DCIT, Ludhiana V. M/s Sunrise Stock Services (P) Ltd, Ludhiana

ITA 694/CHANDI/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95480 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-06-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 13-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: K J SHALLY
• Keywords: Income from undisclosed sources
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 694/CHD/2011 ASSESSMENT YEAR: 2005-06 THE DCIT, VS M/S SUNRISE STOCK SERVICES P.LTD. CIRCLE VII, 488/2, RAJ GURU NAGAR, LUDHIANA. LUDHIANA. PAN: AAGCS6833C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K.MITTAL RESPONDENT BY : SHRI K.J. SHALLY DATE OF HEARING : 10.08.2015 DATE OF PRONOUNCEMENT : 12.08.2015 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF LD. CIT(APPEALS)-II LUDHIANA DATED 27.04.2011 FO R ASSESSMENT YEAR 2005-06, CHALLENGING THE CANCELLATI ON OF PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX A CT. 2. BRIEFLY THE FACTS AS NOTED IN THE IMPUGNED ORDER ARE THAT THE ASSESSING OFFICER LEVIED MINIMUM PENALTY U NDER SECTION 271(1)(C) OF THE ACT WHICH WAS CHALLENGED B EFORE LD. CIT(APPEALS). THE ASSESSING OFFICER OBSERVED TH AT IN THE SECOND APPEAL, ITAT CHANDIGARH BENCH VIDE ORDER DATED 31.12.2009 WITH REGARD TO ADDITION MADE ON ACCOUNT OF COMMISSION EARNED BY ASSESSEE, DIRECTED TO 2 APPLY RATE OF 0.75% COMMISSION INCOME ON ESTIMATED BASIS. THE TRIBUNAL UPHELD ADDITION OF RS. 24,98,6 16/- OUT OF TOTAL ADDITION OF RS. 66,62,980/- MADE BY TH E ASSESSING OFFICER ON ACCOUNT OF COMMISSION. AS PER OBSERVATION OF THE ASSESSING OFFICER, ASSESSEE IS L IABLE FOR PENALTY UNDER SECTION 271(1)(C) OF THE ACT AND ACCORDINGLY LEVIED 100% PENALTY OF THE TAXES. IN T HIS CASE, SURVEY WAS CONDUCTED UNDER SECTION 133A OF TH E ACT ON THE BUSINESS PREMISES OF THE ASSESSEE COMPAN Y ON 15.06.2004, DURING THE COURSE OF SURVEY ASSESSEE DISCLOSED ADDITIONAL INCOME TOTALING TO RS. 14,25,0 00/-. THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE SEIZED DU RING THE SURVEY OPERATION AND LATER ON RELEASED AS PER O RDER OF THE CIT DATED 03.06.2005. THE ASSESSING OFFICER MA DE ADDITION ON ACCOUNT OF COMMISSION EARNED I.E. 2% ON THE TOTAL TURNOVER WHICH COMES TO RS. 66,62,980/-. THI S AMOUNT OF COMMISSION WAS ALSO ADDED TO THE INCOME O F THE ASSESSEE. IN APPEAL, THE ENTIRE ADDITION WAS D ELETED BY LD. CIT(APPEALS). IN FURTHER APPEAL BY THE DEPAR TMENT BEFORE TRIBUNAL, THE ADDITION ON ACCOUNT OF COMMISS ION EARNED WAS CONFIRMED AND PART ADDITION WAS SUSTAINE D AS NOTED ABOVE. THE ASSESSING OFFICER LEVIED THE PENA LTY ON ACCOUNT OF COMMISSION EARNED BY THE ASSESSEE. 