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TMI Blog2020 (2) TMI 653X X X X Extracts X X X X X X X X Extracts X X X X ..... out the commission income of 207 days at ₹ 27.50 lakhs plus ₹ 25 lakhs. In that situation, the stand of the Revenue not to give set off of ₹ 27.50 lakhs could be justified. But in the present situation, the only method which could be adopted is to work out total commission income for 207 days by whatever method, then debit that commission income from the amount already disclosed by the assessee plus expenditure and the remaining will be taxable. The disclosure made by the assessee at ₹ 27.50 lakhs is more the ultimate estimated income worked out by the learned CIT(A); therefore, no further addition is required. Accordingly, the addition of ₹ 18,20,407/- is deleted and the appeal of the assessee is partly allowed. Penalty u/s 271AAA(2)(ii) - HELD THAT:- The conditions enumerated in sub-section (2) are that penalty under Section 271AAA would not be leviable upon assessee if the assessee, during the course of search, has admitted the undisclosed income; specified the manner in which such income has been derived; substantiated the manner in which the undisclosed income was derived and paid the taxes together with interest, if any, in respect of the un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nverted into search under Section 132(1) of the Act. It emerges out from the record that initially the assessee took the stand that this sum of ₹ 27.57 lakhs was of some clients who have given to the assessee for Angadiya services. Later on, the assessee changed the stand and offered it as a commission income. The Assessing Officer, apart from this, further estimated commission income of ₹ 25 lakhs and determined the taxable income of the assessee at ₹ 53,89,840/-. 4. On appeal, learned CIT(A) partly upheld the order of the Assessing Officer. The findings of the learned CIT(A) read as under:- 5. I do not agree fully with the AR of the appellant. For the purpose of working out the daily turnover, monthly turnover or the turnover for 207 days as shown in the above mentioned table, the appellant has included the seized cash is amount of ₹ 27.50 Lacs as the commission income. This is not correct. When the partner of the appellant was asked to state as to which party the cash of ₹ 27.50 Lacs belonged to, he could not state their names. Even subsequently the name of the concerned parties was not given by the appellant as it would have adversely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d offered for taxation. There is no justifiable reason at the end of the learned CIT(A) to exclude this amount from the total income of the assessee representing commission income. The learned CIT(A) has determined ₹ 25 lakhs as estimated commission income; thereafter debited the expenditure and confirmed addition of ₹ 18,20,407/-, but set off of ₹ 27.50 lakhs disclosed by the assessee has not been given. On the other hand, learned Departmental Representative contended that the amount of ₹ 27.50 lakhs is a separate amount and it cannot be treated as commission income. 6. We have duly considered the rival contentions and gone through the record carefully. A perusal of the order of learned CIT(A) would indicate that learned First Appellate Authority has estimated the commission income of the assessee for 207 days. The working of 207 days has been taken by the learned CIT(A) from the day when the assessee-firm came into existence by execution of the partnership deed. It came into existence on 7th May 2008 and ended on 4th December 2008. The average turnover which has been worked out by the learned CIT(A) is based on the turnover of three days, i.e. immediate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we have gone through the record carefully. Section 271AAA has a direct bearing on the controversy; therefore, it is pertinent to take note of this section which reads as under:- 271AAA. (1) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the 1st day of June, 2007 but before the 1st day of July, 2012, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year. (2) Nothing contained in sub-section (1) shall apply if the assessee,- (i) in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) pays the tax, together with interest, if any, in respect of the undisclosed income. (3) No penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be imposed upon the assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earch at ₹ 27.50 lakhs. Therefore, it does not fulfill the conditions enumerated in sub-section (2) of Section 271AAA of the Act. Even copy of the statement recorded under Section 132(4) has not been placed before us. Therefore, after going through the record, we are of the view that the assessee failed to fulfill the conditions of Section 271AAA. It, therefore, deserves to be visited with penalty. However, the penalty is to be restricted qua 10% of the additions we have confirmed. In other words, the penalty was calculated on the following amounts:- 1. Undisclosed income offered for tax in return of income filed in respect to notice u/s 153A ₹ 27,50,000 2. Undisclosed commission income as confirmed by CIT(A) vide No.CIT(A)-III/258 /ACIT-CC-2(2)/10-11 dtd 18/04/2011 ₹ 18,20,407 Undisclosed income within the meaning of Explanation (a) to section 271AAA ₹ 45,70,407 We have already deleted ₹ 18,20,407/-; therefore, 10% of this is to be excluded. The penalty is, therefore, r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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