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2016 (11) TMI 448 - ITAT MUMBAI

2016 (11) TMI 448 - ITAT MUMBAI - TMI - Penalty u/s 271(1)(c) - addition made on the basis of estimation - Held that:- As per the settled law penalty proceedings are different from assessment proceedings because the standard of proof required for imposition of penalty is different from that on which an addition could be maintained. Mere addition to the income of the assessee does not mean that the assessee has concealed. - Thus this is not a fit case where penalty can be imposed under sectio .....

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. Year 2002-03 and 2008-09 respectively. Since both the assessees are the members of same family and the issues involved in both the appeals are common, the same were clubbed and heard together and are being disposed of by this common order for the sake of convenience. ITA No. 2639/Mum/2015 A.Y. 2002-03 2. Since the facts and circumstances of both the case are identical except the amount involved, we take the facts of the ITA 2639/M/2015 as lead case. Survey action u/s 133A was carried out at th .....

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ssessee assailed the order of the Ld. CIT(A) before the ITAT and during pendency of quantum appeal, A.O levied penalty of ₹ 9,33,424/ u/s 271(1)(c) of the Act which was confirmed by the Ld. CIT(A) in the first appeal. In the mean time the ITAT vide order dated 14/09/2016 decided the quantum appeal and partly allowed the appeal of the assessee by reducing the commission to 0.6%. The assessee has challenged the penalty order confirmed by the Ld. CIT(A) by raising the following effective grou .....

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on the basis of estimation and without bringing on record any tangible material to show that the appellant had infact earned a higher rate of commission over and above 1% on sale bills. 3. Before us the Ld. Authorised Representative (AR) submitted that in the present case the A.O levied penalty on the addition of 6% of sales but in some years the addition was made at @ 4% of sales and 3% of purchases. However, in appeal the Tribunal, vide order dated 14/09/2016 changed the basis of estimation b .....

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Fortune Technocomps P. Ltd. ITA 313 of 2016 (Delhi HC), CIT vs. Reliance Petro Products P. Ltd. 322 ITR 158 (SC), Naresh Chand Agarwal vs. CIT (2013) 38 taxmann.com 397 (Allahabad HC), California Design & Construction INC India, Chandigarh vs. ITO (2016) 65 taxmann.com 248 (Chandigarh Tribunal), Mahaveer Jain vs. DCIT (2014) 51 taxmann.com 204(Jodhpur-Tribunal), JCIT vs. Bhagwan Dass Garg (2014) 48 taxmann. com 185(Chandigarh-Tribunal, ITO vs. Gurunanak Oil Agency (2013) 35 taxmann. com 562 .....

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ns of the parties. We notice that in quantum appeal ITA Nos. 5011 and 5018/Mum/2014 sought assessment years 2002-03 to 2009-10, the coordinate bench vide order dated 14/09/2016, following the decision rendered in the case of Sanjay Kumar Garg versus ACIT (2011) 12 taxmann.com 294 (Delhi) and the decision rendered by the coordinate bench in the case of gold star Finvest (P) Ltd versus ITO (2013) 33 taxmann.com 129 (Mumbai tribunal) held that addition of 0.6%. of turnover is reasonable. The releva .....

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jurisdictional Mumbai Tribunal in case of Gold Star Finvest (P.) Ltd. vs ITO (2013) 33 taxmann.com129 (Mumbai - Trib.), wherein Tribunal held as under: 12. Having carefully examined the various Orders in the case of different assessees, it has become amply at that in these type of activities brokers are only concerned with their commission on the value of the transactions. Now the question comes what would be the reasonable percentage of commission on the total turnover? The assessee has also m .....

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ssion at 0.15%, which is more than the percentage of commission considered to be reasonable by the Tribunal in the cases of Palresha & Co. (supra) and Kiran & Co. (supra), in similar type of projections. The theory of the Assessing Officer to treat the entire deposit as unexplained cash credits, cannot be accepted in the light of assessment orders in the case of beneficiaries and also in the light of the fact that assessee is only concerned with the commission earned on providing accommo .....

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ission on turnover and in Gold Star Finvest (P) Ltd. (supra) approved 0.15%. So, taking all factors into consideration, we hold that percentage of commission to be earned on turnover is reasonable at 0.6%. We hold so. 6. Admittedly, the AO had levied penalty in question under section 271 (1) (C) of the Act on the addition made on the basis of estimation and the basis of estimation was further changed substantially by the Tribunal in quantum appeal. As per the settled law penalty proceedings are .....

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ase of Harigopal Singh Vs. Commissioner of Income Tax reported in (2002) 125 Taxman 242, wherein the estimated addition made by the AO was considerably reduced by the Tribunal, has held that in such cases, provisions of section 271 (1 )(c) of the Act are not attracted. The same view have been taken by the ITAT Chandigarh in JCIT v. Bhagwan Dass Garg (2014) 48.taxmann185 (Chandigarh-Trib), Jodhpur Tribunal in ITO v. Gurunanak Oil Agency (2013) 35 taxmann 562(Jodhpur-Trib.) and other Benches of IT .....

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