3. THE PENALTY WAS CHALLENGED BEFORE LD. CIT(APPEAL S) AND WRITTEN SUBMISSION OF THE ASSESSEE IS REPRODUCE D IN THE APPELLATE ORDER IN WHICH THE ASSESSEE BRIEFLY EXPLAINED THAT ASSESSEE HAD ALREADY MADE SURRENDER OF 3 RS. 14,25,000/- DURING SURVEY AND THE STATEMENT OF THE DIRECTOR WAS RECORDED DURING SURVEY IN WHICH IT WAS CLEARLY STATED THAT COMMISSION INCOME @ 0.05% TO 0. 15% WAS EARNED ON THE TRANSACTION SO MADE BY THE ASSESS EE COMPANY. THEREFORE, THERE WAS NO BASIS FOR THE ASSESSING OFFICER TO MAKE ADDITION ON THE COMMISSIO N INCOME @ 2% OF THE TOTAL TURNOVER. IT WAS EXPLAINE D THAT BOOKS OF ACCOUNT OF THE ASSESSEE LOST LATER ON WHIC H COULD NOT BE PRODUCED BEFORE THE ASSESSING OFFICER AT THE ASSESSMENT STAGE. HOWEVER, THE SAME REMAINED IN CUSTODY OF THE DEPARTMENT FOR SOME TIME. THE ASSES SING OFFICER MADE ADDITION ON ACCOUNT OF EARNING OF THE COMMISSION ON ESTIMATE BASIS WHICH HAVE BEEN DELETE D BY LD. CIT(APPEALS), HOWEVER, ITAT CHANDIGARH BENCH HA S ESTIMATED THE RATE OF COMMISSION AT 0.75% AT THE LO NG TERM SALES AT THE SHORT TERM TRANSACTIONS OF SHARE PROFITS. IT IS WELL SETTLED LAW THAT ON ESTIMATED ADDITIONS, PENALTY NEED NOT TO BE IMPOSED. IT WAS SUBMITTED THAT NO CONCEALMENT WAS DETECTED AT THE T IME OF ASSESSMENT AND THAT ON ULTIMATE FINDING OF THE TRIBUNAL, PART ADDITION WAS MAINTAINED ON ACCOUNT O F COMMISSION INCOME ON ESTIMATE BASIS. THEREFORE, ON MERE ESTIMATE OF INCOME, PENALTY IN THIS CASE SHOUL D NOT BE LEVIED. THE ASSESSEE RELIED UPON SEVERAL DECISI ONS IN SUPPORT OF THIS CONTENTION. 4. THE LD. CIT(APPEALS), CONSIDERING THE SUBMISSION OF THE ASSESSEE NOTED THAT ASSESSING OFFICER MADE ADDI TION 4 OF RS. 66,62,980/- ON ACCOUNT OF COMMISSION EARNED WHICH WAS DELETED BY THE LD. CIT(APPEALS) AND THE I TAT HAS ALSO REDUCED THIS ADDITION FROM RS. 66,62,980/- TO RS. 24,98,616/- ON ESTIMATE BASIS. THEREFORE, IT I S A ISSUE OF DEBATABLE IN NATURE AND NO PENALTY IS ATTR ACTED WHEN INCOME IS ASSESSED ON ESTIMATE BASIS. THE LD. CIT(APPEALS) ALSO NOTED THAT THERE IS NO CONCRETE EVIDENCE OF CONCEALMENT AND ACCORDINGLY, CANCELLED THE PENALTY AND ALLOWED THE APPEAL OF THE ASSESSEE. 5. THE LD. DR RELIED UPON ORDERS OF THE ASSESSING OFFICER AND SUBMITTED THAT CONCEALED INCOME WAS DETECTED DURING THE COURSE OF SURVEY ON WHICH STATE MENT OF THE DIRECTOR OF THE ASSESSEE COMPANY SHRI HARVIN DER SINGH WAS RECORDED WHICH IS NOTED IN THE ASSESSMENT ORDER AS WELL. THE DIRECTOR ADMITTED EARNING OF UNACCOUNTED COMMISSION INCOME. THEREFORE, IT IS NO T A CASE OF MERE ESTIMATE OF INCOME. THE UNACCOUNTED COMMISSION WAS EARNED OUT OF ISSUING BOGUS SHARE PROFITS. THEREFORE, LD. CIT(APPEALS) WAS NOT JUSTI FIED IN CANCELING THE PENALTY IN THE MATTER. THE LD. DR FU RTHER SUBMITTED THAT EVEN IF ASSESSEE, DURING THE COURSE OF SURVEY, SURRENDERED THE INCOME SUBJECT TO NO PENALT Y, BUT SUCH STATEMENT IS NO LONGER RELEVANT IN VIEW OF THE JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF MAC DATA PVT. LTD. 358 ITR 593. 6. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW 5 AND SUBMITTED THAT BOOKS OF ACCOUNT WERE IMPOUNDED DURING THE COURSE OF SURVEY WHICH WERE RELEASED LAT ER ON AND NO DEFECTS IN THE BOOKS OF ACCOUNT HAVE BEEN PO INTED OUT. THE ADDITION MADE ON ACCOUNT OF COMMISSION EA RNED WAS DELETED BY THE LD. CIT(APPEALS) WHICH WAS LATER ON SUSTAINED PARTLY BY THE ITAT WHILE ALLOWING DEPARTM ENTAL APPEAL PARTLY. HE HAS SUBMITTED THAT ITAT MADE PAR T ADDITION ONLY ON ESTIMATED BASIS, THEREFORE, ON MER E ESTIMATE OF INCOME, NO PENALTY IS LEVIABLE. HE HAS SUBMITTED THAT SURRENDER WAS MADE DURING THE COURSE OF SURVEY SUBJECT TO NO PENALTY, THEREFORE, NO PENALTY BE LEVIED IN THIS CASE AND FURTHER SUBMITTED THAT PENA LTY PROCEEDINGS WERE NOT INITIATED IN THE ASSESSMENT OR DER. HE HAS RELIED UPON DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS SANGRUR VANASPATI MILLS LTD. 216 CTR 92 AND ORDERS OF ITAT CHANDIGARH BENCH IN THE CASES OF M/S OCTAVE EXPORTS VS DCIT DATED 19.11.2014 AND M/S BOPARAI METALS (P) LT D. IN ITA 1013/CHD/2010 DATED 18.10.2010. 7. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. IT IS NOT IN DISPUTE THAT SURVEY WAS CONDUCTED UNDER SECTION 133A OF THE ACT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 15.06.2004 I.E. BEFORE THE END OF THE R ELEVANT FINANCIAL YEAR. THE ASSESSEE DISCLOSED ADDITIONAL INCOME TOTALING TO RS. 14,25,000/- UNDER THE HEAD SUNDRY RECEIVABLES. THOUGH, IN THIS CASE BOOKS OF ACCOUN T WERE 6 IMPOUNDED DURING THE COURSE OF SURVEY AND RELEASED LATER ON TO THE ASSESSEE BUT IT IS A FACT THAT BOOKS OF A CCOUNT WERE NEVER PRODUCED BEFORE ASSESSING OFFICER AT THE ASSESSMENT STAGE. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER HAS CONSIDERED THIS ISSUE IN DETAI L WITH REGARD TO EARNING OF THE COMMISSION INCOME. THE ASSESSING OFFICER RECORDED CERTAIN FACTS WITH REGAR D TO MODUS-OPERANDI OF THE BUSINESS AS CARRIED OUT BY TH E ASSESSEE COMPANY. THE ASSESSING OFFICER RECORDED P ART OF THE STATEMENT OF SHRI HARVINDER SINGH, DIRECTOR OF THE ASSESSEE COMPANY RECORDED DURING THE COURSE OF SURV EY, IN THE ASSESSMENT ORDER. THE ASSESSING OFFICER ASK ED FOR THE NAMES OF THE DIRECTOR OF THE ASSESSEE COMPANY A ND HAS SHOWN LEDGER, MARKED SUNRISE STOCK AND ASKED THE DIRECTOR OF THE ASSESSEE COMPANY TO EXPLAIN THE NAT URE OF ENTRIES CONTAINED THEREIN. THE ANSWER TO THIS QUEST ION GIVEN BY SHRI HARVINDER SINGH, DIRECTOR OF THE ASSE SSEE COMPANY IS REPRODUCED AS UNDER, WHICH IS REPRODUCED IN THE ASSESSMENT ORDER : ANS. THE ENTRIES IN THIS LEDGER HAVE BEEN MADE BY MY A CCOUNTANT SH. VIJAY KUMAR SHARMA. THESE ENTRIES CONTAIN DETAIL OF DATE WISE SHARE PROFIT GIVEN TO VARIOUS PERSONS AGAINST THE CASH RECEIVED FROM