INDIAN COMMERICAL CO. P.LTD, MUMBAI V. DCIT 1(2), MUMBAI

ITA 4387/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88262 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 29-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 31-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SACCHIDANAND DUBEY
• Assessee Lawyers: D J SHUKLA
• Keywords: Bonafide belief; Source of fund; Additional evidence; Wrong claim; Accommodation entries; Revised return
• Section: 131; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I , MUMBAI . , , , BEFORE SHRI D KARUNAKARA RAO , A M AND SHRI AMIT SHUKLA , J M ITA NO. 4387 /MUM/201 3 : ASST.YEAR 2007 - 2008 M/S.INDIAN COMMERCIAL CO.PVT.LTD. ORIENTAL HOUSE, 5 TH FLOOR J.TATA ROAD CHURCHGATE MUMBAI 400 020. PAN : AAACI1388Q / VS. THE DY.COMMISSIONER OF INCOME - TAX CIRCLE 1(2) MUMBAI. ( / APPELLANT) ( / RESPONDENT) /APPELLANT BY : SHRI D.J.SHUKLA /RESPONDENT BY : SHRI SACCHIDANAND DUBEY / DATE OF HEARING : 29 .01.2015 / DATE OF PRONOUNCEMENT : 13 .02.2015. / O R D E R PER AMIT SHUKLA (JM) : THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAINST THE IMPUGNED ORDER DATED 27.12.2012 , PASSED BY THE COMMI SSIONER OF INCOME - TAX (APPEALS) - 7 , MUMBAI, IN RELATION TO THE PENALTY PROCEEDINGS U/S 271(1)(C) FOR THE ASSESSMENT YEAR 2007 - 2008 . 2. THE ASSESSEE IS MAINLY AGGRIEVED BY LEVY OF PENALTY OF RS.7,50,000 U/S 271(1)(C) ON ACCOUNT OF DISALLOWANCE OF ALLEGED FICTITIOUS PAYMENT OF COMMISSION TO VARIOUS PERSONS FOR SUMS AGGREGATING TO RS.11,00,000. ITA NO. 4387 /MUM/201 3 . M/S. INDIAN COMMRCIAL CO. PVT.LTD. 2 3. BRIEF FACTS ARE THAT THE ASSESSEE IS AN INDENTING AGENT FOR VARIOUS FOREIGN PRINCIPALS AND IS ALSO ENGAGED IN TRADING IN MERCHANDISE, CHEMICALS, ETC. THE ASSESSEE HAS DISCLOSED SALES AT RS.91.20 LAKH AND HAS DERIVED COMMISSION OF RS.1.01 CRORE. THE ASSESSING OFFICER (A.O.) DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.11 LAKH ON ACCOUNT OF BUSINESS PROMOTION UNDER THE HEAD `ADMINISTRATIVE, SELLING AND OTHER EXPENSES . ON VERIFICATION OF THESE EXPENSES IT WAS FOUND THAT THE SAME HAS BEEN CLAIMED ON ACCOUNT OF PAYMENT OF COMMISSION FOR THE ORDERS PROCURED. THE LIST OF THE COMMISSION PAID TO VARIOUS PARTIES HAS BEEN NOTED BY THE A.O. IN PARA 4, PAGE 2 OF T HE ASSESSMENT ORDER. THE A.O. REQUIRED THE ASSESSEE TO FURNISH DETAILS OF SERVICES RENDERED BY THE SAID PARTIES AND ALSO REQUESTED TO PRODUCE THEM SO THAT FACTUM OF THE SERVICES RENDERED BY THEM CAN BE VERIFIED. AFTER VARIOUS REMINDERS, THE ASSESSEE COULD ONLY PRODUCE , SHRI YOGESH H.SHAH ON 24.12.2009 AND HIS STATEMENT ON OATH U/S 131 WAS RECORDED BY THE A.O. THE RELEVANT STATEMENT ON OATH AS RECORDED BY THE A.O. IS REPRODUCED HEREUNDER: - Q.NO.1 PLEASE IDENTIFY YOURSELF AND FURNISH INFORMATION ABOUT YOUR RESIDENCE AND BUSINESS AND OTHER SOURCES OF INCOME? ANS. I AM MR.YOGESH H SHAH, AGED 54 YEARS HAVING RESIDENCE AT 54/4, TULSI ASTHA, 3 RD FLOOR, SECTOR 12, VASHI, NAVI MUMBAI 400 703. I AM EARNING INCOME AS COMMISSION AGENT IN AGRICULTURAL PRODUCTS. ITA NO. 4387 /MUM/201 3 . M/S. INDIAN COMMRCIAL CO. PVT.LTD. 3 Q.N O.2 HOW DO YOU KNOW INDIAN COMMERCIAL CO. P.LTD. ANS. THIS COMPANY WAS MADE KNOWN TO ME BY SOME PERSON FROM CHEMICAL TRADE. I DO NOT REMEMBER THE NAME OF THE PERSON. Q.NO.3 DID YOU RECEIVE ANY AMOUNT FROM INDIAN COMMERCIAL CO. P LTD. DURING F.Y. 2006 - 07 ? ANS. YES. Q.NO.4 PLEASE EXPLAIN THE NATURE OF SERVICES RENDERED BY YOU TO INDIAN COMMERCIAL CO. P LTD. IN CONSIDERATION OF THIS PAYMENT ? ANS. NO, I HAVE NOT RENDERED ANY SERVICE TO INDIAN COMMERCIAL CO. P. LTD. Q.NO.5 PLEASE EXPLAIN, IF NO SERVICES RENDERED BY YOU, WHY THE PAYMENT OF RS.50,000/ - WAS RECEIVED BY YOU FROM INDIAN COMMERCIAL CO P.LTD. ? ANS. AS I STATED ABOVE, I HAVE NOT RENDERED ANY SERVICE TO INDIAN COMMERCIAL CO P LTD. THE PAYMENT OF RS.50,000/ - PAID BY THIS COMPANY TO ME IS NOTHING BUT ACCOMMODATION ENTRY PROVIDED BY ME. Q.NO.6 PLEASE EXPLAIN HOW THIS TRANSACTION INVOLVING ACCOMMODATION ENTRIES WERE ULTIMATELY SETTLED? ANS. AS I STATED ABOVE, I DID NOT KNOW ABOUT INDIAN COMMERCIAL CO P LTD. OR ANY PERSON RELATED WITH THIS COMPANY. THE CHEQUE WAS BROUGHT TO ME BY A BROKER IN THE MARKET AND AFTER CLEARING OF THE CHEQUE, I HAVE RETURNED PART OF THE AMOUNT TO THE BROKER. 3.1 THE AFORESAID STATEMENT WAS RECORDED IN THE PRESENCE OF SHRI S.M.MEHTA, TAXATION MANAGER AND THE REPRESENTATIVE OF THE ASSESSEE - COMPANY, WHO WAS GIVEN AN OPPORTUNITY TO CROSS EXAMINE SHRI YOGESH SHAH. HOWEVER, THE ASSESSEE DECLINED TO CROSS - EXAMINE THE SAID WITNESS. AFTER THE STATEMENT OF SHRI YOGESH SHAH, THE ASSESSEE VIDE LETTER DATED ITA NO. 4387 /MUM/201 3 . M/S. INDIAN COMMRCIAL CO. PVT.LTD. 4 29.12.2009 ADMITTED THAT THE PAYMENT DISCLOSED ON ACCOUNT OF COMMISSION WERE ACCOMMODATION ENTRIES AND THE SAME WAS OFFERED TO TAX AFTER STATING AS UNDER: - AS REGARDS THE STATEMENT OF MR.YOGESH H SHAH, WE HAVE MADE FURTHER ENQUIRIES IN THE MATTER. IT APPEARS THAT THE TRANSACTION IN RELATION TO THE BUSINESS PROMOTION EXPENSES AMOUNTING TO RS.11 LAKHS WERE ARRANGED / CARRIED OUT BY THE THEN VICE PRESIDENT (MARKETING) AND THE MANAGER (ACCOUNTS) OF THE COMPANY WHO HAVE SINCE LEFT THE COMPANY. IT IS NOW UNDERSTOOD THAT THE SAID EXPENSES ARE OF A DOUBTFUL NATURE AND HENCE IN ORDER TO BUY PEACE, WE OFFER THE SAID AMOUNT FOR TAXATION ON THE UNDERSTANDING THAT NO PENALTY WILL BE LEVIED. WE SUBMIT FOR YOUR HONOUR S KIND CONSIDERATION THAT THE COMPANY WAS INCORPORATED ON 04/08/1943 MORE THAN 66 YEARS AGO. IN THE ENTIRE HISTORY OF THE COMPANY, NO SUCH ACCOMMODATION TRANSACTION HAS TAKEN PLACE AND THERE HAS BEEN NO OCCASION FOR THE INCOME - TAX DEPARTMENT TO MAKE ANY ADDITION ON THIS ACCOUNT. THE COMPANY S TRACK RECORD FOR DECLARING ITS INCOME AND P AYMENT OF TAXES HONESTLY IS UNQUESTIONABLE. 3.2 ACCORDINGLY THE A.O. DISALLOWED THE SUM OF RS.11 LAKH ON THE BASIS OF SUCH SURRENDER. AGAINST THE SAID ORDER, THE ASSESSEE DID NOT PREFER ANY APPEAL. 3.3 IN THE COURSE OF THE PENALTY PROCEEDINGS , IN RESPO NSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED THAT THE TRANSACTION OF PAYMENT OF BUSINESS PROMOTION EXPENSES OF RS.11 LAKH WAS ARRANGED / CARRIED OUT BY THE THEN VICE - PRESIDENT (MARKETING) AND THE MANAGER (ACCOUNTS) OF THE COMPANY, WHO HAVE LEFT THE COMPANY AS THEY WERE FOUND TO BE ENGAGED IN FRAUD AND MISAPPROPRIATION OF FUNDS . LATER ON IT CAME TO THE KNOWLEDGE OF THE COMPANY THAT THE SAID EXPENSES WERE DOUBTFUL IN NATURE AND HENCE IN ORDER ITA NO. 4387 /MUM/201 3 . M/S. INDIAN COMMRCIAL CO. PVT.LTD. 5 TO BUY PEACE , THE SAID AMOUNT WAS OFFERED FOR TAXATION ON T HE UNDERSTANDING THAT NO PENALTY WILL BE LEVIED. IT WAS FURTHER SUBMITTED THAT THE COMPANY WAS INTO THE BUSINESS FOR MORE THAN 66 YEARS AND IN ITS ENTIRE HISTORY NO SUCH ACCOMMODATION TRANSACTION HAS TAKEN PLACE. HOWEVER, THE A.O. REJECTED THE ASSESSEE S C ONTENTION ON THE GROUND THAT IT IS AN ADMITTED FACT THAT THE PAYMENT OF COMMISSION WAS FICTITIOUS AND SUCH A SURRENDER WAS MADE ONLY WHEN THE ASSESSEE WAS CONFRONTED WITH THE STATEMENT OF ONE OF THE MONEY LENDERS. THE ASSESSEE KNOWINGLY AND INTENTIONALLY C REATED DOCUMENTS AND MADE BOGUS CLAIM OF EXPENDITURE TO EVADE TAXES . ACCORDINGLY, HE LEVIED PENALTY OF MORE THAN 200% OF THE TAX SOUGHT TO BE EVADED. 3. 4 BEFORE THE CIT(A), THE ASSESSEE JUSTIFIED THE PAYMENT OF COMMISSION ON THE GROUND THAT , IT HAS FILED CONFIRMATION OF ALL THE PARTIES IN THE COURSE OF THE ASSESSMENT PROCEEDINGS AND ALL THE PAYMENTS OF COMMISSION WAS MADE THROUGH ACCOUNT PAYEE CHEQUES DULY RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE - COMPANY. ONE OF THE PERSONS , I.E. SHRI YOGESH SHAH, WHOSE STATEMENT WAS RECORDED, COULD NOT ELUCIDATE THE SERVICES RENDERED BY HIM, BUT IT DOES NOT MEAN THAT THE COMMISSION HAD NOT BEEN PAID TO HIM. SINCE THE VICE - PRESIDENT (MARKETING) AND THE MANAGER (ACCOUNTS) HAVE LEFT THE SERVICES, IT WAS NOT POSSIBLE F OR THE COMPANY TO PROVIDE FURTHER INFORMATION. IN SUCH A SITUATION THE ASSESSEE HAD NO CHOICE BUT TO SURRENDER THE AMOUNT TO BUY PEACE. THE LEARNED CIT(A) REJECTED THE ASSESSEE S EXPLANATION AND NOTED THAT THE ASSESSEE - COMPANY HAD MADE A BOGUS CLAIM OF EXP ENDITURE, WHICH HAS RESULTED IN TO SUPPRESSION OF INCOME. IT WAS IN