1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1140 OF 2009 The Commissioner of Income Tax – 8, Mumbai ..Appellant. Versus M/s.Fibre Foils Limited ..Respondent. Mr.Suresh Kumar for the appellant. None for the respondent. CORAM : V.C. DAGA & J.P. DEVADHAR, JJ. DATE : 24th AUGUST 2009 P.C. : 1. Heard learned counsel for the revenue. The tribunal while deleting the penalty, considering clause (B) of Explanation 1 to Section 271 (1)(c) has observed as under : “11. In our considered view the appellant has given detailed explanation regarding the payment and produced all supporting materials during the course of assessment and appeal proceedings. The onus was on the AO to verify whether Shri Rakesh Sehgal rendered services for earning the commission. In the case of CIT Vs Kerala Spinners Limited (2001) 247 ITR 541 (Ker) the Court held that mere failure on the part of the assessee to substantiate its explanation was not enough to warrant penalty if such explanation was bonafide and all facts relating to the same were disclosed by it. The assessee had offered an explanation in respect of the 2 entries and it was a case of the assessee’s failure to establish or explain them. Therefore, the Tribunal was justified in treating it to be a case covered by clause (B) of Explanation 1 to Section 271(1)(c) and cancelling the penalty.” 2. The tribunal has also found that there was no mensrea on the part f the assessee. Consequently, the tribunal was justified in deleting the penalty under Section 271(1)(c). 3. In this view of the matter, we see no substantial question of law arising in this appeal. The appeal is thus dismissed with no order as to costs. (J.P. Devadhar, J.) (V.C. Daga, J.)