High Court Of Bombay
CIT vs. Heros Publicity Services
Sections 44AB, 260A, 271B
S.H. Kapadia & A.P. Shah, JJ.
IT Appeal No. 170 of 2000
28th February, 2000
R.V. Desai with J.P. Deodhar, for the Appellant : S.J. Mehta with Ms. A. Vissanji, for the Respondent
BY THE COURT :
The short point which arises for consideration in the present matter is whether the Department was entitled to levy penalty under s. 271B of the IT Act, 1961. The Tribunal has deleted the penalty. Hence, the CIT has come by way of appeal. The facts giving rise to this appeal, briefly, are as follows : The assessee is a partnership firm engaged in the agency business of advertising on Doordarshan and AIR during the assessment year in question, it acted as an agent between the principal, on the one hand, and the said media, on the other hand. The assessee received a commission on the payment settled between the parties. The Tribunal found that on the contracts between the principal and the media on the total transaction of Rs. 2.79 crores, the assessee earned a commission of Rs. 14.55 lakhs which is shown in the P&L a/c. The AO treated the entire receipt of Rs. 2.79 crores as receipt of the assessee and held that the assessee ought to have got its accounts audited under s. 44AB and for the failure of which, he levied penalty of Rs. 1 lakh on the assessee under s. 271B of the Act. This order was upheld by the CIT(A). Being aggrieved by the said order, the assessee preferred the appeal to the Tribunal. The Tribunal, after considering the terms and conditions of the contracts between the media like Doordarshan, on the one hand, and the customers of the assessee, on the other hand, came to the conclusion that for the purposes of audit under s. 44AB, the entire amount of the total transaction cannot be treated as the receipt accruing to the assessee. The Tribunal found that the assessee was only an agent. That, the income which accrued to the assessee was Rs. 14.55 lakhs and, in the circumstances, the receipt which could be taken into account was only of Rs. 14.55 lakhs and that, in the circumstances, s. 44AB was not attracted. Accordingly, the Tribunal deleted the penalty.
2. At the outset, we may mention that our order is based only on the findings of fact recorded by the Tribunal. The question whether the intention to evade the tax is or is not the ingredient of s. 271B is left open. On the facts, we find that the media (Doordarshan) had insisted on the contracts being entered into with the advertising agencies mainly to secure payments. However, the facts show that the assessee acted on behalf of the advertisers for commission. That the assessee had obtained letters of authority from their advertisers to enter into a contract with Doordarshan and AIR. That the assessee acted only as agents for commission. On the facts, therefore, we are not inclined to interfere with the order passed by the Tribunal. In the circumstances, the appeal stands dismissed.
[Citation : 248 ITR 256]