M/s. Ishwar Arts, Surat V. The Income tax Officer,Ward-2(2), Baroda

ITA 3217/AHD/2009

• Counselvise Citation: 321720514 RSA 2009
• Duration Of Justice: 1 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 05-10-2011
• Assessment Year: 1989-1990
• Appeal Filed On: 01-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ALOK JOHRI
• Assessee Lawyers: MUHUL K PATEL
• Keywords: Period of limitation; Reasonable cause; Wrong claim; Bad and doubtful debts; Condonation of delay
• Section: 27

Judgement Text

`IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD ( BEFORE SHRI BHAVNESH SAINI, JM AND SHRI A. MOHAN AL ANKAMONY, AM) ITA NO. 3216, 3217 AND 3218/AHD/2009 A. Y.: 1988-89, 1989-90 AND 1990-91 M/S. ISHWAR ARTS, 12, PANORAMA COMPLEX, R. C. DUTTA ROAD, BARODA VS THE INCOME TAX OFFICER, WARD- 2(2), AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA AAEFM 1875 B (APPELLANT) (RESPONDENT) APPELLANT BY SHRI MUHUL K. PATEL, AR RESPONDENT BY SHRI ALOK JOHRI, CIT DR DATE OF HEARING: 05-10-2011 DATE OF PRONOUNCEMENT: 14-10-2011 O R D E R PER BHAVNESH SAINI: ALL THE APPEALS BY THE SAME ASSESSEE ARE DIRECTED AGAINST THE DIFFERENT ORDERS OF THE CIT(A)-II, BARODA DATED 13-08-2009, FOR ASSESSMENT YEARS 1988 -89, 1989-90 AND 1990-91, CHALLENGING THE LEVY OF PENALTY U/S 27 1 (1) ( C ) OF THE IT ACT. 2. ACCORDING TO THE OFFICE, THE APPEALS OF THE ASSE SSEE ARE TIME BARRED BY 7 DAYS. THE ASSESSEE EXPLAINED IN THE APP LICATION FOR CONDONATION OF DELAY THAT DUE TO SHIFTING OF THE OF FICE OF GROUP AT BOMBAY, APPEALS COULD NOT BE FILED ON TIME. THE LEA RNED DR HAS NO OBJECTION FOR CONDONATION OF DELAY OF NOMINAL DAYS IN FILING THE APPEALS. ITA NO.3216, 3217 AND 3218/AHD/2009 M/S. ISHWAR ARTS VS THE ITO, WARD-2 (2), BARODA 2 CONSIDERING THE EXPLANATION OF THE ASSESSEE AND SUB MISSION OF THE LEARNED DR, WE ACCEPT THE EXPLANATION OF THE ASSESS EE THAT APPEALS COULD NOT BE FILED DUE TO REASONABLE CAUSE WITHIN T HE PERIOD OF LIMITATION. THEREFORE, DELAY IN FILING THE APPEALS IS CONDONED. 3. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL ON RECORD POINTED BY THE PARTIES. IT WAS S UBMITTED THAT THE ISSUE IS SAME IN ALL THE APPEALS AND THE PARTIES HA VE ARGUED MAINLY IN ASSESSMENT YEAR 1988-89 FOR THE PURPOSE OF DISPOSAL OF ALL THE APPEALS BEING ISSUE IDENTICAL AND IT IS STATED ORDE R IN ASSESSMENT YEAR 1988-89 MAY BE FOLLOWED IN THE REMAINING APPEA LS. 4. BRIEFLY, THE FACTS AS NOTED IN THE IMPUGNED ORD ER FOR ASSESSMENT YEAR 1988-89 MAINLY ARGUED BY THE PARTIE S ARE THAT THE RETURN OF INCOME WAS FILED 30-06-1987 DECLARING A TOTAL INCOME OF RS.4,09,920/-. ADDITION OF RS.7,62,910/- WAS MADE ON ACCOUNT OF COMMISSION PAID ON HIGH SEAS SALES. THE ASSE SSEE PREFERRED APPEAL AGAINST THE ORDER OF THE AO. THE CIT(A) VIDE ORDER DATED 16-03-1992 ALLOWED PARTIAL RELIEF IN RESPECT OF ADD ITION ON ACCOUNT OF HIGH SEA SALES COMMISSION. THE DEPARTMENT AS WELL A S THE ASSESSEE PREFERRED SECOND APPEAL AGAINST THE ORDER OF THE CIT(A). THE ITAT VIDE ITA NO. 1637/AHD/1992 UPHELD THE ADDI TION MADE BY THE AO FOLLOWING ITS DECISION IN THE CASE OF PANORA MA PLASTICS FOR ASSESSMENT YEAR 1988-89 IN ITA NO. 2029 AND 1428/AH D/1992 DATED 13-05-2005. ON RECEIPT OF THE ORDER OF THE ITAT, TH E AO ISSUED A SHOW NOTICE TO THE ASSESSEE SEEKING REASONS FOR NOT LEVYING PENALTY ITA NO.3216, 3217 AND 3218/AHD/2009 M/S. ISHWAR ARTS VS THE ITO, WARD-2 (2), BARODA 3 U/S 271(L) (C) OF THE IT ACT. BEFORE THE AO, THE AS SESSEE SUBMITTED THAT THE FIRM HAD PAID HIGH SEAS SALES COMMIS SION DURING THE YEAR UNDER REFERENCE TO THE FOLLOWING PARTIES:- I) PMP AUTO INDUSTRIES LTD. RS.2,76,805/- II) MAHARASHTRA PLASTIC SILK MILLS RS.1,05,450/- III) SHIV SHANKAR & CO, RS.3,80,6 55/- FOR THE SERVICES RENDERED BY THESE PARTIES THE FIRM PAID HIGH SEAS SALES COMMISSION TO THESE PARTIES AT A RATE OF RS.5 00 PER MT FOR MATERIAL SOLD BY THE FIRM. TO ESTABLISH THESE PAYME NTS THE FIRM HAD FILED CONFIRMATION LETTERS IN RESPECT OF THESE PART IES. THE RECIPIENTS OF THIS COMMISSION ARE ALSO ASSESSED TO TAX AND COMPLE TE DETAILS WERE FILED DURING THE COURSE OF ASSESSMENT/APPELLATE PRO CEEDINGS. THE UNDISPUTED FACTS ON RECORD ARE: I) THE IMPORT OF PLASTIC RAW MATERIAL AND ITS SALE ON HIGH SALE BASIS. II) RECEIPT OF PAYMENTS FOR THE SALE OF GOODS ON HI GH SEAS BASIS BY CROSSED ACCOUNT PAYEE CHEQUE OR CROSSED ACCOUNT DRAFT WHICH WERE IN THE BANK AND WERE CLEAR ED THROUGH THEIR BANKERS. III) PAYMENT OF COMMISSION ON THE SALES EFFECTED TH ROUGH THE RESPECTIVE PARTIES. IV) PAYMENT OF COMMISSION MADE BY ACCOUNT PAYEE CHEQUES. V) CONFIRMATION BY THE PARTIES RECEIVIN G COMMISSION ITA NO.3216, 3217 AND 3218/AHD/2009 M/S. ISHWAR ARTS VS THE ITO, WARD-2 (2), BARODA 4 OF HAVING RENDERED SERVICES AND RECEIVING COMMI SSION IN CONSIDERATION THEREOF. THE PAYMENT OF COMMISSION WAS EVIDENCED BY THE ENTR IES IN THE BOOKS OF ACCOUNTS. THE AMOUNT OF EXPENDITURE WAS RE ASONABLE AND AS PER THE PREVALENT IN THE MARKET DURING PERIOD. T HE ONLY DISPUTE REVOLVED AROUND THE SANCTITY OF EVIDENCE SUBMITTED BY THE ASSESSEE THAT SOME WORK WAS DONE FOR WHICH COMMISSION WAS PA ID. AS PER THE ASSESSEE, IT HAD PLACED ALL INFORMATION ON RECORD T O PROVE THAT SALES WERE EFFECTED AND THE COMMISSION WERE PAID ON SUCH SALES. FURTHER, THE ASSESSEE SUBMITTED THAT THERE WAS NO EVIDENCE T O COME TO THE CONCLUSION THAT EITHER THE ALLEGED PAYMENT WAS NOT REAL OR IT NOT INCURRED BY THE FIRM IN THE CHARACTER OF TRADE OR I T WAS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSIN ESS. RELIANCE WAS PLACED ON THE DECISION OF THE ITAT, AHMEDABAD IN TH E OF SADHANA TALKIES VS. ITO 41 TTJ 63 WHERE ON IDENTICAL FACTS THE AO LEVIED PENALTY U/S 271 (L) (C) AND THE TRIBUNAL DELETED TH E PENALTY OBSERVING THAT: 'THE TRIBUNAL'S ORDER IN QUANTUM APPEAL CLEARLY SHOWED THAT THE ASSESSEE HAD MADE AN UNJUSTIFIED CL AIM. HOWEVER, THE QUESTION IS WHETHER THE ASSESSEE HAD CONCEALED ANY FACTS OR PARTICULARS OF ITS INCOME. WE ARE UNABLE TO FIND THAT THE ASSESSEE WAS GUILTY OF THAT . THE FINDING OF GUILT U/S. 271(L) (C) BY THE INCOME-TAX OFFICER AND CONFIRMED BY THE COMMISSIONER IS A CONCLUSION DRAWN FROM THE FACTS AND EVIDENCE SUPPLIED BY THE ASSESSEE. BUT THAT DOES NOT MEAN THAT THE ASSESSEE HAD CONCEALED ANY RELEVANT FACTS OR EVIDENCE. CONCEALME NT CAN ONLY BE OF FACTS AND NOT OF CONCLUSIONS TO BE D RAWN FROM FACT. THE ALLEGATION OF SUPPLYING OF INACCURAT E PARTICULARS DOES NOT TAKE THE CASE ANY FURTHER FOR THE ITA NO.3216, 3217 AND 3218/AHD/2009 M/S. ISHWAR ARTS VS THE ITO, WARD-2 (2), BARODA 5 SIMPLE REASON THAT PARTICULARS ONLY BE OF FACTS AND NOT OF A CONCLUSION. IT MAY BE THAT THE HAD GIVEN CERTAIN DETAILS IN RESPONSE TO THE QUERIES MADE BY THE INCOME-TAX OFFI CER BUT THE FACT REMAINS THAT THESE DETAILS WERE IN FAC T SUPPLIED BEFORE THE ASSESSMENT MADE. THE ASSESSEE I N THE BEGINNING HAS SUPPLIED FACTS SUCH AS WERE NECES SARY ACCORDING TO HIM TO SUPPORT HIS CLAIM. IT WAS THEN FOR THE INCOME-TAX OFFICER TO MAKE FURTHER QUERY WHICH HE D ID AND TO WHICH THE ASSESSEE RESPONDED AS ABOVE. IT WA S THE ASSESSEES CASE THAT THE COMMISSION HAD BEEN PA ID. THE TRIBUNAL IN THE QUANTUM APPEALS HAS NOT SAID TH AT THE COMMISSION HAD NOT BEEN PAID BUT THAT THE RENDERING OF SERVICES BY RAJ HAD NOT BEEN SATISFACTORILY ESTABLI SHED. IT WAS ON THIS QUESTION OF RENDERING OF SERVICES THAT THE INCOME-TAX OFFICER ENQUIRIES AS ABOVE'. THE AO WAS NOT CONVINCED BY THE REPLY OF THE ASSESS EE AND HELD THAT THE CONFIRMATIONS WERE SCRUTINIZED DURING THE COURS E OF ASSESSMENT AND WERE FOUND UNRELIABLE. IN NUMBER OF CASES THE C OMMISSION AGENTS DID NOT EVEN KNOW THE PARTIES WHO WERE THE B UYERS OF THE RAW MATERIAL. THE AO ALSO STATED THAT EVEN IF CERTAIN S UMS WERE PAID BY THE ASSESSEE SUCH PAYMENT CANNOT BE CONSIDERED TO H AVE INCURRED FOR BUSINESS PURPOSE AND ELIGIBLE FOR DEDUCTION OUT OF THE INCOME OF THE ASSESSEE. HE THEREFORE TO LEVY PENALTY OF RS.1, 95,000/-. BEFORE THE LEARNED CIT(A) WRITTEN SUBMISSION WAS FILED AND IT WAS ARGUED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE DISAL LOWANCE OF COMMISSION BY THE ITAT WAS ON THE FACT THAT THE ASS ESSEE FIRM COULD NOT PRODUCE EVIDENCE, RECORDS ETC. REGARDING RENDER ING OF SERVICES BY THE COMMISSION AGENTS. HE FURTHER SUBMITTED THAT TH E PENALTY PROCEEDINGS ARE SEPARATE FROM ASSESSMENT PROCEEDING S AND THE FINDING IN THE ASSESSMENT PROCEEDINGS CANNOT BE A G ROUND FOR LEVY OF PENALTY. HE REITERATED THE STAND MADE BEFORE THE AO . HE ALSO ITA NO.3216, 3217 AND 3218/AHD/2009 M/S. ISHWAR ARTS VS THE ITO, WARD-2 (2), BARODA 6 SUBMITTED THAT THERE IS NO EVIDENCE IN THE ITAT'S O RDER THAT THE COMMISSION PAID WAS BOGUS. RELIANCE WAS PLACED BY T HE LEARNED COUNSEL FOR THE ASSESSEE ON THE DECISION OF THE ITA T AHMEDABAD BENCH IN THE CASE OF SADHANA TALKIES (SUPRA) AND AL SO THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF ADDI TIONAL CIT VS. DELHI CLOTH & GENERAL MILLS CO. LTD. 157, ITR 822 WHEREIN IT HAS HELD THAT THE MERE FACT THAT A CLAIM FOR EXPENDITURE STANDS D ISALLOWED DOES NOT BY ITSELF LEAD TO THE INFERENCE THAT THE ASSESSEE H AS FURNISHED INACCURATE PARTICULARS IN REGARD TO THAT ITEM. HE A LSO BROUGHT TO NOTICE OF THE LEARNED CIT(A) THAT THE PENALTY LEVIED BY T HE AO IN THE CASE OF ASSOCIATE CONCERN NAMELY M/S. VIKRAM PLASTIC LTD. H AS BEEN DELETED BY THE LEARNED CIT(A) VIDE HIS ORDER DATED 14-03-20 07. 5. THE LEARNED CIT(A) CONSIDERING THE SUBMISSION OF THE ASSESSEE IN THE LIGHT OF THE FINDINGS OF THE AUTHORITIES BEL OW AND THE TRIBUNAL ON QUANTUM CONFIRMED THE PENALTY AND DISMISSED THE APP EAL OF THE ASSESSEE. THE FINDINGS OF THE LEARNED CIT(A) IN PAR A 2.3 AND 3 ARE REPRODUCED AS UNDER: 2.3. I HAVE CONSIDERED THE SUBMISSIONS OF THE AUTHORIZED REPRESENTATIVE AND THE PENALTY ORDER. TH E ASSESSING OFFICER WHILE MAKING THE ADDITION WITH RE GARD TO COMMISSION PAYMENT VERIFIED FROM THE PURCHASERS REGARDING THE EXISTENCE OF THE MIDDLEMAN. THE PARTY WHO HAD PURCHASED THE RAW MATERIAL FROM THE APPELLANT E ITHER DENIED OR DID NOT CONFIRM THE EXISTENCE OF THE MIDD LEMAN IN THE TRANSACTION. THE ASSESSING OFFICER NOTED THA T THE ASSESSEE HAD SOLD RAW MATERIAL ON HIGH SEAS SALES COMMISSION BASIS TO PARTIES AT VARIOUS PLACES IN TH E COUNTRY SUCH AS PUNE, MUMBAI, LUCKNOW, AHMEDABAD, NEW DELHI, KOLKATTA, KANPUR, BANGLORE, MYSORE, ITA NO.3216, 3217 AND 3218/AHD/2009 M/S. ISHWAR ARTS VS THE ITO, WARD-2 (2), BARODA 7 YAVATMAL, MADHURAI ETC. ON VERIFICATION FROM THE RECIPIENTS OF THE COMMISSION M/S. SHIV SHANKAR & CO ., M/S. MAHARASHTRA PLASTIC SILK MILLS PVT. LTD. AND M /S. PMP AUTO INDUSTRIES LTD. THE ASSESSING OFFICER NOTED TH AT M/S. SHIV SHANKAR & CO. DID NOT EXIST AT THE GIVEN ADDRE SS AND WAS NOT ASSESSED TO INCOME-TAX UNDER THE GIVEN INCO ME- TAX NUMBER, M/S. MAHARASHTRA PLASTIC SILK MILLS PVT . LTD. DID NOT CLAIM ANY TRAVELING EXPENSES FOR THE CORRESPONDING PREVIOUS YEAR, M/S. PMP AUTO INDUSTRI ES LTD. COULD NOT PROVIDE CONFIRMATION THAT EITHER THE DIRECTORS OR ITS EMPLOYEES HAD VISITED THE PLACES W HEREIN THE SALES WERE MADE. THE ASSESSING OFFICER CONCLUDE D THAT THE ONLY REASONABLE INFERENCE THAT CAN BE DRAW N IS THAT, THOUGH PAYMENTS MAY HAVE BEEN MADE TO THE ABO VE THREE PARTIES, SUCH PAYMENTS WERE MADE FOR REASONS BEST KNOWN TO THE ASSESSEE, AND WERE NOT FOR THE PURPOSE OF THE BUSINESS OF THE FIRM. THE CIT(A) GAVE PART RELI EF TO THE APPELLANT HOLDING THAT WHERE THE BUYERS HAVE ADMITT ED THE TRANSACTION THROUGH THESE COMMISSION AGENTS COMMISS ION PAYMENT IS AN ADMISSIBLE DEDUCTION. WHERE NO SUCH EVIDENCE EXIST THE DISALLOWANCE OF THE COMMISSION M ADE BY THE ASSESSING OFFICER IS SUSTAINED. THE HONBLE TRIBUNAL HELD THAT THE ASSESSEE HAS CLAIMED TO HAVE AN AGREEMENT WITH THE COMMISSION AGENT BUT NO SUCH AGREEMENT WAS PRODUCED BEFORE ANY OF THE LOWER AUTHORITIES OR BEFORE US. THE ASSESSEE HAS ALSO NOT PRODUCED ANY EVIDENCE WITH REGARD TO THE ALLEGE D INFORMATION, IF ANY, SUPPLIED BY THE COMMISSION AGE NT. THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE CONCERNED AGENT M/S. SHIV SHANKAR & CO. HOWEVER, TH EY WERE NOT PRODUCED. IT COULD NOT BE ESTABLISHED WHAT SERVICE WAS BY THE PMP AUTO INDUSTRIES LTD, AND WHE THER THE PAYMENT OF COMMISSION WAS FOR BUSINESS PURPOSES . THE BALANCE SHEET OF M/S. SHIV SHANKAR & CO. DOES N OT SHOW THE NAME OF THE ASSESSEE AND THERE IS NO RECEI PT OF COMMISSION AS PER THE PROFIT AND LOSS ACCOUNT. THE HONBLE 1TAT ALSO OBSERVED THAT THE ASSESSEE HAS AL SO NOT BROUGHT ON RECORD ANY EVIDENCE, EITHER DOCUMENT ARY OR ORAL, TO ESTABLISH THAT ANY SERVICES WERE RENDER ED BY THE COMMISSION AGENTS. THEY ALSO OBSERVED THAT IF T HE ITA NO.3216, 3217 AND 3218/AHD/2009 M/S. ISHWAR ARTS VS THE ITO, WARD-2 (2), BARODA 8 ASSESSEE HAD PAID COMMISSION OF SEVERAL LACS OF RUP EES FOR GETTING INFORMATION, MOST OF IT WOULD HAVE BEEN IN WRITING CONTAINING IMPORTANT INFORMATION ABOUT THE PROSPECTIVE BUYERS. THE HONBLE ITAT HELD THAT IT IS NOT PROVED THAT THE TRANSACTION OF SALES HAVE TAKEN PLA CE THROUGH COMMISSION AGENTS. THERE IS NO EVIDENCE THA T THE SO CALLED COMMISSION AGENTS BROUGHT IN PARTIES TO W HOM THE SALE WAS MADE. THE HONBLE ITAT THEREFORE REVE RSED THE ORDER OF THE CIT(A). FROM THE ABOVE DISCUSSION IT CAN BE CONCLUDED THAT THE CLAIM MADE BY THE ASSESSEE OF MAKING PAYMENT FOR COMMISSION FOR HIGH SEAS SALES DOES NOT STAND ESTABLISHED AS PER THE HON BLE ITAT'S ORDER. THE SO CALLED COMMISSION AGENTS I.E. SHIV SHANKAR & CO. AND M/S. PMP AUTO INDUSTRIES LTD . HAVE ALSO NOT REFLECTED THESE AMOUNTS IN THEIR PROF IT AND LOSS ACCOUNT. THE APPELLANT HAS CLAIMED EXPENSES FO R MAKING THE PAYMENT, BUT THE REASONS FOR MAKING THE PAYMENT DO NOT STAND EXPLAINED. IT IS AN ESTABLISHE D PRINCIPLE THAT THE APPELLANT CAN CLAIM EXPENSES WHI CH IS WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF BUSINESS. THE HIGHEST FACT FINDING AUTHORITY HAS HE LD THAT THE CLAIM OF COMMISSION PAYMENT BY THE APPELLANT CA NNOT BE CONSIDERED FOR THE PURPOSE OF BUSINESS. FROM THE ABOVE IT CAN BE CONCLUDED THAT THE ASSESSEE FURNISH ED INACCURATE PARTICULARS OF HIS INCOME. HE CLAIMED EXPENSES WHICH COULD NOT BE ESTABLISHED TO HAVE BEE N INCURRED FOR THE PURPOSE OF BUSINESS. HENCE, THE ASSESSING OFFICER WAS JUSTIFIED IN LEVY OF PENALTY U/S. 271(L) (C). 3. IN THE RESULT, THE APPEAL IS DISMISSED. 6. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND R EFERRED TO PB- 33, THE ORDER OF THE TRIBUNAL ON QUANTUM IN WHICH T HE TRIBUNAL CONFIRMED THE ORDER OF THE AO DISALLOWING THE ENTIR E COMMISSION BY FOLLOWING THE ORDER IN ANOTHER CASE OF PANORAMA PLA STICS. THE ORDER ITA NO.3216, 3217 AND 3218/AHD/2009 M/S. ISHWAR ARTS VS THE ITO, WARD-2 (2), BARODA 9 IN THE CASE OF PANORAMA PLASTICS IS REPRODUCED IN T HE ORDER OF THE TRIBUNAL IN WHICH IN PARA 11 HELD THAT SINCE THE AS SESSEE HAS NOT BEEN ABLE TO PROVE THAT THE COMMISSION WAS PAID TO THE COMMISSION AGENTS FOR THE SERVICES RENDERED BY THEM THE ORDER OF THE LEARNED CIT(A) WAS REVERSED AND THE ORDER OF THE AO WAS UPH ELD WITH REGARD TO DISALLOWANCE OF COMMISSION. THE TRIBUNAL ON QUAN TUM ORDER FOUND THAT THE FACTS AND CIRCUMSTANCES IN THE CASE OF PAN ORAMA PLASTICS ARE SIMILAR TO THE CASE OF THE ASSESSEE AND ACCORDI NGLY DISALLOWANCE MADE BY THE AO WAS CONFIRMED. THE LEARNED COUNSEL F OR THE ASSESSEE, THEREFORE, SUBMITTED THAT THERE IS NO FIN DING BY THE TRIBUNAL THAT CLAIM OF THE ASSESSEE WAS BOGUS OR INCORRECT. HE HAS ALSO REFERRED TO THE FINDINGS OF THE AO IN THE ASSESSMEN T ORDER TO SHOW THAT EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTED A S CORRECT BUT NO FINDING IS GIVEN THAT CLAIM OF THE ASSESSEE WAS INC ORRECT OR BOGUS AND ALSO REFERRED TO THE FINDINGS OF THE AO TO SHOW THA T THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURE OF INSULATED PLASTIC HO USEHOLD ARTICLES AND THE ASSESSEE IS IMPORTING RAW MATERIAL SUCH AS HIGH DENSITY POLYETHYLENE AND SOLD THE RAW MATERIAL TO VARIOUS PARTIES WITHIN THE COUNTRY ON HIGH SEA SALE BASIS AND SUBMITTED THAT F OR THAT PURPOSE THE ASSESSEE HAS TO PAY COMMISSION BECAUSE THE BUSI NESS IS CONDUCTED THROUGH OUT THE COUNTRY. HE HAS SUBMITTED THAT THE COMMISSION AGENTS HAVE CONFIRMED RECEIPT OF THE COM MISSION FROM THE ASSESSEE AND THEY HAVE FILED CONFIRMATION. THER EFORE, EXPLANATION OF THE ASSESSEE SHOULD NOT HAVE BEEN DISBELIEVED BY THE AUTHORITIES BELOW AND THAT IT IS NOT A CASE OF CONCEALMENT OF I NCOME OR FILING OF INACCURATE PARTICULARS OF INCOME AND SUBMITTED THAT THE ORDER OF THE LEARNED CIT(A) IN THE CASE OF M/S. VIKRAM PLASTIC L TD. (SUPRA) HAS ITA NO.3216, 3217 AND 3218/AHD/2009 M/S. ISHWAR ARTS VS THE ITO, WARD-2 (2), BARODA 10 BEEN CONFIRMED BY THE TRIBUNAL BY DISMISSING THE AP PEAL IN ITA NO.2127 AND 2192/AHD/2007 DATED 26-10-2007. HE HAS SUBMITTED THAT MERELY BECAUSE THE COMMISSION WAS DISALLOWED B Y THE AO ON QUANTUM BECAUSE REPLY OF THE ASSESSEE WAS NOT FOUND SATISFACTORY BUT IT WAS NOT HELD THAT COMMISSION WAS BOGUS OR IN CORRECT. THEREFORE, PENALTY SHOULD NOT HAVE BEEN LEVIED IN T HE MATTER. 7. ON THE OTHER HAND, THE LEARNED DR RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE H AS MADE CLAIM OF COMMISSION EXPENSES WHICH WAS DISALLOWED BY THE AO. THE FINDINGS OF THE AO HAVE BEEN CONFIRMED BY THE TRIBUNAL ON ME RIT; THEREFORE, THE FINDING OF FACT AGAINST THE ASSESSEE HAS REACHE D FINALITY. IT WAS NOT PROVED THAT COMMISSION EXPENSES WERE INCURRED W HOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. HE HAS SUBMITTED THAT ENQUIRIES WERE CONDUCTED BY THE AO FROM THE PURCHASERS OF THE RAW MATERIAL IN WHICH EITHER THEY HAVE DENIED OR THEY HAVE NOT CONFIRMED THE INVOLVEMENT OF ANY MIDD LEMAN IN THE TRANSACTIONS. THEREFORE, THE FINDINGS OF THE AO CLE ARLY PROVE THAT THE ASSESSEE FURNISHED INACCURATE PARTICULARS AND ALSO CONCEALED THE PARTICULARS OF INCOME. THE AO HAS REFERRED TO THE R ESULTS OF ENQUIRIES AND CONFIRMED THE ADDITION ON MERIT IN THE ASSESSME NT ORDER WHICH HAVE BEEN CONFIRMED. THE ASSESSEE IS NOT ABLE TO SU BSTANTIATE WHATEVER PLEA WAS TAKEN BEFORE THE AUTHORITIES BELO W AND SUBMITTED THAT SINCE THE CLAIM OF THE ASSESSEE WAS REJECTED I N THE ABSENCE OF ANY EVIDENCE, THEREFORE, THE CLAIM OF THE ASSESSEE WAS