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TMI Blog2015 (10) TMI 791X X X X Extracts X X X X X X X X Extracts X X X X ..... ions. In view of the aforesaid and considering the totality of the facts, we are of the view that the ends of justice shall be met if an estimation of income earned by the Assessee is made in the present case. We are of the view that an estimate of 2.5% of the total amount receipts received by the Assessee would meet the ends of justice. We thus direct accordingly and thus these grounds of the Assessee and Revenue are partly allowed - Decided partly in favour of assessee. Penalty under section 271(1)(c) - CIT(A) giving relief of 95% of penalty imposed - Held that:- CIT(A) has held that for levy of penalty it should be found that all the conditions of section 271(1)(c) must exist before levy of penalty and that it is for the Revenue to establish that such conditions exist. We find that there is no such finding recorded by CIT(A) in the impugned order passed by him that all the conditions for levy of penalty were fulfilled before levy of penalty in this case and that Revenue has established that such conditions exist. We find that the 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 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Assessee. During the search proceedings conducted at Radhe group of cases, it was discovered that Shri Ashish Patel of Radhe group was appointed by Sahara group of Lucknow for acting as mediator/negotiator for the acquisition of land by Sahara group. The usual methodology adopted was that Sahara group entered into separate MOU with mediator/negotiators for negotiating with the original land owners and procurement of Banakhat (land purchase documents). Sahara group of Lucknow used to send cheques/DDs to Shri Ashish Patel for purchases of land at different cities. On receipt of such cheques/DDs, Shri Ashish Patel or agents would pay a part of the amount received from Sahara group to the original land owners and the sale of land documents would be registered in the name of Sahara group. The balance amount of the substantial portion of money received from Sahara group would be claimed as either land development expenses or Banakhat Expenses . In order to claim the development expenses on land purchased through Shri Ashish Patel of Radhe group, certain concerns were created and they were paid development charges in huge amounts through cheques and subsequently the cash was w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty order dated 29.06.2009 levied penalty of ₹ 7,19,32,874/- u/s. 271(1)(c) of the Act. Aggrieved by the order of A.O in quantum proceedings, Assessee carried the matter before CIT(A). CIT(A) after considering the submissions of the Assessee granted partial relief to the Assessee by holding as under:- 8. I have considered the submissions of the appellant. The uncontroverted facts of the case are that a search action u/s.132 of the Income-tax Act was carried out at the business premises of appellant on 04.08.2006. Search action on the Radhe Group of cases was also conducted. During the search proceedings conducted at the Radhe Group of cases, it was discovered that Shri Ashish Patel of Radhe Group of cases has been appointed by the Sahara Group of Lucknow for acting as mediator / negotiator for acquisition of the land by Sahara Group . The usual methodology adopted was that the Sahara Group entered into separate MOU with mediators / negotiators for negotiating with original land owners (Farmers) and procurement of banakhat (land purchase documents). The Sahara Group of Lucknow used to send cheques / DDs to Shri Ashish Patel for purchase of land at different cities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lji and all the schemes of not doing real land development, issuing the bills, making the cash payments, etc. were the designs of Shri Suderlalji. 9. From the aforementioned facts, it is apparent that the role of the appellant is only Havala giver i.e. giving accommodation entries in the whole sequence of transactions. The appellant is an entity created for the purpose of a siphoning away substantial amount of funds received from Sahara Group under the guise of development expenses. In fact, appellant has not carried out any civil construction activity or development activity on the lands procured by 'Sahara Group'. The appellant firm is merely a paper entity and in fact, it has not carried out any work. The appellant is receiving some commission for providing accommodation entries in the whole scheme or arrangements. In such arrangements, the entire receipts could not be taxable profits of any entity. In such circumstances, the computation .of total taxable income on the basis of total deposits discovered in the bank accounts i.e. the total amount received by the appellant from Shri Ashish Patel and his group, is not considered justified. 10. In the statement, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation gathered u/ss.132 and/or 133A of the Act during the course of assessment proceedings, search proceedings post search period, assessment period as well as that forming part of the seized records etc. 7. The learned Commissioner of Income Tax (Appeals) ought to have considered the fact that the Assessing Officer has not considered the fact that the amount of total receipts for the development of the land etc. has been withdrawn on the same or next day and given back to Shri Ashish Patel which can be verified from the evidences found from the search proceedings duly accepted by Shri Ashish Patel. 8. The appellant submits that the appropriate set off of the income/additions/expenses etc. may kindly be given, in case the additions /disallowances of the same if made and confirmed by the I.T. Authorities finally in the hands of either Radhe Group, Ashish Patel, M/s. Sahara India Commercial Corporation Limited (SICCL), or all the four partnership firms and their partners including them in their individual capacities inter se. 7. On the other hand, the grounds raised by the Revenue reads as under:- 1. The Ld. CIT(A) has erred in law and on facts in giving relief of 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rk was actually carried out for development of land. We find that CIT(A) after considering the submissions of the Assessee and the material on record has given a finding of fact that the role of Assessee was to give accommodation entries and it was only a hawala giver created for the purpose of siphoning away substantial amount of funds under the guise of development expenses. He has further given a finding that Assessee has not carried out any civil construction activity or the development activity on the lands procured by Sahara Groups. The Assessee was receiving some commission for providing accommodation entries. He has also noted that Assessee as well as Shri Ashish Patel of Radhe group had claimed that Assessee was entitled for commission at 1.5% of the bills raised. Before us, no material has been brought on record by either of the parties to controvert the aforesaid findings of CIT(A). We also find that CIT(A) has concluded that Assessee must have earned something more that was admitted during the search proceedings and the Assessee was a Hawala giver and in such Hawala transactions, the normal commission charged by Hawala was 5% of the value of such transactions. We find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat appellant is receiving money for doing the development work. However, the facts remain that the appellant was abetting in the tax evasion. Considering the facts of the case, it is held to be fit case for the levy of penalty u/s.271(1)(c) of the Income-tax Act. The Assessing Officer is directed to levy the penalty, @100% of the tax sought to be evaded. However, the concealed income should be determined as per appellate order dated 02.12.2010, passed in appeal related to quantum additions. 15. Aggrieved by the order of CIT(A), Revenue is now in appeal before us and has raised the following ground:- 1. The ld. CIT(A) has erred in law and on facts in giving relief of 95% of penalty imposed of ₹ 7,19,32,874/- i.e. ₹ 6,83,36,230/-. 2. On the facts and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the A.O. 3. It is, therefore, prayed that the order of the CIT(A) be set aside and that of the A.O. be restored to the above extent. 16. Before us, ld. D.R. submitted that in the present case since the facts of debiting bogus expenses has been confirmed, the order of the AO levying penalty be upheld. It was further submit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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