- (1.) THIS is an appeal, by the assessee against the order of the learned Tribunal, upholding the imposition of penalty under Section 271(1)(e) of the IT Act. The appeal was admitted on 16th Sept., 2003, by framing following substantial questions of law: (1) Whether on the facts and in the circumstances of the case, levy of penalty under Section 271(1)(c) is justified ? (ii) Whether on the facts and in the circumstances of the case, the Tribunal was justified in coming to the conclusion that the assessee has not discharged his burden to disclose the presumption arising against him under Explanation to Section 271(1)(c) of the IT Act, 1961 ?
(2.) THE facts of the case are, that the appellant filed return for the relevant assessment year. However, notices were issued to him under Sections 143(2) and 142(1) with detailed questionnaire. Thereafter, the evidence was recorded, enquiry was held, and assessment was made. That assessment was challenged in appeal, and on further appeal, there were remands also. However, the assessments have acquired finality on dismissal of D.B. IT Appeal Nos. 36 of 2003 and 34 of 2003. In the assessment order, made by the AO, the last para reads as under: Assessed at Rs. 38,34,610 accordingly. Issue demand notice and challan. Give credit for TDS as per certificate on file. Charge interest under Sections 201 and 217(1A). Issue penalty notice under Section 271(1)(c) for concealing the particulars of income and under Section 273(2)(c) for non -filing of higher estimate. In compliance thereof, notice was issued to the assessee, and the assessee appeared, and contested proceedings. The notice related to the payment of two amounts, being a payment of Rs. 2 lacs to M/s Radha Kishan Bal Kishan Muchhal of Indore, and the payment of Rs. 3 lacs to M/s Pyroff Packaging (P) Ltd. of Bombay. These payments were disallowed, as they were found to be of other than business consideration, and were added in the income of the assessee. From a look at the order of the Dy. CIT, Annex. 1, it transpires, that since this involved 'concealment/furnishing of inaccurate particulars of income', notice under Section 274 r/w Section 271 of the IT Act was issued. The learned Dy. CUT considered the reply, and proceeded on the basis, that the AO has thoroughly examined the explanation about the payment, and found that the parties did not actually render any service to the assessee. The reasons in this regard were also considered. Then, the learned Dy. CIT concluded that the assessee failed to furnish any explanation as to why the penalty should not be imposed upon it, and that, as the addition made on account of payment to the above parties for no service rendered, involved furnishing of inaccurate particulars of income, resulting in concealment of his income, it attracted penalty under Section 271(1)(c). Thus, the penalty of Rs. 2,75,000, being the minimum, i.e. the amount of tax sought to be evaded, was imposed.
(3.) CHALLENGING this, an appeal was filed, and certain judgments were also cited. That appeal was allowed, relying upon the judgment of the Tribunal, in case of Aditya Mills Ltd. v. IAC (1993) 45 TTJ (Jp) 363, wherein it has been held that the penalty cannot be levied if the assessee could not produce the evidence to establish the rendering of any brokerage service by the other party, and that, in spite of the fact that disallowance has been confirmed, the penalty should not be levied.;