INCORRECT AND BOGUS AND AS SUCH PENALTY IS LEVIABLE IN SUCH CIRCU MSTANCES. THE LEARNED DR RELIED UPON THE DECISION OF ITAT AHMEDAB AD BENCH IN ITA NO.3216, 3217 AND 3218/AHD/2009 M/S. ISHWAR ARTS VS THE ITO, WARD-2 (2), BARODA 11 THE CASE OF GUJARAT STATE FINANCIAL SERVICES LTD. V S ACIT, 39 SOT 570 IN WHICH IT WAS HELD AS UNDER: CONCLUSION ASSESSEE WAS LIABLE TO PENALTY UNDER S. 271 (1) ( C ) IN RESPECT OF DISALLOWANCE OF CLAIM FOR DEDUCTION OF PROVISION FOR BAD AND DOUBTFUL DEBTS AND PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENT AS THERE WAS NOTHING TO SUGGEST THAT THE CLAIM REGARDING DEDUCTI ON FOR EITHER PROVISION FOR BAD AND DOUBTFUL DEBTS OR DIMINUTION IN VALUE OF INVESTMENT WAS BONA FIDE OR SUPPORTED BY ANY PROVISIONS UNDER THE ACT. WHERE THE ASSESSEE FAILED TO SUBSTANTIATE THEIR EXPLANATI ON THAT THEY WERE NOT AWARE OF PROVISIONS OF EXPLANATI ON INTRODUCED BY THE FINANCE ACT, 2001 W. E. F. 1 ST APRIL, 1989 OR THAT THE RBI GUIDELINES OVERRIDE THE PROVISIONS OF THE ACT OR THAT THEIR EXPLANATION WAS BONA FIDE, CIT(A) WAS JUSTIFIED IN UPHOLDING THE LE VY OF PENALTY ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME IN RELATION TO PROVISION FOR BAD AND DOUBTFUL DEBTS AND PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENTS. HE HAS ALSO RELIED UPON THE ORDER OF ITAT, DELHI BE NCH IN THE CASE OF SHRI PRAMOD MITTAL VS ACIT DATED 15-07-2011 IN WHIC H EXPLANATION OF THE ASSESSEE WAS NOT FOUND BONA FIDE FOR SET OFF OF BROUGHT FORWARD LOSSES, THEREFORE, IT WAS HELD THAT IT WILL AMOUNT TO CONCEALMENT OF INCOME. HE HAS ALSO RELIED UPON THE ORDER OF HONBL E DELHI HIGH COURT IN THE CASE OF PSB INDUSTRIES PVT. LTD. IN IT A NO.792/DEL/2011 DATED 11-07-2011 IN WHICH THE PENALTY WAS CONFIRMED EVEN ON DETERMINATION OF THE ANNUAL RENTAL VALUE AND IT WAS HELD THAT EXPLANATION OF THE ASSESSEE WAS NOT BONA FIDE. THER EFORE, PENALTY WAS CONFIRMED. ITA NO.3216, 3217 AND 3218/AHD/2009 M/S. ISHWAR ARTS VS THE ITO, WARD-2 (2), BARODA 12 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE FINDINGS OF THE AUTHORITIES BELOW. IT IS ADMITTED F ACT THAT THE AO WHILE MAKING THE ADDITION WITH REGARD TO COMMISSION PAYME NT VERIFIED FROM THE PURCHASERS REGARDING THE EXISTENCE OF MIDDLEMAN . THE PARTIES WHO HAD PURCHASED THE RAW MATERIAL DURING THE YEAR EITHER DENIED OR DID NOT CONFIRM THE EXISTENCE OF MIDDLEMAN IN THE T RANSACTION. THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE OR MATERIAL BEFORE THE AUTHORITIES BELOW TO PROVE THAT COMMISSION EXPENSES WERE INCURRED WHOLLY OR EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE ASSESSEE IS NOT ABLE TO SUBSTANTIATE ANY PLEA OF DEDUCTION OF E XPENSES AT ANY STAGE OF THE QUANTUM PROCEEDINGS OR PENALTY PROCEED INGS. NO AGREEMENT WITH THE COMMISSION AGENTS IS FILED. NO E VIDENCE OF ANY SERVICES RENDERED BY THE COMMISSION AGENTS WAS FILE D ON RECORD. THE DETAILED ENQUIRIES CONDUCTED BY THE AO ARE NOTED IN THE ASSESSMENT ORDER. THUS, THE AO MADE PROPER ENQUIRIES IN TO THE MATTER WITH REGARD TO CLAIM OF THE ASSESSEE FOR DEDUCTION ON AC COUNT OF COMMISSION PAYMENT AND FOUND THAT THE ASSESSEE MADE AN INCORRECT AND BOGUS CLAIM. IT IS NOT A CASE WHERE ON MERE AS SUMPTION THE COMMISSION IS DISALLOWED. THE DEPARTMENT HAS, THERE FORE, UNEARTHED A REAL FACT OF CONCEALMENT OF INCOME. THE ASSESSEE COULD NOT SUBSTANTIATE THE PLEA BEFORE ANY OF THE AUTHORITIES BELOW. WHATEVER SUBMISSION WAS RAISED BY THE ASSESSEE WAS NOT FOUND TO BE BONA FIDE. COMMISSION AGENTS HAVE NOT RENDERED ANY SERVI CES FOR THE ASSESSEE. THUS, THESE FACTS WOULD SHOW THAT THE ASS ESSEE HAD MADE FALSE AND BOGUS CLAIM OF THE