THE ASSESSEE. THE REVENUE PREFERRED APPEAL BEFORE THE TRIBUNAL AND TRIBUNAL VIDE ORDER DATED 23.02.2010 ALLOWED THE DEPARTMENTAL APPEAL BY UPHOLDING THE ORDER OF THE ASSESSING OFFICER IN MAK ING THE ADDITION OF RS. 41,14,518/-. COPY OF THE JUDGE MENT IS PLACED ON RECORD. THE TRIBUNAL IN THE ORDER PRE CISELY NOTED THAT ASSESSEE HAS FAILED TO EXPLAIN WITH EVID ENCE THE NATURE OF SERVICES RENDERED BY THE SUB AGENT. THE TRIBUNAL ALSO NOTED THAT ONUS IS UPON ASSESSEE TO ESTABLISH THAT EXPENSES HAVE BEEN INCURRED FOR THE 11 PURPOSE OF BUSINESS. THE ORDER OF THE TRIBUNAL HAS BEEN CONFIRMED BY THE HON'BLE HIGH COURT. IN THE BACKGROUND OF THESE FACTS, IT IS CLEAR THAT THE ASS ESSEE IN EARLIER YEARS WAS DOING THE SAME BUSINESS ACTIVI TIES AND IN EARLIER YEAR, THE ASSESSEE IN PROFIT & LOSS ACCOUNT HAS SHOWN THE BUSINESS INCOME ON LIASONING BY DECLARING NET INCOME ON LIASONING IN PROFIT & LOSS ACCOUNT. THE DETAILS OF THE SAME ARE PLACED ON REC ORD. THE ASSESSEE PRODUCED THE SUB AGENTS BEFORE ASSESSI NG OFFICER FOR EXAMINATION AND THEIR STATEMENTS HAVE B EEN RECORDED IN WHICH THEY HAVE CONFIRMED RECEIPT OF COMMISSION FROM THE ASSESSEE WHICH WERE SUBJECTED T O TDS AND SERVICE TAX CHARGES. THE ASSESSEE ALSO PRODUCED COPIES OF THE BILLS RAISED BY THE SUB AGEN T WHICH ARE SUPPORTED BY THEIR STATEMENTS. THE AUTHORITIES BELOW, HOWEVER, DID NOT ACCEPT EXPLANAT ION OF THE ASSESSEE BECAUSE ASSESSEE FAILED TO PROVE WH AT SERVICES, SUB AGENTS HAVE RENDERED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. 7(I) IT IS ADMITTED FACT THAT ASSESSEE BEING INDI VIDUAL WAS RUNNING THE BUSINESS OF RESALE OF CEMENT AS WEL L AS PROVIDING SERVICES TO M/S J.K. CEMENT WORKS AND M/S STPL OF DELHI. THE ASSESSEE WAS RUNNING SERVICES F OR THEM FOR LIASONING IN STATE OF PUNJAB AS WELL AS IN HARYANA. FOR THE STATE OF HARYANA, ASSESSEE ENGAGE D SUB AGENTS, THEREFORE, CONSIDERING THE VOLUME OF BUSINESS OF THE ASSESSEE AND NATURE OF ITS ACTIVITI ES, IT 12 IS CLEAR THAT ASSESSEE WOULD NOT HAVE CONDUCTED THE ENTIRE BUSINESS OF LIASONING BY HIMSELF AND WOULD B E REQUIRED TO ENGAGE SUB AGENTS FOR PERFORMING THE BUSINESS ACTIVITIES OF THE ASSESSEE. MAY BE, ASSES SEE IS NOT ABLE TO SATISFY THE AUTHORITIES BELOW AS TO WHA T SERVICES HAVE BEEN RENDERED BY THE SUB AGENTS AND LIASONING COMMISSION HAVE BEEN DISALLOWED, HOWEVER, BY ITSELF, WOULD NOT PROVE THAT THE EXPLANATION OF THE ASSESSEE WAS INCORRECT OR FALSE. IT IS WELL SETTLE D LAW THAT FINDINGS GIVEN IN THE ASSESSMENT ORDER ARE REL EVANT AND HAVE PROBATIVE VALUE BUT THESE ALONE ARE NOT CONCLUSIVE TO ATTRACT THE LEVY OF THE PENALTY. THE LEVY OF PENALTY IS NOT AUTOMATIC IN EACH AND EVERY CASE AND IT DEPENDS UPON FACTS AND CIRCUMSTANCES OF EACH CASE. IT IS WELL SETTLED LAW THAT QUANTUM AND PENALTY PROCEEDINGS ARE INDEPENDENT AND DISTINCT PROCEEDING S AND THE ASSESSEE IN THE PENALTY PROCEEDINGS STILL C OULD EXPLAIN THAT LEVY OF THE PENALTY IS NOT JUSTIFIED E VEN IF QUANTUM ADDITION HAVE BEEN CONFIRMED BY THE AUTHORI TIES BELOW. HON'BLE SUPREME COURT IN THE CASE OF M/S RAJASTHAN SPINNING & WEAVING MILLS 2009-TIOL-63-SC HELD THAT ON EVERY DEMAND, PENALTY IS NOT AUTOMATIC. HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS NATH BROS. E XIM INTERNATIONAL LTD. 288 ITR 670 HELD AS UNDER : THE ASSESSEE HAD CLAIMED DIVIDEND INCOME AS HIS BU SINESS INCOME AND ACCORDING TO THE ASSESSEE IT WAS ENTITLED TO A DEDU CTION UNDER CLAUSE (BAA) OF THE EXPLANATION TO SECTION 80HHC(4C) OF THE INCOME-TAX ACT, 1961. T HE ASSESSING OFFICER DISALLOWED THE CLAIM AND IMPOSED PENALTY. THE TRIBUNAL 13 CAME TO THE CONCLUSION THAT THE ASSESSEE HAD DISCLOSED A LL THE FACTS, AND THERE- FORE EVEN THOUGH IT HAD MADE AN ERRONEOUS CLAIM WHI CH COULD NOT BE JUSTIFIED IN LAW, THAT BY ITSELF DID NOT ATTRACT THE PENAL PR OVISIONS OF THE ACT. ON APPEAL : TO THE HIGH COURT: HELD, DISMISSING THE APPEAL, THAT THERE WAS FULL DISCLOSU RE OF ALL RELEVANT MATERIAL. IT COULD NOT BE SAID THAT THE CONDUCT OF THE ASSESSEE ATTRACTED THE PRO- VISIONS OF SECTION 271(L)(C). THE CANCELLATION OF P ENALTY WAS JUSTIFIED. 7(II) HON'BLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETROPRODUCTS PVT.LTD. 322 ITR 158 HELD AS UNDER : A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE INCOME-TAX ACT,1961 SUGGESTS THAT IN ORDER TO B E COVERED BY IT, THERE HAS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. SECONDLY , THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTION 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INFORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE, THE ASSESSEE CANNOT BE HEL D GUILTY OF FURNISHING INACCURATE PARTICULARS. IN ORD ER TO EXPOSE THE ASSESSEE TO PENALTY, UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISIONS, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOUNT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE THAT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE, BECAUSE THAT IS THE ONLY DOCUMENT WHERE THE ASSESSEE CAN FURNISH THE PARTICULARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, THE LIABILITY WOULD ARISE. TO ATTRACT PENALTY, THE DETAILS SUPPLIED IN THE RETURN MUST NOT BE ACCURATE , 14 NOT EXACT OR CORRECT, NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FALSE THERE IS NO QUESTIO N OF INVITING THE PENALTY U/S 271(1)(C). A MERE MAKIN G OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSE LF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULAR S REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. 8. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE LIGHT OF MATERIAL ON RECORD, IT IS CLEA R THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESS EE SUBMITTED COMPLETE DETAILS OF SUB AGENTS RENDERING SERVICE FOR ASSESSEE IN STATE OF HARYANA. THEIR STATEMENTS WERE RECORDED IN WHICH THEY HAVE CONFIRM ED HAVING RECEIVED THE PAYMENT AFTER DEDUCTION OF TDS AND SERVICE TAX. THE ASSESSEE, THUS, HAS DISCLOSED ALL THE MATERIAL FACTS TO THE REVENUE AUTHORITIES. IN THE ASSESSMENT YEAR 2005-06, IN THE ORIGINAL SCRUTINY PROCEEDINGS, THE ASSESSING OFFICER ALLOWED SIMILAR CLAIM OF THE ASSESSEE ON THE SAME SET OF FACTS. THEREFOR E, THERE IS NO FINDING BY THE AUTHORITIES BELOW THAT A NY DETAILS OR EXPLANATIONS GIVEN BY THE ASSESSEE IN HI S RETURN ARE FOUND TO BE INCORRECT OR ERRONEOUS OR FA LSE. A MERE MAKING OF CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING INCOME OF THE ASSESSEE. THE ASSESSEE ALSO PRODUCED COMPLETE DETAILS TO SHOW THA T 15 EVEN IN PRECEDING ASSESSMENT YEARS, THE ASSESSEE WA S ENGAGED IN THE SIMILAR BUSINESS ACTIVITIES AND HAS SHOWN LIASONING INCOME ON NET BASIS. THEREFORE, CL AIM OF THE ASSESSEE COULD NOT BE SAID TO BE INCORRECT O R FALSE SO AS TO INVITE THE LEVY OF PENALTY IN THE MATTER. IT MAY ALSO BE NOTED HERE THAT THE ASSESSING OFFICER IN TH E ASSESSMENT ORDER AS WELL AS IN THE PENALTY ORDER HA S INITIATED AND LEVIED THE PENALTY UNDER SECTION 271( 1)(C) OF THE ACT FOR CONCEALMENT AND FURNISHING INACCURAT E PARTICULARS OF INCOME. THE ASSESSING OFFICER IS, THEREFORE, NOT SURE AS TO WHICH OFFENCE ASSESSEE HA S COMMITTED FOR LEVY OF THE PENALTY, WHETHER CONCEALM ENT OF INCOME OR FOR FILING INACCURATE PARTICULARS OF I NCOME. THE ASSESSEE HAS, THUS, OFFERED AN EXPLANATION SUPPORTED BY THE MATERIAL EVIDENCE ON RECORD AND EXPLANATION OF THE ASSESSEE IS NOT FOUND TO BE FALS E. THE EXPLANATION OF THE ASSESSEE HAS BEEN SUBSTANTIA TED BY MATERIAL FACTS AND EXPLANATION OF THE ASSESSEE APPEARS TO BE BONAFIDE AND IS BASED ON FACTS AND CIRCUMSTANCES OF THE CASE. THEREFORE, MERELY BECAU SE COMMISSION EXPENSES HAVE BEEN DISALLOWED IN ASSESSMENT YEAR UNDER APPEAL AND CONFIRMED BY THE APPELLATE AUTHORITY, BY ITSELF IS NO GROUND TO LEVY THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT AGAINST THE ASSESSEE. 9. CONSIDERING TOTALITY OF THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT LD. CIT(APPE ALS) ON PROPER APPRECIATION OF FACTS AND MATERIAL EVIDEN CE ON 16 RECORD, CORRECTLY DELETED THE PENALTY. THERE IS NO INFIRMITY IN THE ORDER OF THE LD. CIT(APPEALS). WE CONFIRM HIS ORDER AND DISMISS THE DEPARTMENTAL APPE AL 10. IN THE RESULT, DEPARTMENTAL APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ( ANNAPURNA GUPTA) (BHAVNESH S AINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 TH DECEMBER,2016. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD