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2020 (2) TMI 653

..... ay when the assessee-firm came into existence by execution of the partnership deed. It came into existence on 7th May 2008 and ended on 4th December 2008. - HELD THAT:- To our mind, the commission income of the assessee was to be estimated for the period during which the firm remained in existence for the relevant accounting year, i.e. for the number of days relating to Assessment Year 2009-10 it remained into existence. Its existence has been worked out for 207 days. Once, after taking into consideration the turnover, the commission income has been worked out at a sum of ₹ 25 lakhs, then how the commission income already accounted for by the firm at ₹ 27.50 lakhs could not be set off. We could appreciate the case of the Revenue, if after taking into the average commission income for three days, the learned CIT(A) worked out the commission income of 207 days at ₹ 27.50 lakhs plus ₹ 25 lakhs. In that situation, the stand of the Revenue not to give set off of ₹ 27.50 lakhs could be justified. But in the present situation, the only method which could be adopted is to work out total commission income for 207 days by whatever method, then debit that commiss .....

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..... . First, we take up ITA No. 1708/Ahd/2011. The grounds of appeal taken by the assessee are not in consonance with Rule 8 of Income Tax (Appellate Tribunal) Rules, 1963; they are descriptive and argumentative in nature. In brief, the grievance of the assessee is that learned CIT(A) has erred in confirming the addition of ₹ 18,20,407/-. 3. The brief facts of the case are that a survey under Section 133A of the Income-tax Act was carried out at the business premises of M/s. Ashish Kumar Ankit Kumar & Co., situated at 1st Floor, 311, Kucha Ghasi Ram, Fateh Puri, Chandani Chowk, Delhi. During the course of survey, a sum of ₹ 27.57 lakhs was recovered from the business premises. As the assessee was unable to explain the cash found/recovered; therefore, the survey was converted into search under Section 132(1) of the Act. It emerges out from the record that initially the assessee took the stand that this sum of ₹ 27.57 lakhs was of some clients who have given to the assessee for Angadiya services. Later on, the assessee changed the stand and offered it as a commission income. The Assessing Officer, apart from this, further estimated commission income of ₹ 25 la .....

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..... ppellant upto that date and therefore, there were no valid reason for retracting this statement by the partners. In other words, the appellant has earned gross commission income of ₹ 25 Lacs during 207 days as mentioned above. 5.1 In the profit and loss account, the appellant has debited total expenditures of ₹ 6,79,593/-. Therefore, the addition of ₹ 25 Lacs minus ₹ 6,79,593/- = ₹ 18,20,407/- is upheld as the net commission income of the appellant instead of ₹ 25 Lacs considered by the AO. 5. Learned Counsel for the assessee, at the very outset, contended that though ₹ 27.50 lakhs was not initially admitted by the assessee as commission income; but later on it was considered as a commission income and offered for taxation. There is no justifiable reason at the end of the learned CIT(A) to exclude this amount from the total income of the assessee representing commission income. The learned CIT(A) has determined ₹ 25 lakhs as estimated commission income; thereafter debited the expenditure and confirmed addition of ₹ 18,20,407/-, but set off of ₹ 27.50 lakhs disclosed by the assessee has not been given. On the other hand, le .....

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..... grievance of the assessee is that learned CIT(A) has erred in confirming the penalty of ₹ 4,57,041/- which was imposed by the Assessing Officer under Section 271AAA(2)(ii) of the Act. 9. The penalty under Section 271AAA(2)(ii) has been imposed qua the addition of ₹ 27,50,000/- and ₹ 18,20,407/-. In other words, the total amount considered for computing the penalty is ₹ 45,70,407/- and 10% of this amount has been calculated as penalty imposable upon the assessee under Section 271AAA of the Act. In this way, learned Assessing Officer has imposed the penalty of ₹ 4,57,041/-. Appeal to the learned CIT(A) did not bring any relief to the assessee. 10. With the assistance of the learned representatives, we have gone through the record carefully. Section 271AAA has a direct bearing on the controversy; therefore, it is pertinent to take note of this section which reads as under:- 271AAA. (1) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the 1st day of June, 2007 but before the 1st day of July, 2012, the assessee shall pay by .....

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..... ate that an assessee could be absolved from the levy of penalty if the conditions enumerated in sub-section (2) are being fulfilled by the assessee. The conditions enumerated in sub-section (2) are that penalty under Section 271AAA would not be leviable upon assessee if the assessee, during the course of search, has admitted the undisclosed income; specified the manner in which such income has been derived; substantiated the manner in which the undisclosed income was derived and paid the taxes together with interest, if any, in respect of the undisclosed income. As submitted by the assessee, it has not firstly admitted the cash recovered during the course of search at ₹ 27.50 lakhs. Therefore, it does not fulfill the conditions enumerated in sub-section (2) of Section 271AAA of the Act. Even copy of the statement recorded under Section 132(4) has not been placed before us. Therefore, after going through the record, we are of the view that the assessee failed to fulfill the conditions of Section 271AAA. It, therefore, deserves to be visited with penalty. However, the penalty is to be restricted qua 10% of the additions we have confirmed. In other words, the penalty was calcula .....

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