ENTIRE EXPENDITURE FOR THE PURPOSE OF DEDUCTION. ITAT AHMEDABAD BENCH IN THE CASE OF HETA L CHANDRAJIT SHAH VS ACIT IN ITA NO.1434/AHD/2010 DATED 28-01-20 11 ITA NO.3216, 3217 AND 3218/AHD/2009 M/S. ISHWAR ARTS VS THE ITO, WARD-2 (2), BARODA 13 CONSIDERING THE ISSUE OF PENALTY IN THE LIGHT OF TH E EXPLANATION (1) TO SECTION 271 (1) (C) OF THE IT ACT AND CONSIDERING T HE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF HARPRASAD A ND COMPANY LTD., 328 ITR 53, CONFIRMED THE PENALTY AND DISMISS ED THE APPEAL OF THE ASSESSEE. THE FINDINGS IN THIS ORDER IN PARA 6 TO 9 ARE REPRODUCED AS UNDER: 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD. EXPLANATION (1) TO SE CTION 271 (1) (C) READS AS UNDER: [EXPLANATION 1.WHERE IN RESPECT OF ANY FACTS MATE RIAL TO THE COMPUTATION OF THE TOTAL INCOME OF ANY PERSO N UNDER THIS ACT, (A) SUCH PERSON FAILS TO OFFER AN EXPLANATION OR OFFERS AN EXPLANATION WHICH IS FOUND BY THE [ASSESSING] OF FICER OR THE [COMMISSIONER (APPEALS)][OR THE COMMISSIONER ] TO BE FALSE, OR (B) SUCH PERSON OFFERS AN EXPLANATION WHICH HE I S NOT ABLE TO SUBSTANTIATE [AND FAILS TO PROVE THAT SUCH EXPLANATION IS BONA FIDE AND THAT ALL THE FACTS REL ATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF HIS TOT AL INCOME HAVE BEEN DISCLOSED BY HIM], THEN, THE AMOUNT ADDED OR DISALLOWED IN COMPUTING T HE TOTAL INCOME OF SUCH PERSON AS A RESULT THEREOF SHA LL, FOR THE PURPOSES OF CLAUSE (C) OF THIS SUB-SECTION, BE DEEMED TO REPRESENT THE INCOME IN RESPECT OF WHICH PARTICU LARS HAVE BEEN CONCEALED. 7. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF TRAVELING EXPEN SES WHICH REVEALS THAT THE HUSBAND OF THE ASSESSEE VISI TED PARIS AND AFTER EXAMINING THE CLAIM THE AO NOTED TH AT THE HUSBAND OF THE ASSESSEE IS NOT AN EMPLOYEE OF THE ASSESSEE AND THAT FOREIGN TRAVEL WAS NOT UNDERTAKEN BY ITA NO.3216, 3217 AND 3218/AHD/2009 M/S. ISHWAR ARTS VS THE ITO, WARD-2 (2), BARODA 14 THE ASSESSEE OR BY ANY OF HER EMPLOYEES. THIS WAS T HE SUFFICIENT REASON TO DISALLOW THE CLAIM OF THE ASSE SSEE. IT WAS FURTHER FOUND THAT THE HUSBAND OF THE ASSESSEE IS A PARTNER IN M/S. EVEREST FIBER GLASS INDUSTRIES AND THE ASSESSEE DID NOT GET ANY BENEFIT IN THE BUSINESS AS A RESULT OF FOREIGN VISIT OF HER HUSBAND. THE DEPARTM ENT HAS UNEARTHED THE REAL FACT OF CONCEALMENT OF INCOME. T HE ASSESSEE COULD NOT SUBSTANTIATE THE PLEA OF THE ASS ESSEE AT THE ASSESSMENT STAGE AS WELL AS AT THE PENALTY S TAGE. WHATEVER SUBMISSION WAS RAISED WAS NOT FOUND TO BE BONA FIDE. THE HUSBAND OF THE ASSESSEE DID NOT REND ER ANY SERVICES FOR THE BUSINESS OF THE ASSESSEE. THES E FACTS WOULD SHOW THAT THE ASSESSEE HAS MADE FALSE A ND BOGUS CLAIM OF THE EXPENDITURE FOR THE PURPOSE OF DEDUCTION. IT WAS NOT A ROUTINE DISALLOWANCE OF THE EXPENDITURE ON ESTIMATE BASIS. THE ASSESSEE HAS NOT OFFERED ANY EXPLANATION AND WHATEVER EXPLANATION WA S OFFERED WAS NOT SUBSTANTIATED THROUGH ANY MATERIAL OR EVIDENCE ON RECORD. THE HONBLE DELHI HIGH COURT ON IDENTICAL FACTS IN THE CASE OF CIT VS HARPARSHAD AN D COMPANY LTD. 328 ITR 53 HELD AS UNDER: HELD, THAT THE REASONS GIVEN BY THE TRIBUNAL FOR QUASHING THE PENALTY PROCEEDINGS WERE IRRELEVANT, NOT GERMANE TO THE ISSUE AND THE TRIBUNAL HAD LOST SIGHT OF ASPECTS WHICH HAD BEEN CONCLUSIVELY ESTABLISHED IN THE QUANTUM PROCEEDINGS. THE TRIBUNAL HAD FAILED TO TAKE NOTE OF THE FACT THAT PART OF THE CLAIM AS COMMISSION WAS ALLOWED TO THE ASSESSEE NOT BECAUSE R HAD RENDERED ANY SERVICES BUT BECAUSE J HAD RENDERED SERVICES FOR WHICH IT WAS PAID 1 PER CENT OF THE COMMISSION BY R OUT OF THE 3 PER CENT RECEIVED BY HER. AS FAR AS COMMISSION TO R WAS CONCERNED, IT WAS ACCEPTED BY THE TRIBUNAL IN THE QUANTUM PROCEEDINGS THAT SHE DID NOT RENDER ANY SERVICES AT ALL. THE ASSESSEE HAD FAILED TO OFFER ANY EXPLANATION IN RESPECT OF THE ADDITION OF RS.1,83,078 AND IT COULD BE DEEMED TO HAVE ITA NO.3216, 3217 AND 3218/AHD/2009 M/S. ISHWAR ARTS VS THE ITO, WARD-2 (2), BARODA 15 CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF, BY VIRTUE OF THIS EXPLANATION. THE TRIBUNAL WAS NOT JUSTIFIED IN DELETING THE PENALTY IMPOSED BY THE INCOME-TAX OFFICER UNDER SECTION 271 (1) (C) OF THE ACT. THE FINDINGS GIVEN IN ASSESSMENT PROCEEDINGS ARE RELEVANT AND HAVE PROBATIVE VALUE. WHERE THE ASSESSEE PRODUCES NO FRESH EVIDENCE OR PRESENTS ANY ADDITIONAL OR FRESH CIRCUMSTANCES IN PENALTY PROCEEDINGS, HE WOULD BE DEEMED TO HAVE FAILED TO DISCHARGE THE ONUS PLACED ON HIM AND THE LEVY OF PENALTY COULD BE JUSTIFIED. EVEN IF THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS, BUT ON THE BASIS THEREOF THE CLAIM WHICH IS MADE IS EX FACIE BOGUS, IT MAY STILL ATTRACT PENALTY PROVISION. THE EXPLANATION APPENDED TO SECTION 271 (1) (C) OF THE ACT ENTIRELY INDICATE THE ELEME NT OF STRICT LIABILITY ON THE ASSESSEE FOR CONCEALMENT OR FOR GIVING INACCURATE PARTICULARS WHILE FILING RETURN. THE OBJECT BEHIND ENACTMENT OF SECTION 271 (1) (C) READ WITH THE EXPLANATIONS INDICATE THAT THE SECTION HAS BEEN ENACTED TO PROVIDE FOR A REMEDY FOR LOSS OF REVENUE. THE PENALTY UNDER THAT PROVISION IS A CIVIL LIABILITY. WILLFUL CONCEALMENT IS NOT AN ESSENTIAL INGREDIENT FOR ATTRACTING CIVIL LIABILITY AS IS THE CASE IN THE MATER OF PROSECUTION UNDER SECTION 276C OF THE ACT. 8. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT EXPLANATION (1) TO SE CTION 271 (1) (C) OF THE IT ACT IS CLEARLY ATTRACTED IN T HE CASE OF THE ASSESSEE FOR THE PURPOSE OF LEVY OF PENALTY. TH E ITA NO.3216, 3217 AND 3218/AHD/2009 M/S. ISHWAR ARTS VS THE ITO, WARD-2 (2), BARODA 16 DECISIONS RELIED UPON BY THE LEARNED COUNSEL FOR TH E ASSESSEE WOULD NOT SUPPORT THE CASE OF THE ASSESSEE . WE, THEREFORE, DO NOT FIND ANY MERIT IN THE CASE OF THE ASSESSEE. THE SAME IS ACCORDINGLY DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. 9. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN VIEW THAT EXPLANATION (1) TO SECTION 271 (1) (C) OF THE IT ACT , IT IS CLEARLY PROVED THAT THE ASSESSEE FAILED TO SUBSTANT IATE ANY EXPLANATION BEFORE THE AUTHORITIES BELOW AND MADE A FALSE AND BOGUS CLAIM OF DEDUCTION OF COMMISSION BEFORE THE AUTHORI TIES BELOW. THEREFORE, THE DECISION IN THE CASE OF SMT. HETAL C HANDRAJIT SHAH (SUPRA) CLEARLY SUPPORTS THE FINDINGS OF THE AUTHOR ITIES BELOW. THE DECISIONS CITED BY THE LEARNED DR ALSO SUPPORT THE CASE OF THE REVENUE AUTHORITIES. IN THE CASE, THE DECISION OF THE HONBLE DELHI HIGH COURT IS CONSIDERED; THEREFORE, THE ORDER OF T HE TRIBUNAL IN THE CASE OF M/S. VIKRAM PLASTIC LTD. (SUPRA) RELIED UPO N BY THE LEARNED COUNSEL FOR THE ASSESSEE WOULD NOT SUPPORT THE CASE OF THE ASSESSEE. IN VIEW OF THE ABOVE DISCUSSIONS, WE CONF IRM THE FINDINGS OF THE AUTHORITIES BELOW AND DISMISS THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 1988-89. 10. IT IS ADMITTED FACT THAT THE ISSUE IN THE REMAI NING APPEALS OF THE ASSESSEE IS SAME EXCEPT NAMES OF COMMISSION AGENTS. THEREFORE, FOLLOWING THE ORDER FOR ASSESSMENT YEAR 1988-89 WE CONFIRM THE LEVY OF PENALTY IN THE REMAINING ASSESSMENT YEARS AS WEL L. IN THE RESULT, REMAINING TWO APPEALS OF THE ASSESSEE ARE ALSO DISM ISSED. ITA NO.3216, 3217 AND 3218/AHD/2009 M/S. ISHWAR ARTS VS THE ITO, WARD-2 (2), BARODA 17 11. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD