ACIT v. Stelmet Marketing [ITA No. 6168/Mum/2012, dt. 11-5-2016] : 2016 TaxPub(DT) 2530 (Mum-Trib)

Accrual of income method consistently followed--Concealment penalty levied whether sustainable

Facts:

Assessee was a commission broker who helped procure iron and steel for BHEL and for various companies, in return of which they were in receipt of commission income. The said commission income received was shown as an advance in the books upon receipt as the contractual clause with the indenters confirmed that if they are not to receive payment for the value of the goods, the said commission shall stand deducted. To that extent the assessee consistently followed the method that upon receipt of commission it was kept in advance account and once collections were confirmed the same was taken into revenue account. This accounting was held to be incorrect by assessing officer/Commissioner (Appeals) by virtue of which the commission had to be offered to tax on receipt. Based on this penalty for concealment was levied by the assessing officer. Commissioner (Appeals) rejected the penalty on ground that this was a bona fide reason and a valid one as well thus not warranting a penalty levy. Aggrieved department went in appeal:

Held in favour of the assessee that concealment penalty is not warranted.