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TMI Blog2016 (11) TMI 1061X X X X Extracts X X X X X X X X Extracts X X X X ..... years 2002-03, 2003-04, 2004-05 and 2008-09. 2. The facts relating to levy of penalty are identical in all the years, which is mainly on account of estimation of net profit rate of commission income. The penalty levied for the various assessment years are as under:- Assessment year Penalty (Amt) Rs. 2002-03 6,91,449 2003-04 7,03,687 2004-05 12,20,646 2008-09 11,34,086 3. The brief facts qua the issue relating to levy of penalty are that, assessee is a trader in fabrics, however, at the time of survey under section 133A, it was found that, he along with his other family members through various concerns are engaged in issuing accommodation sales bills. The assessee's family consists of following persons, who were running ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avelled up to the stage of the Tribunal. The Tribunal sent back the matter to the file of the CIT(A). In the set aside proceedings, the Ld. CIT(A) after calling for the remand report again confirmed the said estimation made by the Assessing Officer. 6. Now, in the second round of appeal before the Tribunal, the net profit rate of commission has been reduced to 0.6% of the turnover and 5% of net expenditure as allowed by the Assessing Officer was retained. 7. Before us, the Ld. Counsel submitted that, now in the wake of the decision of the Hon'ble Tribunal, whereby, substantial relief on account of net profit rate has been given, no penalty can be levied. The effect of the Tribunal order and the computation of additional tax liability have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Tribunal decision, the quantum of penalty can be scaled down. 9. After hearing both the parties and on perusal of the impugned order as well as the material placed on record, we find that the addition in all the years have been made after estimating the income of the assessee by way of net commission @ 6% to 7%. Now, the Tribunal in assessee's own case has reduced the net profit rate of commission @ 0.6% after observing and holding as under: "We find that it is not case of turnover and tax thereon but regarding estimation of commission on such business of accommodation entries and tax thereon. Regarding rate of commission adopted by Assessing Officer at 6%, Ld. Authorized Representative submitted that it was very abnormal and cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bill amount as done in the case of brokerage on real estate business. He further observed that the rate of 1 per cent commission is very reasonable. Now the issue arises as to whether the commission should be estimated at the rate of .01 per cent or 1.75 per cent or 1 per cent. The Id. CIT (A) for arriving at the rate of commission earned has relied on rate of commission normally charged in case of real estate transactions. In real estate transactions the broker has to identify/ the suitable butler/ purchaser, inspection of property, visit of interested parties, negotiations of rates, registration of sale deeds etc. whereas in case of bogus entries providers no such activities are involved. Interested party gives cash to entry provider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se names the bank accounts were maintained. In the absence of any evidence having brought on record, we are unable to agree with the assessee that the assessee had passed on commission of lop to the persons in whose names dummy concerns were floated. However, in the business of entry provider certain expenditure has to be incurred which has been stated to be 5p during the course of survey. Therefore, credit of 5p out of 25p received as commission has to be allowed. Therefore, the Assessing Officer is directed to estimate commission income by applying 0.2 per cent net commission on turnover determined by the Ld. CIT (A) for both the assessment years as against 1 per cent taken by him. 6.1 We find that Tribunal in case of Sanjay Kumar Garg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cases of Pairesha & Co. (supra) and Kiran & Co. (supra), in similar type of transactions. 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 concern with the commission earned on providing accommodation entries. We, therefore, of the view that since the assessee itself has declared the commission on turnover at 0.15% which is more than the percentage considered to be reasonable by the Tribunal in the cases of Palresha & Co. (supra) and Kiran & Co. (supra), the same should be accepted. We, accordingly, accept the commission declared by the assessee and set asid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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