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Alpha Chemie Trade Agencies P. Ltd. Versus DCIT, Central Circle-46, Mumbai

2016 (10) TMI 1129 - ITAT MUMBAI

Penalty levied u/s 271(1)(c) - estimation of income from the accommodation entries - Search and seizure under section 132(1) was conducted in the case of several companies, whose kingpin is identified as one Mr. Mukesh Choksi - Revenue had noted that for providing accommodation entries, the entries like the assessee, which were controlled by Mr. Mukesh Choksi were earning commission income - Held that:- In an identical facts and circumstances in the case of M/s. Kaycee Shares Broking Pvt. Ltd., .....

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favour of assessee. - ITA No.698 & 709/MUM/2015 - Dated:- 21-10-2016 - SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER For The Assessee : Shri Mukesh Chokshi For The Department : Shri Rajesh Ojha - DR ORDER PER C.N. PRASAD, JM Both these appeals are filed by the assessee against the common order of the ld. CIT(A)-38, Mumbai dated 14/11/2014 for the Assessment Years 2004-05 & 2008-09 in sustaining the penalty levied under section 271(1)(c) of the Act. 2. The Author .....

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ssee, the commission was estimated and the penalty levied on such estimate was deleted by the I.T.A.T., Mumbai Bench in various cases. Therefore, he pleaded deletion of penalty in assessee case also. 3. Departmental Representative supported the orders of the authorities below. 4. We have heard rival submissions, perused the orders of the authorities below and the case-laws before us. Admittedly, the assessee provided accommodation entries in this case. The backdrop of the dispute is that search .....

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en further affirmed by the ld. CIT(A). 5. During the course of search proceedings, the Revenue had noted that for providing accommodation entries, the entries like the assessee, which were controlled by Mr. Mukesh Choksi were earning commission income. In view of such modus operandi noted and the statements of Mr. Mukesh Choksi recorded at the time of search, the Assessing Officer notes that the group was earning commission ranging from 1.5% to 3.5% and accordingly he estimated the net commissio .....

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15% instead of 2% applied by the Assessing Officer. The Assessing Officer levied penalty for the addition made on account of commission income. The matter was carried out to the ld. CIT(A), who sustained the penalty by following the cases where similar additions were made and in the cases of Goldstar Finvest Pvt. Ltd., M/s. Kaycee Shares Broking Pvt. Ltd., M/s. Mihir Agencies Pvt. Ltd. and finally the assessee for the Assessment Year 2009-10 & 2010-11. We have also perused the coordinate Ben .....

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background, Ld. Representative for the assessee pointed out that similar situation has been dealt with by the Tribunal in the case of Mihir Agencies Pvt. Ltd., & Mr. Mukesh Choksi (supra), wherein the penalty levied under section 271(1)(c) of the Act has been deleted. Ld. Representative for the assessee pointed out that the Tribunal has duly noted that the difference between the assessee and the Revenue was primarily on the estimation of income earned from providing of accommodation entries .....

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iding accommodation bills/hawala entries, that the assessee did not dispute the said fact, that the AO estimated the income from the accommodation entries @ 2% of the total transactions appearing in the bank accounts of the assessee, that the then FAA confirmed the quantum addition made by the AO, that in the case under consideration the Tribunal had held that commission income should be taken at the rate of 0.15% (ITA /6435/Mum/2012 - AY-2004-05 and other six appeals dt.6.1.16). The undisputed .....

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distinct proceedings and the quantum proceedings should not result in automatic levy of concealment penalty. It is a case of estimation of income by the AO and the assessee. Here we would like to discuss two cases. One of the m is Aero Traders P. LTD.(322 ITR 316).In that case the assessee-company had filed its return of income for the year 1997-98 on a notice u/s.148 of the Act, 1961declaring a loss of ₹ 83, 64, 468/-.The assessee had, in the return attached a note stating that it was imp .....

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#8377; 1,02,980/-.The Tribunal confirmed this order. The AO observed that the profit was estimated after rejection of books of account due to certain discrepancies and imposed a penalty on the assessee of ₹ 36,41,003/-, on the ground that it was a clear case of furnishing inaccurate particulars of income. The FAA deleted the penalty holding that the addition made by the AO on the basis of estimated profit could not be a subject-matter of penalty for concealment of income. The Tribunal conf .....

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income of the assessee. But when it comes to the question of imposition of penalty, then independent of the finding arrived at in the quantum proceedings, the authority has to find conclusively that the assessee owns the concealed amount. Considering the fact that Tribunal has adopted a particular rate for estimating the income of the assessee for the year under consideration, we hold that the FAA was not justified in confirming the order passed by the AO u/s. 271(1)(c) of the Act. Therefore, r .....

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