2015 (10) TMI 934 - AT - Income Tax

Assessment of commission income of providing accommodation bills by the assessee - Held that - Issue is covered with the decision of the ITAT, Ahmedabad Bench in assessee s group case of M/s.Devi Durga Construction Vs. ACIT for Asstt.Years 2004-05 to 2007-08 in 2015 (10) TMI 791 - ITAT AHMEDABAD wherein the Tribunal in identical facts has partly allowed the appeal of the assessee, and has directed the AO to assess the assessee by estimating the commission income of the assessee at 2.5% of the total bill amount, as against the rate of 5% applied by the CIT(A) - Decided partly in favour of assessee. Penalty under section 271(1)(c) - CIT(A) giving relief of 95% of penalty imposed - Held that - Issue is covered with the decision of the ITAT, Ahmedabad Bench in assessee s group case of M/s.Devi Durga Construction Vs. ACIT for Asstt.Years 2004-05 to 2007-08 in 2015 (10) TMI 791 - ITAT AHMEDABAD wherein held only finding recorded by CIT(A) for confirming the penalty in this case was that Assessee was abating in tax evasion. The act of abatement in tax evasion for some other person could not be made the basis for levy of penalty u/s. 271(1)(c) on the Assessee. We further find that CIT(A) has passed a cryptic order. On these facts of the case, we are of the view that the impugned order could not be sustained. However in the interest of justice to both the parties, we consider that it shall be appropriate to restore the issue of penalty u/s. 271(1)(c) to the file of A.O to pass a de novo order in accordance with law after providing reasonable opportunity of hearing to the Assessee and A.O shall record a clear finding on the issue that the conditions for levy of penalty u/s. 271(1)(c) exists and proved in this case. - Decided in favour of revenue for statistical purpose.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal before the Tribunal.
2. Assessment of commission income of providing accommodation bills.
3. Validity of penalty imposed under section 271(1)(c) of the Income Tax Act.

Analysis:

1. Condonation of Delay:
The appeal by the assessee for the Asstt. Year 2004-2005 was initially barred by a 2-day limitation. The assessee filed an application for condonation of delay, supported by an affidavit explaining the reasons for the delay. After hearing both parties, the Tribunal decided to condone the delay of 2 days, considering it a fit case for such condonation.

2. Assessment of Commission Income:
The grounds of the appeal by the assessee primarily challenged the assessment made by the AO under specific sections of the Income Tax Act. The counsel for the assessee argued that the issue was covered by a previous decision by the ITAT, Ahmedabad Bench, in a related case. The Tribunal found the facts of the current case to be identical to the previous case and directed the AO to estimate the commission income at 2.5% of the total receipts received by the assessee, partially allowing the appeal.

3. Validity of Penalty Imposed:
Both the appeals by the Revenue and the assessee revolved around the validity of the penalty imposed under section 271(1)(c) of the Act. It was noted that the issue was similar to a previous case involving the assessee's group. The Tribunal decided to restore the issue to the AO for a de novo order in accordance with the law, providing a reasonable opportunity of hearing to the assessee. The Tribunal emphasized the need for clear findings on the conditions for levy of penalty under section 271(1)(c), directing the AO accordingly.

In conclusion, the Tribunal partly allowed the quantum appeal of the assessee, directed the AO to estimate commission income, and restored the issue of penalty imposition for a fresh decision. The cross-appeals of the Revenue and the assessee were allowed for statistical purposes.