Transport Corporation of India Ltd, Secunderabad V. Asst. CIT, Circle - 2 (3), Hyderabad

ITA 195/HYD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69817 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 18-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R LAXMAN
• Keywords: Revised return
• Section: 6; 12; 10; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.195/HYD/2013 (ASSESSMENT YEAR 2005 - 06) M/S. TRANSPORT CORPORATION OF INDIA LTD., SECUNDERABAD. ( PAN AAACT 7966 R ) V/S ASSTT. COMMISSIONER OF INCOME - TAX CIRCLE 2(3), HYDERABAD (APPELLANT) (RESPONDENT) ITA NO.233/HYD/2013 (ASSESSMENT YEAR 2005 - 06) DY. COMMISSIONER OF INCOME - TAX CIRCLE 2(3), HYDERABAD V/S M/S. TRANSPORT CORPORATION OF INDIA LTD., SECUNDERABAD. ( PAN AAACT 7966 R ) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI Y.RATNAKAR RESPONDENT BY : SHRI R.LAXMAN DATE OF HEARING 11.09.2013 DATE OF PRONOUNCEMENT 27.09.2013 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THESE ARE CROSS - APPEALS ONE BY THE ASSESSEE AND THE OTHER BY THE REV ENUE - DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) III, HYDERABAD DATED 11 TH DECEMBER, 2012, CONFIRMING PART OF THE PENALTY OF R S .1,08,77,115 LEVIED BY THE ASSESSING OFFICER UNDER S.271(1)(C) OF THE INCOME - TAX ACT, 1961 FOR THE AS SESSMENT YEAR 2005 - 06. ITA NO. 195 & 233 /HYD/ 13 M/S. TRANSPORT CORPORATION OF INDIA LTD., SECUNDERABAD. 2 2. FACTS OF THE CA S E IN BRIEF ARE THAT THE ASSESSEE IS A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY IN T ER E STED. ASSESSEE FILED ITS R ETURN OF IN C OM E FOR THE ASSESSMENT YEAR 2005 - 06 ON 20.10.2005 ADMITTING TAXABLE INCOME FROM BUSINESS OF RS.2,74,16,880 . THE SAME WAS REVISED TO RS.2,61,95,600 VIDE REVISED COMPUTATION FIL E D BY THE ASSESSEE ON 11.12.2007. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER S.143(3) OF THE ACT ON 28.12.2007, DISALLOWING COMMISSION PAYMENTS A GGREGATING TO RS.2,97,24,985 AND DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.5,69,20,590. ON APPEAL, THE CIT(A) CONFIRMED THE SAID DISALLOWANCE FOLLOWING THE APPELLATE ORDERS ON THIS VERY ISSUE OF DISALLOWANCE IN RESPECT OF COMMISSION PAYMENT FOR EA RLIER YEARS. ON FURTHER APPEAL, THE TRIBUNAL GAVE SOME RELIEF TO THE ASSESSEE, BY SUSTAINING THE DISALLOWANCE ONLY TO THE EXTENT OF 15%, AND DIRECTING THE ASSESSING OFFICER TO RECOMPUTE THE INCOME ACCORDINGLY. 3. WHILE COMPLETING THE ASSESSMENT AS ABOVE, THE ASSESSING OFFICER ALSO INITIATED PROCEEDINGS FOR LEVY OF PENALTY UNDER S .271(1)(C) OF THE ACT. IN R E SPON S E TO THE PENALTY NOTICE, THE ASSESSEE VIDE I T S LETTER DATED 2.3.2010 FIL E D ITS EXPLANATION, CONTENDING IN T ER ALIA THAT THEY HAVE N E ITHER CONCEALED THEIR INCOME NOR FURNI S H E D INACCURATE PARTICULARS OF SUCH INCOME; THAT THERE HAS BEEN NO FAILURE ON THEIR PART TO DISCLOSE FULLY AND TRULY ALL M A TERIAL FACTS NECESSARY FOR THE COMPLETION OF ASSESSMENT ; THAT THEY HAVE GIVEN ALL THE DETAILS, DOCUM E N T S AND IN F O R M A TION WITHOUT WITHHOLDING ANY INFORMATION REL A TING TO COMPUTATION OF TH E IR INCOME AND PLACED ALL FACTUAL MATERIAL TO THE COMPUTATION OF THEIR INCOME; THAT THE VOUC HERS READ WITH RELEVANT CONSIGNMENT NOTES FUR NISHED BY THE ASSESSEE CONTAIN ALL PARTICULARS AND DETAILS, AND THEY WERE DULY SIGNED BY THE PAYEES AND FROM THE SAME IT WAS POSSIBLE TO IDENTIFY THE PARTICULAR CONSIGNMENT IN RESPECT OF WHICH COMMISSION PAYM E N T S HAVE BEEN MADE; THAT ALL PARTICULARS AND DE TAILS O F THE CO NSI GNMENTS AND COMMI S SION PAYM E N T S WERE FURNISHED AND WERE AVAILABLE FROM THE RECORDS; THAT TH E ITA NO. 195 & 233 /HYD/ 13 M/S. TRANSPORT CORPORATION OF INDIA LTD., SECUNDERABAD. 3 COMMISSION PAYMENTS HAVE BEEN MADE IN CON S I D ERATION OF THE PAYEES RENDERING SERVICES IN SECURING BUSINESS; THAT THE COMMI S SION PAYM E N T S WERE AS P E R TH E ESTABLISHED TRADE PRACTICE PREVAILING IN THE TRANSPORT BUSINESS AND SUCH COMMISSION PAYM E N T S WERE BEIN G MADE SIN C E INCEPTION AND FOR THE LAST S EVERAL DECADES; T H AT THEY HAVE NOT MAINTAINED A RECORD OF THE ADDRESSES OF THE LARGE NUMBER OF PAYEES TO WHOM COMMISSION WAS PAID NOR IT WAS P OSSIBLE TO COLLECT THE S AME AFTER LAPSE OF SO MANY YEARS. IT HAS ALSO BE E N FURTH E R STA T ED THAT THE DISALLOWANCE OF COMMISSION PAYMENT W AS DISPUTED BY THEM AND NO PENALTY IN RESPECT OF SUCH DISALLOWANCE CAN BE LEVIED . THUS STATING THE ASSESSEE REQUESTED THAT THE PENALTY PROCEEDINGS IN I TIATED BE DROPPED. THE ASSESSING OFFICER NOT CONVINCED WITH THE EXPLANATION OF THE ASSESSEE. HE OBSERVED THAT IT HAS BEEN CATEGORICALLY BEEN ADMITTED DURING THE FINALIZATION OF THE ASS ESSMENT PRO C EE D IN G S AND THE PENALTY PROCEEDINGS AS WELL THAT THEY HAVE NO T MAINTAINED A RECORDS OF THE ADDRESSES OF THE LARGE NUMBER OF PAYEES TO WHOM COMMISSION HAS BEEN PAID AND IT W A S NOT POSSIBLE TO COLLECT THE SAME. WH E N TH E ASSESSEE MADE A CLAIM OF INCURRING CERTAIN EXPENDITURE WHICH HAS A MATERIAL B E ARING ON THE PROFITS DIS C LOSED FOR INCOME - TAX PURPOSES, THE ASSESSING OFFICER NOTED THAT IT IS FOR THE ASSESSEE TO SUBSTANTIATE THAT THE EXPENDITURE CLAIMED WAS GENUINE, WHICH THE ASSESSEE FAILED TO PROV E IN THE INSTANT CASE. HE ACCORDINGLY CONCLUDED THAT IT IS A FIT CA S E FOR IMPOSITION OF PENALTY, AND CONSEQUENTLY IMPOSED PENALTY OF RS.1,08,77,115, VIDE ORDER OF PENALTY DATED 29.3.2010. 4. ON APPEAL BEFORE THE CIT(A), THE ASSESSEE FILED ELABORATE W RITTEN SUBMI S SION S AND CONTENDED THAT THE DISALLO W ANCE OF COMMISSION WAS MADE MERELY ON ESTIMATION BASIS AND THAT THE ASSESSEE HAS NO T FURNISHED ANY INACCURATE PARTICULARS. IT WAS ALSO CONTENDED THAT THERE WAS NEITHER DEFAULT IN FURNISHING RELEVANT PARTIC ULARS/DETAILS NOR INTENTION TO EVADE TAX ON THE PART OF THE ASSESSEE. IT WAS ALSO SUBMITTED THAT OUT ITA NO. 195 & 233 /HYD/ 13 M/S. TRANSPORT CORPORATION OF INDIA LTD., SECUNDERABAD. 4 OF THE TOTAL COMMI S SION PAYMENTS WHICH WERE DISCLOSED IN THE PROFIT & LOSS ACCOUNT, THE ASSESSING OFFICER HAD ALLOWED THOSE COMMISSION PAYM E N T S WHICH WERE MADE BY CHEQUE. THE CIT(A) TOO DID NOT FIND MERIT IN THE CONTENTIONS OF THE ASSESSEE. HE DID NOT AGREE WITH THE ASSESSEE THAT THERE WAS JUST AN ESTIMATED DISALLOWANCE OF COMMISSION PAYMENTS. HE OBSERVED THAT WHEREVER THE PARTIES ARE IDENTIFIABLE AND TH E TRANSACTIONS ARE GENUINE, THE ASSESSING OFFICER HAS ALLOWED SUCH PAYM E N T S AND IT IS ONLY WHERE THE ASSESSEE DELIBERATELY DID NO T PROV I DE ANY DETAILS THAT THE DISALLOWANCE WAS MADE. HE FURTHER OBSERVED THAT THERE WAS INFLATION OF EXPENSES, AND PRECISE EX TENT OF SUCH INFLATION IS KNOWN ONLY TO THE ASSESSEE. WITH THESE OBSERVATIONS, T H E CIT(A) CONCLUDED THAT THE AFFAIRS OF THE ASSESSEE ARE ARRAN G ED IN SUCH A MANNER THAT THE ASSESSING OFFICER CANNO T DECIPHER THE TRUTH AND TH E RE IS AMPLE SCOPE OF MANAGING THE AMOUNT OF EXPENSES TO BE DEBITED . HE FURTHER NOTED THAT THE FACT OF INFLATION OF EXPENSES IN THE CA S E OF THE ASSESSEE ON THE ISSUE OF COMMISSION HAS BEEN CONFIRMED BY THE TRIBUNAL AS WELL AS HONBLE HIGH COU R T OF ANDHRA PRADESH. TAKING NOTE OF THE REL EVANT OBSERVATIONS OF THE TRIBUNAL IN THIS BEHALF, THE CIT(A) AGREED WITH THE ASSESSING OFFICER THAT IT IS A FIT CASE FOR THE LEVY OF PENALTY, BUT CONSIDERING THE RELIEF GRANTED BY THE ITAT IN QUANTUM PROCEEDINGS BY RESTRICTING THE DISALLOWANCE TO 15%, DIR ECTED THE ASSESSING OFFICER TO RECOMPUTE THE PENALTY TAKING INTO ACCOUNT ONLY THE ADDITION THAT ULTIMATELY REMAINED SUSTAINED. 