THE NATURE OF ACCOMMODATION ENTRY, WHICH HAS BEEN DULY BROUGHT ON RECORD BY THE A.O. IN THE FORM OF STATEMENT RECORDED ON OATH OF ONE OF THE PERSONS. THE ITA NO. 4387 /MUM/201 3 . M/S. INDIAN COMMRCIAL CO. PVT.LTD. 6 ASSESSEE S EXPLANATION CANNOT BE HELD TO BE BONAFIDE IN THE LIGHT OF THE MATERIAL ON RECORD. ACCORDINGLY HE CONFIRMED THE PENALTY LEVIED BY THE A.O. 4 . BEFORE US THE LEARNED COUNSEL, FILED AN APPLICATION FOR ADMISSION OF FRESH EVIDENCE, WHICH IS A COPY O F COMPLAINT LODGED WITH THE SENIOR INSPECTOR OF POLICE, MARINE DRIVE POLICE STATION, AGAINST MR. VIBHAKAR AND MR.VERNEKAR, WHO HAVE MISAPPROPRIATED THE FUNDS OF THE ASSESSEE - COMPANY. HE SUBMITTED THAT THESE TWO EMPLOYEES OF THE ASSESSEE - COMPANY HAD CHEATED AND COMMITTED FRAUD IN THE ACCOUNT OF THE ASSESSEE - COMPANY BY INFLATING THE EXPENSES AND DEBITING BOGUS PAYMENTS. IMMEDIATELY WHEN THE ASSESSEE CAME TO KNOW ABOUT SUCH A FRAUD, THEY HAVE BEEN TERMINATED FROM THE SERVICES. BESIDES THAT, HE SUBMITTED THAT SO FAR AS THE ASSESSEE IS CONCERNED, IT WAS UNDER A BONAFIDE BELIEF THAT PAYMENTS DEBITED ARE GENUINE AND IT WAS NOT AWARE OF THE CHEATING AND MISAPPROPRIATION DONE BY ITS TWO SENIOR - MOST EMPLOYEES. BESIDES THIS, HE SUBMITTED THAT THE ASSESSEE HAS MADE SURRE NDER TO BUY PEACE TO AVOID PENAL PROVISION , BECAUSE IT WAS BEYOND THE CONTROL OF THE ASSESSEE - COMPANY TO UNDO THE MISCHIEF DONE BY ITS EMPLOYEES. THEREFORE, THE PENALTY LEVIED BY THE A.O. SHOULD BE DELETED. HE SUBMITTED THAT THE CONFIRMATION S OF THE ACCOUN T OF THESE PARTIES WERE ALSO FURNISHED GIVING THE ENTIRE PARTICULARS OF COMMISSION PAYMENT ALONG WITH TDS PAYABLE ON SUCH COMMISSION. IN THE LIGHT OF THESE DOCUMENTS, IT CANNOT BE HELD THAT THE ASSESSEE HAS MALAFIDELY CLAIMED BOGUS PAYMENT OF COMMISSION WH EN THE TWO EMPLOYEES HAVE TRIED TO CREATE FICTITIOUS PAYMENT FOR THEIR OWN PERSONAL BENEFIT. ITA NO. 4387 /MUM/201 3 . M/S. INDIAN COMMRCIAL CO. PVT.LTD. 7 5 . ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT , ONCE THE ASSESSEE HAD COME TO KNOW ABOUT THE FICTITIOUS PAYMENT, IT COULD HAVE FILE D REVISED RETURN U/S 139 (5) . IT WAS ONLY WHEN THE A.O. CORNERED THE ASSESSEE WITH AN INQUIRY AND THE STATEMENT ON OATH OF ONE OF THE RECIPIENTS OF COMMISSION PAYMENT , WHICH CONCLUSIVELY PROVED THAT IT WAS PURELY AN ACCOMMODATION ENTRY, THEN ONLY THE ASSESS EE CAME FORWARD FOR SURRENDER OF THE COMMISSION PAYMENT AS INCOME OF THE ASSESSEE. EVEN IN THE ENTIRE POLICE COMPLAINT, AS HAS BEEN FILED BY THE LEARNED COUNSEL AS ADDITIONAL EVIDENCE, THERE IS NO MENTION ABOUT THE PAYMENT OF COMMISSION AND RATHER IT DEALS WITH CERTAIN OTHER KINDS OF MISAPPROPRIATION OF FUNDS. ONCE , IT WAS NOT A VOLUNTARY OFFER AND THE ASSESSEE S CLAIM HAS BEEN FOUND TO BE FALSE AND FICTITIOUS, THEN PENALTY U/S 271(1)(C) HAS TO BE LEVIED. THUS, HE STRONGLY RELIED UPON THE ORDER OF THE CIT(A). 6 . WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE RELE VANT FINDINGS GIVEN IN THE IMPUGNED ORDERS AND THE MATERIAL PLACED ON RECORD. THE ASSESSEE HAS CLAIMED PAYMENT OF COMMISSION TO 11 PERSONS FOR THE ORDER PROCURED BY THEM FOR A SUM S AGGREGATING TO RS.11 LAKH NOT ONLY IN THE BOOKS OF ACCOUNT BUT ALSO IN THE AUDITED ACCOUNTS FILED ALONG WITH THE RETURN OF INCOME AS ON 31.3.2007. THE ASSESSEE S CASE FOR SCRUTINY WAS SELECTED BY ISSUANCE OF NOTICE U/S 143(2) ON 13.08.2008 . WHEN THE ASSESSEE COULD NOT FURNISH DETAILS OF SERVICES RENDERED BY THE PARTIES, THE A.O. REQUIRED THE ASSESSEE TO PRODUCE THE PERSONS SO AS TO VERIFY THE RENDERING OF SERVICES. THE ONE PERSON, WHO WAS PRODUCED BEFORE THE A.O. VIZ. SHRI YOGESH SHAH, CATEGORICALLY ADMITTED THAT HE HAS NOT RENDERED ANY SERVICES, BUT HAS GONE TO THE EXTENT OF SAYI NG THAT THE PAYMENT RECEIVED BY THE ASSESSEE WAS IN THE ITA NO. 4387 /MUM/201 3 . M/S. INDIAN COMMRCIAL CO. PVT.LTD. 8 NATURE OF ACCOMMODATION ENTRY PROVIDED BY HIM AND HE DOES NOT KNOW THE ASSESSEE - COMPANY OR ANY PERSON RELATED TO THE SAID COMPANY. HE SUBMITTED THAT THE CHEQUE WAS BROUGHT TO HIM BY A BROKER IN THE MA RKET AND AFTER CLEARING OF THE CHEQUE HE HAS RETURNED PART OF THE AMOUNT TO THE BROKER. AT THAT STAGE ALSO THE ASSESSEE DID NOT CROSS - EXAMINE THE SAID WITNESS. WHEN CONFRONTED WITH SUCH AN ADVERSE MATERIAL ON RECORD, THE ASSESSEE OFFERED THE SAID EXPENDITU RE OF COMMISSION PAYMENT AS INCOME. THE EXPLANATION OF THE ASSESSEE BEFORE THE A.O. WAS THAT THE SAID PAYMENT WAS ARRANGED BY THE THEN VICE - PRESIDENT (MARKETING) AND THE MANAGER (ACCOUNTS), WHO HAVE COMMITTED FRAUD AND HAVE LEFT THE JOB AND AT THE SAME TIM E THE ASSESSEE HAS TRIED TO JUSTIFY THE PAYMENT ON THE GROUND THAT THE PAYMENT HAS BEEN MADE THROUGH ACCOUNT PAYEE CHEQUES, CONFIRMATION OF THE PARTIES HAVE BEEN FURNISHED , ETC. NOW BEFORE US, THE EXPLANATION GIVEN BY THE LEARNED COUNSEL IS THAT THE POLICE COMPLAINT HAS BEEN FILED AGAINST THE SAID TWO PERSONS FOR MISAPPROPRIATION OF FUNDS , WHO HAD INDULGED IN CHEATING AND FOR CREATING FICTITIOUS EXPENDITURE / PAYMENT FOR THEIR OWN BENEFIT. FROM THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE, IT IS NOTED THAT THE POLICE COMPLAINT IS DATED 18.12.2007 I.E. MUCH BEFORE THE SCRUTINY PROCEEDINGS WERE UNDERTAKEN BY THE A.O. IF THE ASSESSEE WAS AWARE OF SUCH A MISAPPROPRIATION AND CHEATING BY THE EMPLOYEES, IT COULD HAVE VERY WELL FILED EITHER THE REVISED RETURN OR C OULD HAVE OFFERED THE SAID PAYMENT AS INCOME BEFORE THE COMMENCEMENT OF THE PROCEEDINGS . IT WAS ONLY VIDE LETTER DATED 29.12.2009 I.E. AFTER TWO YEARS OF LODGING OF POLICE COMPLAINT AND ASSESSEE BEING AWARE OF SUCH A CLAIM OF FICTITIOUS EXPENDITURE, DID NO T COME WITH A CLEAN HAND BEFORE THE DEPARTMENTAL AUTHORITIES. ONLY WHEN THE A.O. CONFRONTED ONE OF THE RECIPIENTS OF THE PAYMENT THAT SUCH A PAYMENT WAS ACCOMMODATION ENTRY ITA NO. 4387 /MUM/201 3 . M/S. INDIAN COMMRCIAL CO. PVT.LTD. 9 AND FICTITIOUS CLAIM HAS BEEN BOOKED IN THE BOOKS OF ACCOUNT , THE ASSESSEE HAS COME UP FOR SURRENDER OF THE AMOUNT. HENCE SUCH A SURRENDER CANNOT BE HELD TO BE VOLUNTARY IN NATURE. EVEN THE EXPLANATION OF THE ASSESSEE HAD NOT BEEN CONSISTENT. EXPLANATION 1 TO SECTION 271(1)(C) RAISES A REBUTABLE PRESUMPTION , WHEREBY ASSESSEE CAN OFFER AN EXPLANATION WHICH IS BONAFIDE AND IS ABLE TO SUBSTANTIATE. ONCE HIS EXPLANATION AND THE ENTIRE CONDUCT HAS BEEN FOUND TO BE FALSE AND NOT BONAFIDE, THEN PRESUMPTION IS RAISED AGAINST THE ASSESSEE THAT FACTS MATERIAL TO THE COMPUTATIO N OF TOTAL INCOME HAS BEEN CONCEALED BY THE ASSESSEE. EVEN IN THE POLICE COMPLAINT AS FILED BY THE LEARNED COUNSEL BEFORE US, THERE IS NOT A WHISPER REGARDING THE FICTITIOUS PAYMENT OF COMMISSION THAT THEY WERE ENGAGED FOR ARRANGING OF ACCOMMODATION ENTRY. THUS, IT CANNOT BE CONCLUSIVELY SAID THAT THE EMPLOYEES OF THE ASSESSEE - COMPANY HAD ARRANGED SUCH ACCOMMODATION ENTRY AND ASSESSEE WAS IN DARK UP TO THE TIME WHEN A.O. CORNERED THE ASSESSEE. RATHER THE ASSESSEE WAS TRYING TO JUSTIFY BY FALLING UNCORROBORA TED CONFIRMATIONS . EVEN IF IT IS PRESUMED THAT THESE EMPLOYEES WERE INVOLVED FOR SUCH A BOGUS CLAIM OF FICTITIOUS PAYMENTS, THEN THE ASSESSEE WAS VERY WELL AWARE MUCH BEFORE THE SCRUTINY PROCEEDINGS AND AT THAT TIME IT SHOULD HAVE COME WITH A CLEAN HAND BE FORE THE DEPARTMENT. UNDER THESE FACTS AND CIRCUMSTANCES, WE HOLD THAT THE LEVY OF PENALTY ON THE DISALLOWANCE OF RS.11 LAKH HAS RIGHTLY BEEN CONFIRMED BY THE CIT(A). HOWEVER IT IS NOTED THAT THE A.O. HAS LEVIED PENALTY OF MORE THAN 200% OF THE TAX SOUGHT TO BE EVADED WHICH I N OUR OPINION SHOULD BE RESTRICTED TO 100%. ACCORDINGLY, WE HOLD THAT PENALTY SHOULD BE LEVIED AT 100% OF THE TAX SOUGHT TO BE EVADED, WHICH COMES TO RS.3,70,260. THUS, THE PENALTY IS REDUCED FROM RS.7,50,000 TO RS.3,70,260 AND THE APPE AL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED . ITA NO. 4387 /MUM/201 3 . M/S. INDIAN COMMRCIAL CO. PVT.LTD. 10 7 . IN THE RESULT, ASSESSEE S APPEAL IS PARTLY ALLOWED . ORDER PRONOUNCED ON THIS 13 TH DAY OF FEBRUARY, 2015 . SD/ - SD/ - ( D.KARUNAKARA RAO ) ( AMIT SHUKLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 13 TH FEBRUARY, 2015 . DEVDAS* / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT , MUMBAI. 4. / CIT(A) - 7 , MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE.