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Genus Commu Trade Limited Versus DCIT, Central Circle 2 (2) , Ahmedabad

2016 (10) TMI 596 - ITAT AHMEDABAD

Levy of penalty u/s 271(1)(c) - assessment based on estimated income - professional entry operator - as per assessee he has accepted the estimated income to buy peace and avoid protracted litigation - Held that:- The addition on which penalty has been imposed is not based on estimate but the same was offered by the assessee itself based on another case of Nexus Software Ltd. There being no element of estimate, this contention of the assessee carries no merit. - Nothing emerges from record th .....

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et. Thus no infirmity in the orders of the authorities below confirming the penalty which are upheld - Decided against assessee. - ITA No. 1669/Ahd/2015 - Dated:- 30-8-2016 - SHRI R.P. TOLANI, JUDICIAL MEMBER For The Assessee : Shri P.F. Jain, AR For The Revenue : Shri Aditya Shukla, Sr DR ORDER This appeal by the assessee is directed against the order of the Commissioner of Income-Tax (Appeals)-12, Ahmedabad dated 27.03.2015 for AY 2010-2011. 2. The sole ground raised is as under:- The Ld. CIT .....

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puted and the assessment was framed at ₹ 10,23,115/- as against the loss declared by the assessee at Rs.(-)16,12,371/-, by following observations:- 3. Further, assessee vide its submission dated 23.03.2013, the relevant extract is reproduced hereunder: "The above assessee has filed return for A. Y 2010-11 on 14/10/2010 declaring loss of 16,12.371/-. The facts of the assessee are similar to the facts of Nexus Software Ltd. which /s also assessed in your circle The assessment of Nexus S .....

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s per profit and loss account of the assessee for this year there is loss of ₹ 41,00,291 /-During the year the assessee has shown sales of ₹ 10,30,67,375/- which includes amounts received on land transactions and shares and securities treated by the department as accommodation entries determining income @ 0.5 % on the gross amount of transactions as per bank statement. As stated above the facts of the assessee being similar to the facts of Nexus Software Ltd. and in the reasons recor .....

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exure separately attached herewith. As per the computation method adopted by the department the income for A.Y. 2010-11 @ 0.5 % will come to ₹ 26,35,485/-. This is in keeping with assessment order for A. Y. 2009-10 of Nexus Software Ltd. and as per the reasons recorded for A.Y 2008-09 u/s. 148 in respect of assessee company also. Therefore the assessment may kindly be finalized accordingly." 4. On perusal of the bank statement as submitted by the assessee, it is clear that the deposit .....

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d admission of the assessee company vide its letter dated 23.03.2013, it is held that the assessee-company is involved in the business of providing accommodation entries and acts as a pass through entity. Thus, as admitted by the assessee-company in its submission referred to above that it gets a commission of 0.5% on providing accommodation entries and amount of ₹ 26,35,485/- (527097148 X 0.5%) is hereby held to be the total income of the assessee company being 0.5% of the total funds rou .....

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to buy peace and avoid protracted litigation the assessee has accepted the estimated income which cannot be construed furnishing of inaccurate particulars of income. The assessee has discharged its onus in support of return of income filed. Estimated income cannot be as basis for levy of penalty. Simply on the basis of confession in the statement, no addition can be made if there is no corroborating evidence to prove the allegation. The parties, with whom dealings of sales and purchases have ta .....

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closing balances are insignificant when compared with the deposits and the withdrawals. Moreover, on examination of the Bank statement it is seen that funds are deposited in the bank account of the assessee company and the same in equal amount are transferred to some other account on the same day or the subsequent days. During the financial year under consideration the total deposits and withdrawals work out at ₹ 52,78,46,703/-. On the basis of the discussion during assessment proceedings .....

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by following reply:- "The appellant Company is engaged in Business of Dealing in purchase and sale of securities. Return showing loss of ₹ 16,12,371 was filed on 14-10- 2010. As per assessment order passed u/s 143(3) income has been estimated by treating the transactions of the company as accommodating entries without any Cogent evidence. The assessee has accepted the estimated income to buy peace and avoid protracted litigation. The parties with whom dealing of purchase and sales hav .....

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hrough the assessment order as well as penalty order passed by the Assessing Officer. 6.1 The contentions of the appellants are not acceptable as it is seen that during the year under consideration, the appellant was involved in the accommodation entry business and funds received was not utilized for business purpose at all. The standard modus operandi was followed regularly and the funds used to be transferred to another entity on the very same day or next day in the form of accommodation entry .....

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ong with the other company of the group i.e. nexus software Ltd. The other company Nexus Software was assessed u/s 144 of the Act in AY 2009-10 and income was estimated at 0.5% of the accommodation entries as commission by the Department. After confrontation the appellant agreed to offer commission income @ 0.5% and disclosed/ admitted 0.5% commission on the similar line and offer ₹ 26,35,485/- on bank transaction of ₹ 52,70,97,148/- for taxation. Thus the contention of the appellant .....

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nce Petro products, 322 ITR 158 however the facts and circumstances are clearly distinguishable from the appellant as in the case of appellant it was involved in the accommodation entries business and since after confrontation, all escape route was closed, therefore undisclosed commission income was admitted at the rate of 0.5% of the accommodation entries. 6.5 Therefore, it is held that appellant has earned unaccounted income to the extent of ₹ 26,35,485/- without reflecting the same in t .....

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nd and to avoid litigation. There was no malafide intention; ii) The quantum addition is not based on any direct evidence but on estimate and the penalty u/s 271(1)(c) should not be imposed on estimated income. Reliance is placed on ITAT, Nagpur Bench judgment in the case of ACIT vs. Malu Electrodes (P) Ltd, reported in (2011) 7 ITR 0256, wherein it was held as under:- Mere fact of agreed addition does not result into a conclusion that the amount agreed to be added as income is concealed income; .....

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ary reply dated 23.03.2013 during the course of assessment proceedings, offered the accommodation entry income @ 0.5%, coming at ₹ 26,35,485/-. The assessee has cited the case of Nexus Software Ltd for AY 2008-09. Thus, the assessment has been framed not on any estimate but assessee s own definitive admission of being entry operator and percentage calculation on accommodation entries. 5.1 The assessee has not disputed that it was an instrumentality in accommodation entry racket; therefore, .....

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) were reasonable in imposing the penalty @ 100% of the tax sought to be evaded as against the power of imposing a penalty of 300% of the tax sought to be evaded. 5.3 ITAT, Nagpur Bench judgment in the case of Malu Electrodes (P) Ltd (supra) is not applicable to assessee s case as in that case the assessee, i.e. Malu Electrodes (P) Ltd was not an entry operator but had legitimately received bogus share capital and there was likelihood of application of Supreme Court judgment in the case of CIT v .....

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