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2020 (2) TMI 653 - AT - Income TaxCommission income - cash recovered during survey / search - estimation of daily turnover / monthly turnover 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. - HELD THAT:- To our mind, the commission income of the assessee was to be estimated for the period during which the firm remained in existence for the relevant accounting year, i.e. for the number of days relating to Assessment Year 2009-10 it remained into existence. Its existence has been worked out for 207 days. Once, after taking into consideration the turnover, the commission income has been worked out at a sum of ₹ 25 lakhs, then how the commission income already accounted for by the firm at ₹ 27.50 lakhs could not be set off. We could appreciate the case of the Revenue, if after taking into the average commission income for three days, the learned CIT(A) worked 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 undisclosed income. As submitted by the assessee, it has not firstly admitted the cash recovered during the course of search 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. 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. We have already deleted ₹ 18,20,407/-; therefore, 10% of this is to be excluded. The penalty is, therefore, restricted to ₹ 2,75,000/-, instead of ₹ 4,57,041/- imposed by the Assessing Officer. In the result, the appeal of the assessee is partly allowed.
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