THEM. THE DATE MENTIONED SHOWS THE DATE ON WHICH THE BILL HAS BEEN ISSUED. THE NAME OF THE PERSON IS MENTIONED IN WHOSE FAVOUR THE BILL OF SHA RE PROFIT HAS BEEN ISSUED. IT ALSO CONTAINS THE NAME OF BANK AND AMOUNT OF BIL L/SHARE PROFIT. IN THE LAST COLUMN THE DETAIL OF CASH PAYMENT RECEIVED AND THE DATE OF RECEIPT OF CASH IS MENTIONED IN RED INK. IN CASES WHERE ADVANCES HAVE BEEN RECEIVED FOR THE PURPOSE OF SHARE PROFIT, THE DETAIL OF CHEQUES HAVE ALSO BEEN WRITTEN. THE INDEX CONTAINS THE NAMES OF SUB-BROKERS TO WHOM THE SE TRANSACTION HAVE BEEN MADE .......................................... ................................................... ... 7 ............. I CATEGORICALLY STATE THAT THESE ARE BOGUS SHARE P ROFITS ISSUED TO DIFFERENT PERSONS AGAINST CASH PAYMENTS MADE BY THE M. IN REALITY NO SUCH PROFITS HAVE BEEN EARNED BY THEM. THESE TRANSACTION S OF SHARE ARE NOT THROUGH STOCK EXCHANGE.. THE MODUS OPERANDI IS THAT AGENT OF CLIENT SUBMITS US LISTS OF PERSON TO WHOM SHARE PROFIT IS TO BE GIVEN. HE ALSO HANDS OVE R CASH IN LIEU OF THE BILLS AND CHEQUES OF SHARE PROFITS WHICH ARE ISSUED SUBSE QUENTLY. WE CHARGE MORE COMMISSION ON THE AMOUNT OF CHEQUES WHICH ARE ISSUE D BY US. THE SALE OF SHARES IS NORMALLY IN CASH TO BOGUS PARTIES AND THI S CASH IS PASSED THROUGH OUR CASH BOOK AND IS DEPOSITED IN THE BANK ACCOUNT FROM WHICH SHARE PROFITS ARE ISSUED. 8. THE ASSESSING OFFICER FURTHER NOTED IN THE ASSESSMENT ORDER THAT LD. COUNSEL FOR THE ASSESSEE WAS ASKED TO PROVIDE THE DETAILS OF WORKING AND MODUS- OPERANDI OF TRANSACTION OF THE ASSESSEE COMPANY. T HE COUNSEL FOR ASSESSEE SUBMITTED THAT IN THIS PROCESS, WE RECEIVE CASH/CHEQUE FROM OUR CLIENTS FOR MAKING INVESTMENTS IN SHARES ON THEIR BEHALF. LATER, AFTE R GETTING THE INSTRUCTIONS FROM OUR CLIENTS, WE SELL THOSE SH ARES ON THEIR BEHALF AND ACCOUNT IS SETTLED AFTER GETTING D IFFERENCE BETWEEN SALE AND PURCHASE AND AFTER DEDUCTING OUR SERVICE CHARGES/COMMISSION, WE ISSUE THEM CHEQUES . 9. THE LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE ASSESSEE GET THEIR SERVICE CHARGES/COMMISSION O N PERFORMING SUCH COTRACTS AND EARN COMMISSION AND HA S EXPLAINED DIFFERENT RATES EARNED ON ACCOUNT OF COMMISSION. THE ASSESSING OFFICER, THEREFORE, CONSIDERING THE EXPLANATION OF THE ASSESSEE AND STATEMENT OF THE DIRECTOR SHRI HARVINDER SINGH, REC ORDING 8 DURING THE COURSE OF SURVEY FOUND THAT THERE IS NO WAY IN WHICH IN THE ABSENCE OF REGULAR BOOKS OF ACCOUNT, T HE TRANSACTIONS CAN BE DIVIDED INTO SHORT TERM AND LON G TERM NATURE. THE CONTENTION OF THE COUNSEL THAT 90 % OF THE TRANSACTIONS ARE OF SHORT TERM NATURE, CANNOT B E ACCEPTED AS THERE IS NO EVIDENCE ON RECORD TO SUPPO RT THE SAME. THE ASSESSING OFFICER, THEREFORE, CONSIDERIN G THE MATERIAL FOUND DURING THE COURSE OF SURVEY, APPLIED RATE OF 2% AGAINST TURNOVER FOR EARNING OF THE UNACCOUNT ED COMMISSION BY THE ASSESSEE ON THIS BUSINESS. THOUGH THE LD. CIT(APPEALS) DELETED ADDITION OF RS. 66,62,980/ -, THE ITAT BENCH WHILE DEALING WITH THE DEPARTMENTAL APPE AL IN ITA 367/2008 FOR ASSESSMENT YEAR UNDER APPEAL VIDE ORDER DATED 31.12.2009 IN PRINCIPLE, SUSTAINED THE ORDER OF THE ASSESSING OFFICER IN MAKING THE ADDITION, HO WEVER THE UNACCOUNTED COMMISSION INCOME WAS RESTRICTED @ 0.75% AND DIRECTED THE ASSESSING OFFICER TO RECOMPU TED UNACCOUNTED INCOME. ACCORDINGLY, IT WAS ULTIMATELY RESTRICTED TO RS. 24,98,616/- BY THE ASSESSING OFFI CER ON WHICH PENALTY WAS IMPOSED BY THE ASSESSING OFFICER. 10. IT IS WELL SETTLED LAW THAT FINDINGS GIVEN IN T HE ASSESSMENT/QUANTUM PROCEEDINGS HAVE PROBATIVE VALUE , HOWEVER THE ASSESSEE COULD STILL EXPLAIN THE ADDITI ON AT THE STAGE OF PENALTY PROCEEDINGS. IN THIS CASE, TH E LD. CIT(APPEALS) MERELY CANCELLED THE PENALTY HOLDING I T TO BE A CASE OF ESTIMATED ADDITION AND FURTHER HOLDING TH AT SINCE NO CONCRETE EVIDENCE OF CONCEALMENT OF INCOME HAVE 9 BEEN FOUND, THEREFORE, PENALTY WAS CANCELLED. THE APPROACH OF THE LD. CIT(APPEALS) IS NOT SUSTAINABLE IN LAW. HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CAS E OF RAMESH CHANDER GUPTA V ITAT & OTHERS 344 ITR 320 HELD AS UNDER : ON AUGUST 5,1994, A SURVEY WAS CARRIED OUT UNDER SEC TION 133A OF THE INCOME-TAX ACT, 1961, AT THE BUSINESS PR EMISES OF THE ASSESSEE. EXCESS STOCK WAS DISCOVERED. AN ADDIT ION WAS MADE TO THE INCOME OF THE ASSESSEE. PENALTY WAS ALS O IMPOSED. THE TRIBUNAL UPHELD THE ORDER OF PENALTY. ON APPEAL TO THE HIGH COURT: HELD, DISMISSING THE APPEAL, THAT THE TRIBUNAL CATEGORI CALLY HELD THAT THE ADDITION HAD NOT BEEN MADE ON THE BAS IS OF ESTIMATE AS RECORDED BY THE COMMISSIONER (APPEALS) BUT ON ACTUAL PHYSICAL VERIFICATION OF STOCK BY THE ASSESSI NG OFFICER DURING SURVEY. THE IMPOSITION OF PENALTY WAS VALID. 11. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF JYOTI LAXMANKONKAR V CIT 292 ITR 163 HELD AS UNDER: THE ASSESSEE FILED A RETURN FOR THE ASSESSMENT YEAR 1999- 2000 DECLARING AN INCOME OF RS. 7,40,510. NOT SATISFIED THEREWITH, THE ASSESSING OFFICER CARRIED OUT A SURVEY UNDER SECTION 133A OF THE INCOME-TAX ACT, 1961, AND DURING THE SURVEY FOUND THAT THERE WAS A DISCREPANCY IN STOCK TO THE TUNE OF RS. 18,28,706/- WHICH WAS BROUGHT TO THE NO TICE OF THE ASSESSEE, AND THE ASSESSES FILED A REVISED RETUR N DISCLOSING ADDITIONAL INCOME OF RS. 18,28,706. THE ASSESSING OFFICER IMPOSED PENALTY UNDER SECTION 271( L)(C) AND THIS WAS UPHELD BY THE TRIBUNAL . ON APPEAL TO T HE HIGH COURT: HELD, DISMISSING THE APPEAL, THAT THE QUESTION WHET HER THERE IS CONCEALMENT OF INCOME OR NOT HAS TO BE DECIDED W ITH REFERENCE TO THE FACTS OF A GIVEN CASE AND THE FACT FINDING AUTHORITIES UNDER THE ACT HAVING COME TO THE CONCLU SION THAT IN THE FACTS OF THE CASE, THE ASSESSEE HAD CONCEALE D THE INCOME INITIALLY WITH A VIEW TO AVOID THE PAYMENT O F TAX, THE IMPOSITION OF PENALTY WAS VALID. 