INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "SMC": NEW DELHI
BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER
ITA Nos.:- 4297,4298/Del/2018
Assessment Years: 2011-12, 2010-11
Addagio Overseas, ACIT
1/18-B, Asaf Ali Road, Central Circle-26
New Delhi-110 026 Vs. New Delhi
Pan AAFFA4164Q
(Appellant) (Respondent)
Assessee by: Shri S.K. Chaturvedi, CA
Department by : Shri S.L. Anuragi Sr. DR
Date of Hearing 30/01/2019
Date of 31/01/2019
pronouncement
ORDER
The aforesaid appeal has been filed by the assessee against
impugned order dated 1.5.2018 passed by Ld. CIT(A) 29 New Delhi in
relation to the penalty proceedings u/s 271(1)(c) for the assessment
year 2011-12. The assessee is mainly aggrieved by levy of penalty of
Rs. 3,09,000/- made on account of disallowance of commission
/brokerage on purchases.
2. The facts in brief are that assessee was engaged in the business
of manufacturing of garments of various brands. During the year
assessee has claimed brokerage/commission on purchase of Rs.
10,47,592/-. AO disallowed the entire brokerage. Before the AO
assessee had submitted confirmation letters of the parties, copy of
their Income Tax Return and their bank account. However, the AO has
made the disallowance on the ground that the assessee could not
produce the parties. In the appellate proceedings, addition of Rs. 10
lacs was confirmed up till the stage of the Tribunal. Thus, on the basis
of such an addition Ld. AO has levied penalty of Rs. 3,09,000/- on
account of furnishing of inaccurate particulars of income. Ld. CIT (A)
has confirmed the said penalty.
3. After hearing both the parties and on perusal of the relevant
finding given in the impugned order, it is seen that disallowance of Rs.
10 lacs was made in the quantum proceedings on the ground that
brokerage /commission could not be proved to be genuine, although
the copy of confirmation, income tax return etc. filed by the parties
directly before the AO in response to summon made u/s 131. The sole
reason for disallowance in the quantum proceedings was that, none of
these persons could be produced for a deposition when the assessee
was asked to produce these persons. Hence solely on this reasoning it
was held that assessee could not prove the claim to be genuine.
However, such a finding given in the quantum proceedings could not
be held to be conclusive to hold that assessee is also guilty for
furnishing of inaccurate particular of income so as to warrant penalty
u/s 271(1)(c). The assessee has been paying brokerage/ commission
in the earlier year also and in order to prove the claim, the parties
have directly sent confirmations, their income tax returns, bank
statement etc. to show that these commissions have been paid to them
on account of purchases. Thus, the primary onus cast upon the
assessee, stood discharged and even if these persons could not be
produced or did not appear inspite of summon u/s 131, that does not
mean the material and evidence filed by the assessee was incorrect or
has been found to be false. Assessee was able to substantiate its claim
though such a claim did not found favour only for the reason that
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these parties did not appear. There is no other material or evidence on
record to show that such payment of brokerage / commission is bogus
or is coloured transaction. Accordingly, under these facts and
circumstances no penalty can be levied for furnishing of inaccurate
particulars of income and same is directed to be deleted.
4. In the result appeals of the assessee is allowed.
Order pronounced in the open court on 31st January, 2019.
Sd/-
(AMIT SHUKLA)
JUDICIAL MEMBER
Dated: 31/01/2019
Veena
Copy forwarded to
1. Applicant
2. Respondent
3. CIT
4. CIT (A)
5. DR:ITAT
ASSISTANT REGISTRAR
ITAT, New Delhi
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