5. AGGRIEVED BY THE PENALTY SUSTAINED BY TH E CIT(A) , ASSESSEE PREFERRED ITS APPEAL ITA NO.195/HYD/2013 BEFORE US, WHEREAS, THE REVENUE FILED ITS APPEAL ITA NO.233/HYD/2013 CONTESTING THE RELIEF GRANTED BY THE CIT(A). ITA NO. 195 & 233 /HYD/ 13 M/S. TRANSPORT CORPORATION OF INDIA LTD., SECUNDERABAD. 5 6. LEARNED COUNSEL FOR THE ASSESSEE, REITERATING THE CONTENTIONS URGED BEFORE THE LOWER AUTHORITIES SUBMITTED THAT IT IS THE DISALLOWANCE OUT OF COMMISSION PAYM ENTS, WHICH WAS MADE IN THE QUANTUM PROCEEDINGS, ON ACCOUNT OF ASSESSEES INABILITY TO SUBSTANTIATE SUCH PAYM E N T S TO THE SATISFACTION OF THE ASSESSING OFFICER, THAT HAS LED TO THE IMPOSITION OF THE IMPUGNED PENALTY FOR CONCEALMENT. HE SUBMITTED THAT EVERY ADDITION MADE IN THE ASSESSMENT PROCEEDINGS CANNOT LEAD TO THE INFERENCE OF THE ASSESSEE HAVING EITHER CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME TO WARRANT LEVY OF PENALTY UNDER S.271(1)(C). IT IS SUBMITTED THAT THE ONLY GROUND ON WHICH THE DISALLOWANCE OF COMMISSION PAYMENT WAS MADE BY THE ASSESSING OFFICER WAS THE ASSESSEES INABILITY TO FURNISH ADDRESSES OF THE RECIPIENTS OF THE COMMISSION PAYMENTS, THOUGH NONE OF THE INFORMATION OR EVIDENCE ON RECORD WAS CONSIDERED OR EXAMINE D. HE SUBMITTED THAT THE CIT(A) IN HIS IMPUGNED ORDER DATED 11.12.2012 MERELY EXTRACTED THE CONCLUDING PORTION OF THE ORDER OF THE TRIBUNAL AND UPHELD LEVY OF 15% PENALTY, WITHOUT EXAMINING THE EVIDENCE ON RECORD. LEARNED COUNSEL SUBMITTED THAT THE EXPLA NATION OF THE ASSESSEE AGAINST THE PENALTY PROPOSED WAS NOT EVEN CONSIDERED BY THE CIT(A) AND CONSEQUENTLY THE ORDER OF THE CIT(A) IS TOTALLY SILENT ON THE CONTENTION OF TH E ASSESSEE THAT THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS FURNISHED ALL TH E RE LEVANT DETAILS, PARTICULARS AND INFORMATION REGARDING COMMI S SION PAYM E N T S WITHOUT WITHHOLDING ANY IN F O R M A TION INCLUDING ALL BOOKS OF ACC O UN T S, VOUCHERS FOR COMMISSION PAYM E N T S AND PLACED ALL TH E RELEVANT FACTS MATERIAL TO THE COMPUTATION OF TOTAL INCOME. IT IS SUBMITTED THAT EVEN IN RESPECT OF COMMISSION AMOUNTS PAID BY REMITTANCE THROUGH BANK TO NON - R ESIDENTS, PENALTY IS L E VIED W ITHOU T LOOKING AT THE FACTS OF TH E CA S E. HE SUBMITTED THAT EVEN THE RELEVANT PORTION OF THE O R DER OF THE TRIBUNAL RELIED UPO N BY THE CIT(A) IN THE IMPUGNED ORDER DOES NO T STATE THAT THE 15% DISALLOWANCE SUSTAINED REPR E SENTS THE FICTITIOUS EXPENDITURE OR NOT GENUINE EXPENDITURE. THE SAID DISALLOWANCE WAS SUSTAINED ME R ELY ON THE ITA NO. 195 & 233 /HYD/ 13 M/S. TRANSPORT CORPORATION OF INDIA LTD., SECUNDERABAD. 6 GROUND OF THE SAME BEING EXCESSIVE PAYMENT, THAT TOO DETERMIN ING THE QUANTUM OF SUCH EXCESS BY RESORTING TO ESTIMAT ION . 7. THE LEARNED COUNSEL SUBMITTED THAT THE COMMISSION PAYMENT VOU C H E RS GIVE FULL D E TAILS O F THE PAYM E NT OF COMMISSION WHICH CAN BE LINKED FULLY TO THE CONSIGNMENTS TRANSPO R TED. HE FUR THER SUBMITTED THAT A LL DE T AILS ARE FULLY AVAILABLE IN TH E SE COMMISSION PAYMENT VOUCH E RS. SEVENTY NINE AFFIDAVITS , DULY SIGNED BY THE SENIOR MANAGERS OF THE ASSESSEE COMPANY, AFFIRMING PAYM E NT OF COMMISSION AT VARIOUS ACCOU N TIN G CEN T ERS , WERE FILED . IT IS ALSO SUBMITTED THAT PAYMENT OF COMMISSION IS A NORMAL TRADE PRACTICE FOR GETTING BUSINESS IN TRANSPORT INDUSTRY AND THERE ARE COMPARABLE CASES GIVEN WHERE COMMISSION WAS PAID. IT IS PL E ADED THAT OMISSION TO FURNISH AD D RES S ES IS HELD TO BE THE SOLE FACT OR FOR LEVY OF PENALTY. THE EXPLANATION THAT THE ADDRES S ES OF THE PAYEES WERE NOT MAINTAINED AND COULD NO T BE SUPPLIED , AND IT WOULD BE IN THE NATURE OF THINGS WHICH GREATLY JEOPARDIZE THE BUSINESS INTERESTS OF THE ASSESSEE COMPANY, WAS COMPLETELY IGNORED. EVEN THE ESTIMATED DISALLOWANCES MADE VARIED F R OM Y E AR TO Y E AR AND BETWEEN THE ASSESSING OFFICER AND APPELLATE AUTHORITIES. SUCH DISALLOWANCE ESTIMATED VARIED DRASTICALLY, RIGHT FROM 5% TO EVEN 100% BY VARIOUS AUTHORITIES AND FOR VARIOUS YEARS, AND THU S, T H E RE WAS NO RIGIDITY IN THE MATTER OF ESTIMATION AND IT WAS MERELY BY WAY OF APPROXIMATION. IT WAS A L SO PLEADED THAT PAYMENT OF COMMISSION WAS ACCEPTED RIGHT F R OM THE ASSESSMENT YEAR 1976 - 77 ONWARDS AND IT WAS NOT AS IF IT DID NOT EXI S T IN THE PRECEDI NG YEARS. ACTUALLY, IT WAS OVER THE PERIOD, IT WAS GREATLY DECLINING AS A PER C ENTAGE OF THE TURNOVER. 8. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT ASSESSEE HAS OFFERED AN EXPLANATION, WHICH WAS BONA FIDE AND IT HAS SUBSTANTIATED THE SAID EXPLANATION AND ALL FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF TOTAL I N COM E H A S B EE N FI LED BY THE ITA NO. 195 & 233 /HYD/ 13 M/S. TRANSPORT CORPORATION OF INDIA LTD., SECUNDERABAD. 7 ASSESSEE. IN THE CIR C UM S TAN C ES, IT IS SUBMITTED THAT THE EXPLANATIONS 1 TO S.271(1)(C) IS INAPPLICABLE TO THE FACTS OF THE CA S E. IN THE FACE OF OVERWHELMING EVIDENCE SUPPORTING THE PAYMENT OF COMMISSION, THE NEE D FOR PAYMENT, AND THE FACT THAT IT IS A BUSINESS RELATED EXPENDITURE, THE SOLE FACT THAT THE ADDRES S ES OF THE PAYEES COULD NOT BE S UPPLIED WILL NO T CONVERT THE CLAIM FOR A LLOWANCE OF EXPENDITURE INTO ONE OF CONCEALMENT. ANY CONCLUSION DRAWN IN RELATION TO ANY CLAIM FOR EXPENDITURE FOR MAKING AN ASSESSMENT IS NOT AUTOMATIC OR CONCLUSIVE FOR THE LEVY OF PENALTY AS WELL. 9. IN SUPPORT OF THE ABOVE CON T ENTIO N S, THE LEARNED COUNSEL RELIED ON THE FOLLOWING DECISIONS - ( A ) CIT V/S. RELIANCE PETRO PRODUCTS (P) LTD. (322 ITR 158) - SC ( B ) CIT V/S. USHA MARKETING (P) LTD. (332 ITR 334) - DEL. ( C ) CIT V/S. DEVSONS (P) LTD. (329 ITR 483) ( D ) NORTHLAND DEVELOPMENT & HOTEL CORPORATION V/S. CIT (349 ITR 363) - DEL. ( E ) ORDER DATED 6.1.2010 IN DCIT V/S. BOSTON CONSUL5TING GROUP INDIA (P)LTD. (ITA NOS.7067/MUM/2008) ( F ) ORDER DATED 25.1.2012 IN ITA NO.144 & 1445/AHD/2008 10. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, STRONGLY OPPOSING THE ABOVE CONTENTIONS OF THE ASSESSEE SUBMITTED THAT IT IS A CLEAR CUT CASE OF CONCEALMENT AND THE ASSESSING OFFICER WAS PERFECTLY JUSTIFIED IN IMPOSING THE PENALTY UNDER S.271(1)(C) WITH REFERENCE TO THE DISALLOWANCE OF ENTIRE COMMISSION PAYMENT MADE IN T HE ASSESSMENT. CONSEQUENTLY, IT IS SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN GRANTING ANY RELIEF TO THE ASSESSEE. ITA NO. 195 & 233 /HYD/ 13 M/S. TRANSPORT CORPORATION OF INDIA LTD., SECUNDERABAD. 8 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND OTHER MATERIAL AVAILABLE ON RECORD. AS ALREADY NOTED ABOVE PENALTY UNDER S.271(1)(C) OF THE ACT HAS BEEN MADE BY THE ASSESSING OFFICER WITH REFERENCE TO THE DISALLOWANCE OF ENTIRE COMMISSION PAYMENT S MADE IN THE QUANTUM PROCEEDINGS BY THE ASSESSING OFFICER . WHEN THE MATTER REACHED THE SEC OND APPELLATE STAGE, THE TRIBUNAL VIDE ITS CONSOLIDATED ORDER DATED 25.1.2012, INTER - ALIA IN ITA NO.19/HYD/2009 FOR THE ASSESSMENT YEAR 2005 - 06, LIMITED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER TO ONLY 15%. IN THIS VIEW OF THE MATTER, THE CIT(A) BY THE IMPUGNED ORDER SUSTAINED THE PENALTY LEVIED BY THE ASSESSING OFFICER ONLY WITH RESPECT TO THE DISALLOWANCE SUSTAINED IN THE QUANTUM PROCEEDINGS. 12. AT THE OUTSET , WE MAY NOTE THAT I NSOFAR AS THE RELIEF GRANTED BY THE CIT(A) IN THE MATTER OF QUA NTUM OF PENALTY, WE FIND NO MERIT IN THE GRIEVANCE OF THE REVENUE IN ITS APPEAL, ITA NO.233/HYD/2013, SINCE THERE IS NO JUSTIFICATION FOR PENALTY IN RELATION TO THAT PART OF THE ADDITION TOWARDS COMMISSION PAYMENT, WHICH ULTIMATELY STOOD DELETED. WE ACCOR DINGLY REJECT THE GROUNDS OF THE REVENUE ON THIS ASPECT AND DISMISS THE APPEAL. 13. AS FOR THE GRIEVANCE OF THE ASSESSEE IN ITS APPEAL, VIZ. ITA NO.195/HYD/2013, CRUX OF THE CONTENTION OF THE ASSESSEE IS THAT THERE IS NO DEFAULT ON THE PART OF T HE ASSESSEE AS THERE WAS FULL AND COMPLETE DISCLOSURE AND THE ASSESSEE DID ALL THAT IT COULD DURING THE QUANTUM PROCEEDINGS TO SUBSTANTIATE ITS CLAIM IN RESPECT OF COMMISSION PAYMENTS. ALL THAT WAS ATTRIBUTED TO THE ASSESSEE WAS ITS INABILITY TO FURNISH T HE ADDRESSES OF THE PAYEES OF SUCH COMMISSION, AND THE ADDITION THAT ULTIMATELY STOOD SUSTAINED WAS ONLY BY WAY OF ESTIMATION OF EXCESS AMOUNT ALLEGEDLY CLAIMED BY THE ASSESSEE. SINCE ADDITION SUSTAINED WAS ONLY BY WAY OF ESTIMATION, THE CONTENTION OF THE ASSESSEE IS THAT NO ITA NO. 195 & 233 /HYD/ 13 M/S. TRANSPORT CORPORATION OF INDIA LTD., SECUNDERABAD. 9 PENALTY COULD BE SUSTAINED WITH REFERENCE TO SUCH ESTIMATED ADDITIONS/DISALLOWANCES. IT IS A MATTER OF FACT THAT PAYMENT OF COMMISSION IS A GENERAL TRADE PRACTICE IN THE LINE OF TRANSPORT BUSINESS, IN WHICH ASSESSEE WAS CARRYING ON IT S BUSINESS. IT IS RECOGNIZING THIS PRACTICE, THAT THE HUGE COMMISSION PAYMENTS CLAIMED BY THE ASSESSEE, HAVE BEEN ALLOWED TO SOME EXTENT BY THE APPELLATE AUTHORITIES IN QUANTUM PROCEEDINGS, NOTWITHSTANDING THE DEFICIENCIES, LIKE NON - FURNISHING OF THE ADDRE SSES OF THE RECIPIENTS, IN THE VOUCHERS FILED BY THE ASSESSEE, NOTICED BY THE ASSESSING OFFICER. CONSIDERING THE NON - VERIFIABLE NATURE OF THE EXPENDITURE, AS POINTED OUT BY THE ASSESSING OFFICER, THERE IS EVERY POSSIBILITY OF INFLATION IN THE EXPENDITURE CLAIMED BY WAY OF COMMISSION PAYMENTS. AT THE SAME TIME, ON THE GROUND OF NON - VERIFIABLE NATURE ITSELF, IT WOULD BE TOO HARSH TO DISALLOW THE ENTIRE AMOUNT OF COMMISSION PAYMENTS CLAIMED BY THE ASSESSEE, NOTWITHSTANDING THE V OLUMINOUS EVIDENCE IN THE FORM OF VOUCHERS AND AFFIDAVITS, ETC. FILED BY THE ASSESSEE MERELY BECAUSE ADDRESSES OF THE PAYEES ARE MISSING, MORE PARTICULARLY SINCE SUCH COMMISSION PAYMENTS ARE IN CONSONANCE WITH THE TRADE PRACTICE PREVAILING IN TRANSPORT BUS INESS. IT IS CONSIDERING ALL THESE ASPECTS THAT DISALLOWANCE HAS BEEN SUSTAINED BY THE TRIBUNAL IN THE YEAR UNDER APPEAL, BY MAKING A REASONABLE ESTIMATION OF EXCESS AMOUNT THAT MIGHT HAVE BEEN CLAIMED BY THE ASSESSEE. SUCH ADDITION SUSTAINED BY THE TRI BUNAL IS ONLY ON ACCOUNT OF A ESTIMATION THAT THE ASSESSEE COULD HAVE AND MIGHT HAVE INFLATED THE EXPENDITURE BY WAY OF COMMISSION PAYMENTS. AS FOR THE QUANTUM PROCEEDINGS, INFERENCE DRAWN BY THE TRIBUNAL AS TO THE INFLATION IN EXPENDITURE AND CONSEQUENT A DDITION, COULD BE JUSTIFIED. BUT , THAT INFERENCE IS CONFINED TO QUANTUM PROCEEDINGS ONLY, AND IT CANNOT BE VALIDLY APPLIED EVEN IN PROCEEDINGS UNDER S.271(1)(C) OF THE ACT, IN WHICH THE MATTER NEEDS TO BE EXAMINED INDEPENDENTLY BY ASCERTAINING WHETHER THE ASSESSEE HAS EITHER CONCEALED ITS INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. THIS EXERCISE IS WARRANTED, SINCE THE PROCEEDINGS ITA NO. 195 & 233 /HYD/ 13 M/S. TRANSPORT CORPORATION OF INDIA LTD., SECUNDERABAD. 10 UNDER S.271(1)(C) ARE PENAL IN NATURE, AND CALL FOR A FINDING AS TO THE CONDUCT OF THE ASSESSEE EITHER WITH REGARD T O CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. SINCE IN THE INSTANT CASE, THE DISALLOWANCE OF OUT OF EXPENDITURE CLAIMED ON ACCOUNT OF COMMISSION PAYMENTS IS MADE, BY RESORTING TO ESTIMATION OF THE INFLATION OF SUCH EXPENDITUR E WHICH MIGHT HAVE BEEN MADE BY THE ASSESSEE, ASSESSEE CANNOT BE CONCLUSIVELY SAID TO HAVE CONCEALED THE INCOME. FURTHER, SINCE SUCH DISALLOWANCE IS MADE ON THE BASIS OF THE MATERIAL FURNISHED BY THE ASSESSEE ITSELF, ASSESSEE CANNOT BE SAID TO HAVE FURNISH ED INACCURATE PARTICULARS OF INCOME. IN ANY VIEW OF THE MATTER, THEREFORE, IT IS NOT A FIT CASE OF THE LEVY OF PENALTY UNDER S.271(1)(C) OF THE ACT. 14. WE ARE SUP P ORT E D IN TH E ARRIVING AT THE ABOVE CONCLUSION, BY THE DECISION OF THE MUMBAI BENCH OF THE T RIBUNAL IN THE CA S E OF DY. CIT V/S. BOSTON CONSULTING GROUP(INDIA) (P) LTD. (2011)12 TAXMANN.COM 278(MUM), WHEREIN CONSIDERING IMPOSITION OF PENALTY FOR CONCEALMENT IN RELATION TO AN AD HOC DISALLOWANCE OF EXPENDITURE FOR PERSONAL ELEMENT, IT HAS BEEN HELD THAT THE DISALLOWANCE ITSELF WAS NO T BEYOND DOUBT IN AS MUCH AS A VIEW WAS INDEED POSSIBLE THAT THE ASSESSEE BEING AN ARTIFICIAL JUDICIAL PERSON, ANY DISALLOWANCE FOR PERSONAL EXPENSES WAS NO T POSSIBLE; AND T HAT THE NATURE OF DISALLOWANCE THEREFORE, WAS SUCH THAT THE DISALLOWANCE PER SE, EVEN IF ACCEPTED BY THE ASSESSEE, COULD NOT BE A SOUND BASIS FOR IMPOSITION OF PENALTY. 15. FURTHER, CONSIDERING IMPOSITION OF PENALTY FOR CONCEALMENT WITH REFERENCE TO AN ESTIMATED ADDITION/DISALLOWANCE, IN THE LIGHT OF VARIOUS ASPECTS TO BE EXAMINED, FOR INVOKING PENAL PROVISIONS AND IMPOSING PENALTY, COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF P.V. RAMANA REDDY V/S. ITO, IN ITA NO.1852 - 1857/HYD/2011, VIDE ITS ORDER DATED 6.1.2012, HAS HELD AS FOLLOWS - ITA NO. 195 & 233 /HYD/ 13 M/S. TRANSPORT CORPORATION OF INDIA LTD., SECUNDERABAD. 11 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. . THE ASSESSING OFFICER IS REQUIRED TO SATISFY HIMSELF ABOUT THE CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF SUCH INCOME. IT GIVES DISCRETION TO THE ASSESSING OFFICER TO EXONERATE THE ASSESSEE FROM LEVY OF PENALTY EVEN IN CASE WHERE THE AS SESSEE HAS CONCEALED THE INCOME OR FURNISH INCORRECT PARTICULARS OF INCOME. THE EXPRESSION IF THE ASSESSING OFFICER ............ IS SATISFIED THAT IN PERSON ........ (C) HAS CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME; HE MAY DIRECT ....... S HOWS THAT THE ASSESSING OFFICER IS VESTED WITH A DISCRETIONARY POWER TO LEVY OR NOT TO LEVY ANY PENALTY IN A DESERVING CASE. IN THE CASE OF HINDUSTAN STEEL LTD VS. STATE OF ORISSA (83 ITR 26) (SC), HELD THAT PENALTY SHOULD NOT BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. THE ASSESSING OFFICER HAS TO EXERCISE HIS DISCRETION JUDICIOUSLY. IF AN ASSESSEE FILES THE REVISED RETURN THOUGH A T A LATER STAGE OR DISCLOSED TRUE INCOME, PENALTY NEED NOT BE LEVIED. NO DOUBT, MERELY OFFERING ADDITIONAL INCOME WILL NOT AUTOMATICALLY PROTECT THE ASSESSEE FROM LEVY OF PENALTY BUT IN A GIVEN CASE WHERE THE ASSESSEES CASE FORWARD WITH ADDITIONAL INCOME THOUGH AFTER DEDUCTION ON ACCOUNT OF THAT THE ASSESSEE WAS NOT IN A POSITION TO EXPLAIN PROPERLY, THE SEIZED MATERIAL AND EXPRESS REMORSE, IN HIS CONDUCT UN - HESITANTLY, THE ASSESSING OFFICER MIGHT HAVE TO EXERCISE THE DISCRETION IN FAVOUR OF SUCH ASSESSE E AS OTHERWISE THE EXPRESSION MAY IN SECTION 271(1)(C) OF THE ACT REMAINS REDUNDANT. IF IT IS UNDERSTOOD THAT IN A CASE OF ADMITTED CONCEALMENT PENALTY IS AUTOMATIC. THE DISCRETION VESTED IN THE OFFICER SHOULD BE USED NOT TO LEVY THE PENALTY. IN OUR OPINION, THE CASE BEFORE US IS MOST BEFITTING CASE TO EXERCISE SUCH DISCRETION, PARTICULARLY THERE IS DIVERGENT OF OPINION AMONG THE LOWER AUTHORITIES AS WELL AS THE TRIBUNAL WHILE DELETING OR SUSTAIN THE ADDITION. IT SHOWS THAT THERE IS NO CONCLUSIVE PRO OF THAT THE ASSESSEE ITA NO. 195 & 233 /HYD/ 13 M/S. TRANSPORT CORPORATION OF INDIA LTD., SECUNDERABAD. 12 CONCEALED INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME. FURTHER AS SEEN FROM THE FACTS OF THE CASE, TO AVOID LITIGATION THE ASSESSEE ACCEPTED THE ADDITIONS OR MADE FRESH OFFER IN THE COURSE OF THE PROCEEDINGS BEFORE THE LOWER AUTHORITIES. AFTER THE ASSESSING OFFICER HAD THE CLINCHING EVIDENCE OF CONCEALMENT THEN THE OFFER MAY NOT HAVE BEEN ACCEPTED AND THE SAME SHOULD HAVE BEEN PROCEEDED ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. THE LOWER AUTHORITIES RELIED ON PROCEEDINGS BEFORE SEVERAL STAGES FOR LEVYING THE PENALTY. THE SAME DO NOT CONSTITUTE ADMISSION FOR THE PURPOSE OF LEVYING PENALTY. THE ADDITION MADE ON THE BASIS OF MORE OR LESS ON THE OFFER MADE BY THE ASSESSEE AND THE ASSESSING OFFICER NOT BROUGHT ANY INCRIMINAT ING MATERIAL FOR CONCEALMENT AND THERE IS NO MATERIAL FOR ESTABLISHING THE CONCEALMENT INDEPENDENTLY IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE PENALTY IS NOT LEVIABLE AND THE SAME IS DELETED. 16. SINCE IN THE FACTS OF THE PRESENT CASE, THE DISALLOWANC E OUT OF COMMISSION PAYMENTS SUSTAINED BY THE TRIBUNAL IS MERELY BY ESTIMATION OF THE EXCESS AMOUNT OF EXPENDITURE WHICH THE ASSESSEE MIGHT HAVE BEEN CLAIMED BY THE ASSESSEE , AND FURTHER, SINCE SUCH DISALLOWANCE HAS BEEN MADE ON THE BASIS OF THE MATERIAL F URNISHED BY THE ASSESSEE ITSELF AND ALREADY AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THIS IS NOT A FIT CASE FOR IMPOSITION OF THE PENALTY UNDER S.271(1)(C) OF THE ACT. FURTHER, THE IMPUGNED ORDERS OF THE LOWER AUTHORITIES PROCEED MERELY ON THE BASIS OF THE FINDINGS IN THE QUANTUM PROCEEDINGS AND HAVE NOT INDEPENDENTLY EXAMINED THE MATTER IN THE PENAL PROCEEDINGS FOR LEVY OF PENALTY UNDER S.271(1)(C) OF THE ACT. EVEN ON THIS PROCEDURAL COUNT, THE PENALTY LEVIED CANNOT BE SUSTAINED. THOUGH THE ADDITIO N WAS SUSTAINED AT 15% OF THE COMMISSION PAYMENT BY THE TRIBUNAL, THAT BY ITSELF DOES NOT PROVE THAT THERE IS ANY CONCLUSIVE MATERIAL TO SUGGEST THAT THE ASSESSEE HAS EARNED EXACTLY THAT AMOUNT OF PROFIT, OUT OF THIS DISALLOWANCE DETERMINED BY THE ASSESSIN G OFFICER. PENALTY CANNOT BE LEVIED IN THIS KIND OF SITUATION. FURTHER, UNLESS THE CLAIM OF THE ASSESSEE WAS PROVED TO BE BOGUS OR THAT ANY AMOUNT WAS RECEIVED BACK BY THE ASSESSEE, THE DISALLOWANCE OF THE ITA NO. 195 & 233 /HYD/ 13 M/S. TRANSPORT CORPORATION OF INDIA LTD., SECUNDERABAD. 13 EXPENDITURE BY ITSELF, CANNOT BE A REASON FOR LEV Y OF PENALTY. THE ADDITION IS ONLY ON ACCOUNT OF DIFFERENCE IN ESTIMATION OF EXPENDITURE LIABLE FOR DISALLOWANCE MADE BY THE ASSESSING OFFICER AND THE TRIBUNAL, AND THE CLAIM OF THE ASSESSEE ITSELF WAS NOT FOUN D TO BE BOGUS. THE ASSESSING OFFICER COULD NO T P R OVE THAT TH E RE WAS WILLFUL OR GROSS NEGLIGENCE ON THE PART OF THE ASSESSEE, RESULTING THEREBY EITHER IN CONCEALMENT OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME . AS HELD BY THE ALLAHABAD HIGH COURT IN THE CASE OF CIT V/S. K.L. MANGAL SAIN(1 07 ITR 598), WHEN THE ASSESSING OFFICER IS NOT ABLE TO PROVE THAT THE ASSESSEE WAS GUILTY OF FRAUD OR GROSS OR WILLFUL NEGLIGENCE, PENALTY CANNOT BE SUSTAINED. IF, LOOKING TO THE NATURE OF THE BUSINESS, PARTICULAR METHOD OF ACCOUNTING IS ADOPTED BY THE ASSESSEE FOR BOOKING THE EXPENDITURE, BUT THE ASSESSING OFFICER IS NOT SATISFIED WITH THE METHOD OF ACCOUNTS KEPT BY THE ASSESSEE AND THE BOOK RESULTS ARE REJECTED, THERE IS NO FAILURE TO RETURN CORRECT INCOME DUE TO FRAUD, GROSS OR WILLFUL NEGLECT, AS HE LD BY THE BOMBAY HIGH COURT IN THE CASE OF CIT V/S. MOHAMMED YAKUB MOHD. IBRAHIM & CO. (143 ITR 67). SOMETIM E S, THE ASSESSING OFFICER ESTIMATES THE INCOME OF THE ASSESSEE AND TH E R E AFTER THE APPELLATE AUTHORITIES ADOPTS DIFFE RE NT METHOD AND ESTIMATES I N COM E . IN SUCH CIRCUM ST AN C ES, AS HELD BY THE PUNJAB AND HARYANA HIGH COURT IN THE C ASE OF HARGOPAL SIGH V/S. CIT(258 ITR 85), PENALTY CANNOT BE LEVIED. TO LEVY PENALTY FO R CONCEALMENT, IT IS NECESSARY THAT THE RE MU S T BE EITHER CONCEALMENT OF INCOME OR FURN ISHING OF INACCURATE PARTICULARS OF ITS INCOME BY THE ASSESSEE . AS THE ASSESSING OFFICER AND T H E APPELLATE AUTHORITY ARRIVED AT DIFFERENT ESTIMATES OF INCOME O F TH E ASSESSEE , IT CANNOT BE SAID THAT THE ASSESSEE CONC E ALED PARTICULARS OF INCOME, SO AS TO AT TRACT PENALTY. IT WAS HELD BY THE ALLAHABAD HIGH COURT IN THE CASE OF CIT V/S. RAJ BANS SINGH (276 ITR 351), THAT WHEN INCOME IS ESTIMATED BY DIFFERENT AUTHORITIES RIGHT FROM ASSESSING OFFICER TO TRIBUNAL AND IT WAS A SIMPLE CASE OF ONE ESTIMATE AGAIN ST ANOTHER ESTIMATE, AND THEREFORE, PENALTY CANNOT BE LEVIED. SIMILARLY, BOMBAY HIGH COURT IN THE CASE OF CIT V/S. BADVE (138ITR 82); ITA NO. 195 & 233 /HYD/ 13 M/S. TRANSPORT CORPORATION OF INDIA LTD., SECUNDERABAD. 14 PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT V/S. METAL PRODUCTS OF INDIA (150 ITR 714); DELHI HIGH COURT IN THE CA SE OF CIT V/S. AJAY HARI DALMIA(157 ITR 145); AND MADRAS HIGH COURT IN THE CASE OF BOMBAY HARDWARE SYNDICATE V/S. CIT(114 ITR 586) HAVE TAKEN A VIEW THAT PENALTY UNDER S.271(1)(C) WAS NOT IMPOSABLE IN RELATION TO ESTIMATED ADDITIONS BECAUSE THE FACTUM OF EITHER CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME, WERE NOT PROVED. 17. CONSIDERING TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE ON HAND IN THE LIGHT OF THE SETTLED LEGAL PRINCIPLES LAID DOWN BY VARIOUS COURTS AS DISCUSSED ABOVE, WE ARE OF THE VIEW THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY. WE ACCORDINGLY CANCEL THE ENTIRE PENALTY UN D ER S.271(1)(C) OF THE ACT LEVIED BY THE ASSESSING OFFICER. CONSEQUENTLY, APPEAL OF THE ASSESSEE IS ALLOWED. 1 8 . T O SUM UP, IN THE RESULT, WHILE APPEAL OF THE ASSESSEE BEING ITA NO.195/HYD/2013 IS ALLOWED, APPEAL OF THE REVENUE BEING ITA NO.233/HYD/2013 IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 27.09.2013 SD/ - SD/ - ( SAKTIJIT DEY ) ( CHANDRA POOJARI ) JUDICIAL MEMBER. ACCOUNTANT MEMBER. DT/ - 27 TH SEPTEMBER , 201 3 COPY FORWARDED TO: 1. M/S. TRANSPORT CORPORATION OF INDIA LTD., 306 - 307 III FLOOR, ASHOKA BHOOPAL CHAMB E RS, S.P.ROAD, SECUNDERABAD. 2. ASST . COMMISSIONER OF INCOME - TAX CIRCLE 2 ( 3 ), HYDERABAD 3. 4. 5. COMMISSIONER OF INCOME - TAX(APPEALS) III HYDERABAD COMMISSIONER OF INCOME - TAX I I HYDERABAD THE DEPARTMENTAL REPRESENTATIVE, ITAT HYDERABAD B.V.S.