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TMI Blog2016 (12) TMI 1144X X X X Extracts X X X X X X X X Extracts X X X X ..... he accommodation bills provided by the assessee, after claiming expenditure of 2.5% towards brokerage payable by the assessee to brokers which was ultimately surrendered by the assessee during assessment proceedings as these brokers were not traceable due to sales tax raid on them and the assessee was unable to prove brokerage expenditure incurred by him due to reasons set out above. Thus, based on our above detailed discussions and reasoning as set out above , in our considered view, the penalty is not leviable in the instant case u/s 271AAA of the Act as the assessee is entitled for immunity from penalty u/s 271AAA(2) of the Act and the penalty levied by the AO and as sustained by learned CIT(A) u/s 271AAA of the Act is hereby ordered to be deleted. - Decided in favour of assessee. - I .T.A. No.828/Mum/2015 - - - Dated:- 25-10-2016 - SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Assessee : None For The Revenue : Shri Rajneesh K. Arvind (DR) ORDER PER RAMIT KOCHAR, Accountant Member This appeal, filed by the assessee, being ITA No. 828/Mum/2015, is directed against the appellate order dated 1st October, 2014 pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to undisclosed income @ 2.5% of the total value of the accommodation bills. The assessee submitted that he had made the disclosure during the search and the assessment proceedings to buy peace and avoid protracted litigation . Regarding jewellery, the assessee has submitted that the same had been purchased out of commission income from the bogus bills. However, this issue of levying penalty on alleged un-explained jewellery is not before us as the ld. CIT(A) has deleted the penalty u/s 271 AAA of the Act with respect to the addition of unexplained jewellery and the Revenue is not in appeal before us. The only issue before us is the assessee s admission of commission income @ 2.5% subsequently on the accommodation bills provided by the assessee to Kanakia group of the total value of accommodation bills , over and above as against 0.75% admitted at the time of search. The A.O. observed that the assessee has routed bogus bills through its books on which the assessee has offered additional undisclosed income . Thus , it was observed by the AO that the declarations are squarely covered within the meaning of Section 271AAA of the Act as undisclosed income on which penalty is leviable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d u/s 132(4) of the Act on 30/03/2011 during the course of search. This issue was probed further during assessment proceedings and the assessee admitted additional income @2.5% on such transactions , over and above 0.75% admitted at the time of search. The ld. CIT(A) held that the assessee is liable for penalty u/s 271AAA of the Act in respect of additional income of ₹ 6,36,115/- surrendered during the course of assessment proceedings while recording statement u/s. 131 of the Act on 19/03/2013 in respect of bogus transactions with Kanakia Group detected during the course of search and since the amount of ₹ 6,36,115/- has not even been surrendered during the course of search while recording statement u/s 132(4) of the Act and explaining the manner of deriving such income and substantiating the same, which is utmost necessary to claim immunity from penalty u/s 271 AAA of the Act, the AO's action in levying penalty u/s.271 AAA of the Act on this ground was held to be justified by the learned CIT(A) which penalty order of the AO was upheld/sustained by learned CIT(A) vide appellate orders dated 01-10-2014 passed by learned CIT(A). 7. Aggrieved by the appellate orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmed his statement recorded u/s 132(4) of the Act on 30-03-2011 that he earned commission @0.75% on turnover of ₹ 4,41,19,702/- from his firm G. Chimanlal and Company and on turnover ₹ 82,79,200/- from M/s Isha Trade Links which material have been procured from M/s Karma Ispat and a sum of ₹ 71,32,487/- from M/s G.Chimanlal and Co. and sum of ₹ 18,78,856/- from M/s Isha Trade Links which has been procured from M/s Elpro Packaging Limited .The detailed party wise and year wise break-up was submitted by the assessee (refer page 5-6 / CIT(A) order) while recording statement on 18/05/2011, whereby the assessee confirmed the statement recorded u/s 132(4) of the Act on 30-03- 2011 during search operations. The assessee explained the modus operandi of earning commission income on accommodation bills while replying to question no 5 in the statement recorded u/s. 131 of the Act during assessment proceedings on 19/03/2013 wherein he submitted that the assessee is providing accommodation entries to Kanakia group whereby on receipt of the payment against the accommodation bills through cheque which was deposited in the bank and against this cheque the assessee hand over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the payment of brokerage to them by the assessee @2.25-2.5% in connection with the accommodation bills provided by the assessee due to sales tax action against them. The assessee had submitted that he did not had any other evidence to prove that he has actually earned net 0.75% commission income on accommodation bills and have actually paid the balance 2.25% to such brokers out of books. However, the assessee in order to buy peace of mind and to avoid protracted litigation , admitted 2.5% of the undisclosed income from these accommodation bills over and above 0.75% declared in the statement recorded u/s 132(4) of the Act recoded on 18/05/2011 as the assessee was unable to prove the payment of commission @2.25-2.5% to the brokers and offered to be taxed at 3.25% being gross commission income earned on accommodation bills provided by the assessee to the Kanakia group without claiming deduction of brokerage paid by the assessee w.r.t. these accommodation bills provided by the assessee to the Kanakia group. The assessee agreed to file revised return of income with enhanced undisclosed income of 2.5% of the value of admitted accommodation bills and pay taxes , with the understanding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove such payments out of books due to obious reasons cited by us as set out above and the assessee was left with no choice but to surrender additional 2.5% to buy peace and to avoid protracted litigation with the Revenue but the fact remains that the assessee earned 0.75% net commission income on accommodation bills provided by the assessee , while it is a different matter that the assessee declared net commission income 0.75% of the accommodation bills provided by the assessee, after claiming expenditure of 2.5% towards brokerage payable by the assessee to brokers which was ultimately surrendered by the assessee during assessment proceedings as these brokers were not traceable due to sales tax raid on them and the assessee was unable to prove brokerage expenditure incurred by him due to reasons set out above. Thus, based on our above detailed discussions and reasoning as set out above , in our considered view, the penalty is not leviable in the instant case u/s 271AAA of the Act as the assessee is entitled for immunity from penalty u/s 271AAA(2) of the Act and the penalty levied by the AO and as sustained by learned CIT(A) u/s 271AAA of the Act is hereby ordered to be deleted. We ..... X X X X Extracts X X X X X X X X Extracts X X X X
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