TMI Blog2016 (10) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 (A) has erred in law and on facts in upholding the levy of penalty of ₹ 7,15,485/- u/s 271(1)(c) for alleged furnishing of inaccurate particulars of income without properly appreciating the facts of the appellant. 3. Brief facts are the assessee though claims to be engaged in the business of software development and trading in shares and securities, during the course of assessment the Assessing Officer found that the assessee-firm is only an accommodation entry provider which was not disputed 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 reprodu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are insignificant when compared with the deposits and the withdrawals. Moreover, on examination of the Bank statements 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. 4.2 . 5. In view of the discussion held above and 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 routed by the assessee-company through its bank accounts. 3.1 Since the assessee admitted the addition, no further appeals were filed by it. Consequent to the initiation of penalty proceedings, show cause notice u/s 271(1)(c) was issued. The assessee vide reply dated 27.09.2013 contended as under:- The books of the account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 have taken place have not accepted that the said dealings are accommodating entries only. The onus is on the department to prove it. The contentions of the assessee have not been accepted and penalty has been levied for alleged furnishing of inaccurate particulars of income. Being aggrieved by the penalty, this appeal is preferred. 3.4 The ld. CIT(A), however, confirmed the penalty by following observations:- 6. I have carefully considered the submissions made by the appellant and have gone through 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 tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Ld. Counsel for the assessee reiterated the facts and contends that the penalty in question is not justified as :- i) The addition was accepted by assessee and not challenged before the ld. CIT(A) to buy peace of mind 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; in such a case, the AO should further bring some material on record so that it is conclusively established that such surrender, in fact, represented the real income or undisclosed income of the assessee; on the facts of the case, penalty was not leviable in respect of surrender of share capital as income. 5. Ld. DR, on the other hand, vehemently contends that there is no question of estimate. The assessment is not framed on any estimate but based on clear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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