10 12. WE MAY NOTE HERE THAT FROM THE STATEMENT OF SHR I HARVINDER SINGH, DIRECTOR OF THE ASSESSEE COMPANY, AS REPRODUCED ABOVE, IT WAS CLEAR THAT THE INCRIMINATI NG STATEMENT OF SHRI HARVINDER SINGH WAS RECORDED DURI NG THE COURSE OF SURVEY, COPY OF WHICH IS FILED AT PAG E 1 OF THE PAPER BOOK AND THAT THE ASSESSING OFFICER HAS S HOWN THE LEDGER MARKED SUNRISE STOCK TO HIM AND ASKED FOR THE EXPLANATION OF THE DIRECTOR. SHRI HARVINDER SI NGH, DIRECTOR, AFTER GOING THROUGH THE LEDGER SHOWN AT T HE TIME OF SURVEY PROCEEDINGS EXPLAINED THAT THE ENTRI ES CONTAINED IN THE LEDGER FOUND DURING THE COURSE OF SURVEY EXPLAINED THE DETAILS OF DATE-WISE SHARE PROFIT GIV EN TO VARIOUS PERSONS AGAINST THE CASH RECEIVED FROM THEM . THE STATEMENT OF SHRI HARVINDER SINGH ALSO CLARIFIE D THAT THESE ARE BOGUS SHARE PROFITS ISSUED TO DIFFERENT P ERSONS AGAINST CASH PAYMENT MADE BY THEM. IT WAS ALSO EXPLAINED THAT THESE TRANSACTIONS OF SHARES ARE NOT THROUGH STOCK EXCHANGE AND THAT THE MODUS-OPERANDI WAS THAT AGENT OF THE CLIENT SUBMITS TO THE ASSESSE E LIST OF THE PERSONS TO WHOM SHARE PROFIT IS TO BE GIVEN. THE AGENT WOULD HAND OVER CASH IN LIEU OF THE BILLS AND CHEQUES OF SHARE PROFITS WHICH ARE ISSUED SUBSEQUEN TLY. THUS, THE ASSESSEE CHARGED MORE COMMISSION ON THE AMOUNT OF CHEQUES WHICH WERE ISSUED BY THE ASSESSEE COMPANY. THE COUNSEL FOR ASSESSEE ALSO, AT THE ASSESSMENT STAGE EXPLAINED THE SIMILAR MODUS-OPERAN DI OF THE TRANSACTIONS OF THE ASSESSEE COMPANY IN WHIC H THE ASSESSEE COMPANY WAS RECEIVING CASH/CHEQUES FROM TH EIR 11 CLIENTS FOR MAKING INVESTMENTS IN SHARES ON THEIR B EHALF AND AS PER INSTRUCTIONS AFTER DEDUCTING COMMISSION, ASSESSEE WAS ISSUING CHEQUES. THE FACTS GATHERED D URING THE COURSE OF SURVEY AND THE LEDGER ACCOUNT SHOWN T O THE DIRECTOR OF THE ASSESSEE COMPANY CLEARLY REVEALED T HAT IT WAS A REGULAR TRANSACTION OF THE ASSESSEE TO DEAL I N UNACCOUNTED COMMISSION EARNED ON ISSUING BOGUS SHAR E PROFITS TO VARIOUS PERSONS. THIS UNACCOUNTED COMMI SSION EARNED ON ISSUING BOGUS SHARE PROFITS WAS NOT ENTER ED INTO THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY. THEREFORE, THE BOOKS OF ACCOUNT MERELY IMPOUNDED AT THE TIME OF SURVEY AND RELEASED LATER ON TO THE ASSESSE E WOULD NOT ABSOLVE THE ASSESSEE FROM LEVY OF THE PEN ALTY IN THE MATTER. IT IS A FIT CASE OF CONCEALMENT OF PARTICULARS OF INCOME BY THE ASSESSEE IN THE RETURN OF INCOME FILED ORIGINALLY BY THE ASSESSEE. IN CASE T HE SURVEY WOULD NOT HAVE BEEN CONDUCTED IN THE BUSINES