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TMI Blog2016 (12) TMI 1144X X X X Extracts X X X X X X X X Extracts X X X X ..... 71AAA of the Income Tax Act amounting to Rs. 63,611/-." 3. At the time of hearing before us, none appeared on behalf of the assessee. Therefore, we proceed to dispose of the appeal after hearing the learned D.R.. 4. The brief facts of the case are that the assessee was covered during the search action on the Kanakia Group on 29th March, 2011. During the course of the search operations, the assessee admitted providing bogus bills amounting to Rs. 2,54,44,602/- in the statement recorded u/s 132(4) of the Act, for the year under consideration. These bogus bills were provided to the Kanakia Group of Companies. The assessee admitted earning commission income 0.75% of the value of the accommodation bills as his undisclosed income earned by providing accommodation bills. During the course of the assessment proceedings , the assessee's statement was recorded on 19th March, 2013 u/s 131 of the Act and in this statement the assessee declared his undisclosed income on the above accommodation bills @ 2.5% of the value of the accommodation bills. This income amounted to Rs. 6,36,116/- was declared in his return of income filed after recording of this statement u/s 131 of the Act on 19-03- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e manner of earning of undisclosed income. The assessee himself admitted as under:- "It can be appreciated that the assessee had during the course of search proceedings u/s 132(4) admitted to have earned .75 % on the accommodation bills provided to the Kanakia group. However, since the assessee was not able to prove the payment of 2.5 % on accommodation bills procured against which accommodation bills provided to Kanakia group & earned 3.25 % on the same, assessee to buy peace & avoid protracted litigation agreed for undisclosed income @ 2.5 % instead of .75 % on accommodation bills provided to Kanakia group in the statement recorded u/s 131 in pursuance to the statement recorded u/s 132(4}." Thus the AO observed that the assessee is not able to prove and substantiate the manner of earning of the undisclosed income @ 2.5% on the accommodation bills provided and hence the assessee was not granted immunity from the levy of penalty u/s 271 AAA of the Act and the plea of the assessee was rejected by the AO. Accordingly, the A.O. levied penalty @ 10% of the afore-stated undisclosed income, vide penalty order dated 26.09.2013 passed by the AO u/s 271AAA of the Act. 5. Aggrieved by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 30/03/2011 whereby the assessee admitted to have earned income @ 0.75 % on the accommodation bills provided to Kanakia group. However, in order to buy peace and avoid protracted litigation with the Revenue, the assessee admitted to have earned additional commission income @ 2.5% over and above 0.75% commission income earned on providing accommodation entries to Kanakia group during the course of assessment proceedings vide statement recorded on 19/03/2013 u/s 131 of the Act . The ld. D.R. submitted that the authorities below have rightly levied the penalty u/s 271AAA of the Act and he relied upon the orders of the authorities below. 7. We have heard the ld. D.R. , perused the orders of the authorities below and also perused the material available on record. We have observed that the assessee was searched along with the Kanakia Group of cases on 29/03/2011. Statements of the assessee were recorded u/s 132(4) of the Act on 30/03/2011 whereby the assessee had admitted that the assessee had earned commission income @ 0.75% on the accommodation entries provided by him to Kanakia Group . The assessee during the course of assessment proceedings while recording statement u/s 131 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion @ 2.25% to 2.5% on each accommodation bill amount which the assessee used to match the said material in the accommodation bills supplied to Kanakia group against the said material purchased against the accommodation purchase bills taken from M/s Karma Ispat or Elpro Packaging through brokers wherein the assessee used to earn net commission [email protected]% of each accommodation bill, as the gross commission income charged was 3.25% while brokerage paid was around 2.25-2.5% leaving a gap of net commission income of 0.75% on accommodation bills provided by the assessee to Kanakia group. The assessee in reply to question no 7 in his statement recorded u/s 131 of the Act on 19/03/2013 had stated that he has earned commission income @ 0.75% on accommodation bills supplied to Kanakia group, which in-fact matches with the initial statement of the assessee that he earned commission income @0.75% of the accommodation bills while recording statement on 30/03/2011 u/s 132(4) of the Act. It is a different matter that owing to non availability of brokers to whom commission expenditure @2.25-2.5% out of books was paid after a gap of long time as also due to obvious reasons that these brokers to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing undisclosed income , the transactions cannot be proved to the hilt as the recipient of the brokerage would not like to come forward and self incriminate themselves for the obvious reasons of safe-guarding themselves from the wrath of the Revenue , which led the assessee to surrender additional commission income @ 2.5% of accommodation bills issued by the assessee to the Kanakia group. The Revenue has also not made any efforts to summon the said brokers u/s 131 of the Act or to issue notices u/s 133(6) of the Act to call information from the brokers to whom commission was paid by the assessee out of books. In our considered view, the assessee has come out with bonafide explanations to fulfill the mandate of Section 271AAA(2) of the Act and the assessee is entitled for immunity granted from penalty as all the conditions are met . The assessee has substantiated the claim with respect to the manner of earning of the earning of undisclosed income by way of additional commission income @2.5% on accommodation bills provided by the assessee. In our considered view, the assessee has made truthful declaration while recording the statement u/s 132(4) of the Act whereby the assessee claim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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