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TMI Blog2016 (11) TMI 1061X X X X Extracts X X X X X X X X Extracts X X X X ..... , JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER For The Appellant : Shri Vimal Punamiya, Shri Niraj Punamiya For The Respondent : Shri C S Sharma ORDER PER AMIT SHUKLA, J.M.: The aforesaid appeals have been filed by the assessee against common order dated, 22.01.2015 passed by ld. CIT(Appeals)-29, Mumbai in relation to the penalty proceedings under section 271(1)(c) for the assessment years 2002-03, 2003-04, 2004-05 and 2008-09. 2. The facts relating to levy of penalty are identical in all the years, which is mainly on account of estimation of net profit rate of commission income. The penalty levied for the various assessment years are as under:- Assessment year Penalty (Amt) Rs. 2002-03 6,91,449 2003-04 7,03,687 2004-05 12,20,646 2008-09 11,34,086 3. The brief facts qua the issue relating to levy of penalty are that, assessee is a trader in fabrics, however, at the time of survey under section 133A, it was found that, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion income was around 0.42%, whereas, the Assessing Officer has estimated net profit @ 7% and thereafter giving benefit of expenditure for earning this income to the extent of 5%, the balance net profit rate of approximately 6.35% was confirmed. 5. In the first appeal, the Ld. CIT(A) confirmed the said addition and matter had travelled up to the stage of the Tribunal. The Tribunal sent back the matter to the file of the CIT(A). In the set aside proceedings, the Ld. CIT(A) after calling for the remand report again confirmed the said estimation made by the Assessing Officer. 6. Now, in the second round of appeal before the Tribunal, the net profit rate of commission has been reduced to 0.6% of the turnover and 5% of net expenditure as allowed by the Assessing Officer was retained. 7. Before us, the Ld. Counsel submitted that, now in the wake of the decision of the Hon ble Tribunal, whereby, substantial relief on account of net profit rate has been given, no penalty can be levied. The effect of the Tribunal order and the computation of additional tax liability have been worked out by the Ld. Counsel in the following manner: COMPUTATIN OF ADDITIONAL TAX L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f turnover and tax thereon but regarding estimation of commission on such business of accommodation entries and tax thereon. Regarding rate of commission adopted by Assessing Officer at 6%, Ld. Authorized Representative submitted that it was very abnormal and cannot happen in case of accommodation business. Further, the rate of presumptive profit referred by the CIT(A) could not be considered in case of accommodation business. Assessee in his statement dated 13/02/2009 23/02/2009 stated that commission income is earned @ 1% on the sales also claimed certain expense thereon. The rate mentioned by assessee is the rate which is prevailing in this line. In this regard, Ld. Authorized Representative submitted that this issue of determination of rate of commission in case of accommodation transaction arose before the ITAT in case of Sanjay Kumar Garg vs. ACIT [2011] 12 taxmann.com 294 (Delhi) wherein Tribunal held as under:- 49. The next issue arises for estimation of commission income. In the statement the assessee at the time of survey under section 133A had stated that he charged 25p as commission for providing accommodation entries and out of that 25p he paid lop to others i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovider. Therefore, in the absence of any such material on record, the statement given by the assessee on oath during the course of survey proceedings has to be given credence. The assessee has floated the bogus concerns and has controlled the accounts. During the course of survey, no material was found on the basis of which it could be said that the assessee had passed on. 1 per cent commission to the persons in whose names the bank accounts were maintained. In the absence of any evidence having brought on record, we are unable to agree with the assessee that the assessee had passed on commission of lop to the persons in whose names dummy concerns were floated. However, in the business of entry provider certain expenditure has to be incurred which has been stated to be 5p during the course of survey. Therefore, credit of 5p out of 25p received as commission has to be allowed. Therefore, the Assessing Officer is directed to estimate commission income by applying 0.2 per cent net commission on turnover determined by the Ld. CIT (A) for both the assessment years as against 1 per cent taken by him. 6.1 We find that Tribunal in case of Sanjay Kumar Garg vs. ACIT (supra) held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P) Ltd. (supra) approved 0.15%. So, taking all factors into consideration, we hold that percentage of commission to be earned on turnover is reasonable at 0.6%. We hold so. 6.3 Assessing Officer has allowed only ad hoc expenses @ 5% of commission income, without prejudice to merit of issue, we are not inclined to interfere in the finding of Assessing Officer on this issue . Now, in the wake of the aforesaid Tribunal decision in the quantum proceedings, the income estimated has been scaled down substantially and the differential in tax amount is in few thousands only as reproduced above. Once it is a matter of estimation and the final income sustained after estimation of net profit is very near to the estimate of commission income shown by the assessee, then under these facts and circumstances, it cannot be held that any penalty can be levied under section 271(1)(c) either for concealment of income or for furnishing of inaccurate particulars. Once it is a case of pure estimation which has been varied by various authorities at different stages, then on such difference of opinion that to be in the matter of estimation, it cannot lead to any inference of levy of penalty. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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