S PREMISES OF THE ASSESSEE, THE ASSESSEE WOULD HAVE N EVER DISCLOSE THE UNACCOUNTED COMMISSION EARNED ON ISSUI NG BOGUS SHARE PROFITS TO VARIOUS PERSONS. THE ASSESS EE HAS FAILED TO EXPLAIN BEFORE THE AUTHORITIES BELOW THAT SUCH UNACCOUNTED COMMISSION WAS ENTERED INTO THE BOOKS O F ACCOUNT OF THE ASSESSEE. IT WAS, THEREFORE, NOT A MERE CASE OF ESTIMATE OF UNACCOUNTED INCOME. THE LD. CIT(APPEALS) WAS, THEREFORE, NOT JUSTIFIED IN HOLDI NG THAT IT IS A CASE OF ESTIMATE OF INCOME AND BECAUSE LD. CIT(APPEALS) DELETED THE QUANTUM ADDITION, WOULD MA KE OUT IT TO BE A CASE OF DEBATABLE IN NATURE. THE LD . 12 CIT(APPEALS) WAS ALSO NOT JUSTIFIED IN HOLDING THAT NO CONCRETE EVIDENCE OF CONCEALMENT OF INCOME WAS FOUN D DURING THE COURSE OF SURVEY. THE CASE IS BASED ON INCRIMINATING MATERIAL AND ENTRIES FOUND AGAINST ASSESSEE IN SURVEY PROCEEDINGS. THE RATE OF COMMISS ION IS SETTLED BY TRIBUNAL. THEREFORE, IT IS NOT A CASE OF ADDITION ON MERE ESTIMATE. 12(I) IT MAY ALSO BE NOTED HERE THAT THE ASSESS ING OFFICER IN THE PENALTY ORDER HAS SPECIFICALLY NOTED AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND MATE RIAL ON RECORD IT WAS FOUND THAT CERTAIN TYPES OF INCOME S WERE NOT RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSE E AND ASSESSEE WAS REGULARLY EARNING UNDISCLOSED INCOME O UT OF THESE TRANSACTIONS. IT WAS ALSO NOTED THAT ASSESSE E HAD CONTINUED THE SAME PRACTICE THROUGH OUT THE YEAR. T HE ASSESSING OFFICER ALSO RECORDED THAT IT IS A CASE O F EARNING OF UNDISCLOSED INCOME BY THE ASSESSEE AND W AS NOT MERELY ON CONJECTURE OR ESTIMATE. THE ASSESSIN G OFFICER ALSO RELIED UPON DECISION OF THE HON'BLE PU NJAB & HARYANA HIGH COURT IN THE CASE OF VIDHYA SAGAR OSWA L VS CIT 108 ITR 861, IN WHICH HON'BLE HIGH COURT UPHELD THE PENALTY UNDER SECTION 271(1)(C) OF THE ACT WHEREIN THE ASSESSING OFFICER HAS ESTIMATED THE UNDISCLOSED EXP ENSES ON ESTIMATE BASIS AND THE TRIBUNAL CAME TO THE CONCLUSION THAT THE HOUSEHOLD EXPENSES SHOWN WERE RIDICULOUSLY LOW AND ADDITION MADE ON THIS ACCOUNT ATTRACT PENALTY. THE HON'BLE PUNJAB & HARYANA HIGH 13 COURT HELD THAT THERE WAS SUFFICIENT EVIDENCE BEFOR E THE TRIBUNAL FOR COMING TO THE CONCLUSION AND IMPOSING PENALTY. THE ASSESSING OFFICER WAS THEREFORE, JUST IFIED IN HOLDING IT TO BE A CASE OF EARNING UNDISCLOSED INCO ME IN THE NATURE OF UNACCOUNTED COMMISSION EARNED ON ISSU ING BOGUS SHARE PROFITS WHICH WAS NOT RECORDED IN THE B OOKS OF ACCOUNT OF THE ASSESSEE. THUS, THE LD. CIT(APPE ALS) WAS NOT JUSTIFIED IN CANCELING THE PENALTY HOLDING IT TO BE A CASE OF ESTIMATED INCOME AND THAT NO CONCRETE EVI DENCE CONCEALMENT OF INCOME FOUND AGAINST THE ASSESSEE. THE DECISIONS RELIED UPON BY LD. COUNSEL FOR THE ASSESS EE ARE, THEREFORE, CLEARLY DISTINGUISHABLE ON FACTS BECAUSE IN THOSE CASES, INCOME WAS ESTIMATED MERELY ON ESTIMAT E AND THUS, PENALTY WAS CANCELLED. 13. THE LD. COUNSEL FOR THE ASSESSEE ALSO CONTENDED THAT ASSESSING OFFICER HAS NOT INITIATED PENALTY FOR CONCEALMENT OF INCOME IN THE ASSESSMENT ORDER WHICH FACT IS INCORRECT BECAUSE THE ASSESSING OFFICER AFT ER PASSING THE ASSESSMENT ORDER HAS RECORDED THE FOLLO WING FACTS IN THE ASSESSMENT ORDER, PENALTY PROCEEDING UNDER SECTION 271(1)(C) HAS BEEN INITIATED FOR CONCEALMEN T OF INCOME. WE MAY ALSO NOTE HERE THAT THIS POINT IS RAISED AT THIS STAGE, BUT ACCORDING TO SUBMISSION OF LD. C OUNSEL FOR THE ASSESSEE, SAME ISSUE WAS NEVER RAISED BEFOR E THE LD. CIT(APPEALS) AND NO FINDINGS HAVE BEEN RECORDED BY THE LD. CIT(APPEALS) ON THIS ISSUE AS WELL. FURTHE R, THE ASSESSEE HAS NOT FILED ANY CROSS APPEAL OR CROSS 14 OBJECTION, THEREFORE, CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE IS REJECTED. 14. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMIT TED THAT SINCE SURRENDER WAS MADE AT THE SURVEY PROCEED INGS OF UNACCOUNTED INCOME OF RS. 14,25,000/- SUBJECT TO NO PENALTY, THEREFORE, PENALTY NEED NOT TO BE IMPOSED. IN THIS CASE, ASSESSEE HAS SURRENDERED RS. 14,25,000/- IN RESPECT OF SUNDRY RECEIVABLE WHICH HAS NO CONNECT ION, WHAT-SO-EVER WITH THE UNACCOUNTED COMMISSION EARNED BY ASSESSEE ON ISSUING BOGUS SHARE PROFITS. THEREFORE , SUCH FACT IS NOT RELEVANT FOR CANCELING THE PENALTY. FU RTHER, HON'BLE SUPREME COURT IN THE CASE OF MAC DATA PVT. LTD. (SUPRA) HAS HELD THAT THE CONCEPT OF VOLUNTARY SURRENDER IS NOT APPLICABLE TO THE INCOME TAX PROCEEDINGS AND THE PENALTY SHALL HAVE TO BE LEVIED EVEN ON SURRENDERED INCOME. 15. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, IN THE LIGHT OF THE STATEMENT OF THE DIRECTOR RECORDED DURING THE COURSE OF SURVEY AND L EDGER FOUND AGAINST THE ASSESSEE SHOWING UNACCOUNTED COMMISSION EARNED BY THE ASSESSEE, CLEARLY REVEALED THAT IT IS A FIT CASE OF LEVY OF THE PENALTY BECAUSE THE ASSESSEE HAS CONCEALED THE PARTICULARS OF INCOME. IT MAY AL SO BE NOTED HERE THAT DESPITE SURVEY WAS CONDUCTED ON 15.06.2004 AND THE FINANCIAL YEAR ENDED ON 31.03.20 05, THE ASSESSEE DELIBERATELY DID NOT SHOW THE UNACCOUN TED INCOME IN THE ORIGINAL RETURN OF INCOME FILED IN TH IS CASE. 15 THEREFORE, IN OUR VIEW, LD. CIT(APPEALS) WAS NOT JU STIFIED IN CANCELING THE PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. WE, ACCORDINGLY, SET ASIDE THE ORD ERS OF THE LD. CIT(APPEALS) AND RESTORE THE ORDER OF THE ASSESSING OFFICER LEVYING THE PENALTY UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 16. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH AUGUST,2015. SD/- SD/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12 TH AUGUST,2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH