GIRISH C. SANGANI, MUMBAI V. ACIT CEN CIR 23, MUMBAI

ITA 828/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2481 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 10-08-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 06-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJN EESH K ARVIND
• Keywords: Bogus purchase; Search and seizure; Accommodation entries; Revised return
• Section: 133(6); 131

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.828 /MUM/2015 ( / ASSESSMENT YEAR : 2011-12) SHRI GIRISH C. SANGANI, 2/26, KAMALA BHUVAN, SAHAR ROAD, ANDHERI (E), MUMBAI 400 069. / V. ACIT CENT. CIRCLE 23, MUMBAI. ./ PAN : AAEPS4932R ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY NONE REVENUE BY : SHRI RAJNEESH K. ARVIND (DR) / DATE OF HEARING : 10-08-2016 / DATE OF PRONOUNCEMENT : 25-10-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 828/MUM/2015, IS DIRECTED AGAINST THE APPELLATE ORDER DATED 1ST OCTO BER, 2014 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 40, M UMBAI (HEREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2011- 12, THE APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARISING FROM THE PENALTY ORDER DATED 26 TH SEPTEMBER, 2013 PASSED BY THE LEARNED ASSESSING OF FICER (HEREINAFTER CALLED THE AO) U/S 271 AAA OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED THE ACT). ITA 828/MUM/2015 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME TAX APPELLATE TRIBUNAL, MUMBA I (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. THE LEARNED COMMISSIONER OF INCOME TAX, APPEAL - 40 ERRED IN LAW & ON FACTS CONFIRMING PENALTY U/S. 271AAA OF THE INCO ME 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 A PPEAL AFTER HEARING THE LEARNED D.R.. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E WAS COVERED DURING THE SEARCH ACTION ON THE KANAKIA GROUP ON 29 TH MARCH, 2011. DURING THE COURSE OF THE SEARCH OPERATIONS, THE ASSESSEE ADMITTED PRO VIDING BOGUS BILLS AMOUNTING TO RS. 2,54,44,602/- IN THE STATEMENT REC ORDED 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 E ARNING COMMISSION INCOME 0.75% OF THE VALUE OF THE ACCOMMODATION BILL S AS HIS UNDISCLOSED INCOME EARNED BY PROVIDING ACCOMMODATION BILLS. DUR ING THE COURSE OF THE ASSESSMENT PROCEEDINGS , THE ASSESSEE'S STATEMENT W AS RECORDED ON 19 TH MARCH, 2013 U/S 131 OF THE ACT AND IN THIS STATEMEN T THE ASSESSEE DECLARED HIS UNDISCLOSED INCOME ON THE ABOVE ACCOMMODATION B ILLS @ 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 RECORD ING OF THIS STATEMENT U/S 131 OF THE ACT ON 19-03-2013. THE ASSESSEE ALSO ADM ITTED UNDISCLOSED JEWELLERY WORTH RS. 4,71,590/-. THE A.O. INITIATED PENALTY PROCEEDING U/S 271AAA OF THE ACT AGAINST THE ASSESSEE . NOTICES WE RE ISSUED AND IN RESPONSE THEREOF, THE ASSESSEE FILED WRITTEN SUBMISSIONS VID E LETTER DATED 23.08.2013 EXPLAINING WHY PENALTY U/S 271AAA OF THE ACT SHOULD NOT BE LEVIED. THE ASSESSEE HAS SUBMITTED THAT HE HAD ADMITTED UNDISCL OSED INCOME @ 0.75% OF THE VALUE OF THE ACCOMMODATION BILLS , DURING THE T IME OF SEARCH . THE ITA 828/MUM/2015 3 ASSESSEE LATER AGREED TO UNDISCLOSED INCOME @ 2.5% OF THE TOTAL VALUE OF THE ACCOMMODATION BILLS. THE ASSESSEE SUBMITTED THAT HE HAD MADE THE DISCLOSURE DURING THE SEARCH AND THE ASSESSMENT PRO CEEDINGS TO BUY PEACE AND AVOID PROTRACTED LITIGATION. REGARDING JEWELLE RY, THE ASSESSEE HAS SUBMITTED THAT THE SAME HAD BEEN PURCHASED OUT OF C OMMISSION INCOME FROM THE BOGUS BILLS. HOWEVER, THIS ISSUE OF LEVYING PEN ALTY ON ALLEGED UN-EXPLAINED JEWELLERY IS NOT BEFORE US AS THE LD. CIT(A) HAS DE LETED THE PENALTY U/S 271 AAA OF THE ACT WITH RESPECT TO THE ADDITION OF UNEX PLAINED JEWELLERY AND THE REVENUE IS NOT IN APPEAL BEFORE US. THE ONLY ISSUE BEFORE US IS THE ASSESSEES ADMISSION OF COMMISSION INCOME @ 2.5% SUBSEQUENTLY ON THE ACCOMMODATION BILLS PROVIDED BY THE ASSESSEE TO KAN AKIA GROUP OF THE TOTAL VALUE OF ACCOMMODATION BILLS , OVER AND ABOVE AS AG AINST 0.75% ADMITTED AT THE TIME OF SEARCH. THE A.O. OBSERVED THAT THE ASSESSEE HAS ROUTED BOGU S BILLS THROUGH ITS BOOKS ON WHICH THE ASSESSEE HAS OFFERED ADDITIONAL UNDISC LOSED INCOME . THUS , IT WAS OBSERVED BY THE AO THAT THE DECLARATIONS ARE SQ UARELY COVERED WITHIN THE MEANING OF SECTION 271AAA OF THE ACT AS UNDISCLOSED INCOME ON WHICH PENALTY IS LEVIABLE U/S 271AAA OF THE ACT AS THE SA ME IS NOT COVERED BY IMMUNITY U/S 271AAA(2) OF THE ACT. THE AO WAS OF TH E VIEW THAT IN ORDER TO CLAIM AND ENJOY IMMUNITY FROM PENALTY U/S 271AAA OF THE ACT THE ASSESSEE NEEDS TO EXPLAIN THE MANNER OF EARNING UNDISCLOSED INCOME AND ALSO SUBSTANTIATE THE MANNER OF HAVING EARNED SUCH COMMI SSION INCOME @ 2.5% OF THE ACCOMMODATION BILLS PROVIDED AS AGAINST THE ORIGINAL DISCLOSURE @ 0.75%. IT WAS ALSO OBSERVED BY THE AO THAT THE SECT ION 271AAA OF THE ACT DOES NOT ALLOW THE ASSESSEE ANY IMMUNITY FROM PENAL TY U/S 271AAA OF THE ACT ON THE ACCOUNT TO BUY PEACE AND AVOID PROTRACT ED LITIGATION. IT WAS OBSERVED BY THE AO THAT THE ASSESSEE IS NOT ABLE TO PROVE THE MANNER OF EARNING OF UNDISCLOSED INCOME. THE ASSESSEE HIMSELF ADMITTED AS UNDER:- ITA 828/MUM/2015 4 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 T HE ASSESSEE WAS NOT ABLE TO PROVE THE PAYMENT OF 2.5 % ON ACCOMMODATION BILLS P ROCURED AGAINST WHICH ACCOMMODATION BILLS PROVIDED TO KANAKIA GROUP & EARNE D 3.25 % ON THE SAME, ASSESSEE TO BUY PEACE & AVOID PROTRACTED LITIGATION A GREED FOR UNDISCLOSED INCOME @ 2.5 % INSTEAD OF .75 % ON ACCOMMODATION BIL LS PROVIDED TO KANAKIA GROUP IN THE STATEMENT RECORDED U/S 131 IN PURSUANCE T O 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 TH E 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 PENALT Y ORDER DATED 26.09.2013 PASSED BY THE AO U/S 271AAA OF THE ACT. 5. AGGRIEVED BY THE PENALTY ORDER DATED 26.09.2013 PASSED BY THE A.O. U/S. 271AAA OF THE ACT, THE ASSESSEE FILED FIRST APPEAL BEFORE THE LD. CIT(A). 6. THE APPEAL FILED BY THE ASSESSEE BEFORE THE LD. CIT(A) WAS REJECTED BY LD. CIT(A) WHO UPHELD AND SUSTAINED THE PENALTY ORD ERS DATED 26.09.2013 PASSED BY THE A.O. U/S. 271AAA OF THE ACT. THE LEAR NED CIT(A) OBSERVED THAT THE ASSESSEE INITIALLY ADMITTED COMMISSION INCOME A T THE RATE OF 0.75% ON THE ACCOMMODATION BILLS PROVIDED TO KANAKIA GROUP IN HI S STATEMENT RECORDED U/S 132(4) OF THE ACT ON 30/03/2011 DURING THE COUR SE OF SEARCH. THIS ISSUE WAS PROBED FURTHER DURING ASSESSMENT PROCEEDINGS AN D THE ASSESSEE ADMITTED ADDITIONAL INCOME @2.5% ON SUCH TRANSACTIONS , OVER AND ABOVE 0.75% ADMITTED AT THE TIME OF SEARCH. THE LD. CIT(A) HELD THAT THE ASSESSEE IS LIABLE FOR PENALTY U/S 271AAA OF THE ACT IN RESPECT OF ADD ITIONAL INCOME OF RS.6,36,115/- SURRENDERED DURING THE COURSE OF ASSE SSMENT PROCEEDINGS WHILE RECORDING STATEMENT U/S. 131 OF THE ACT ON 19 /03/2013 IN RESPECT OF ITA 828/MUM/2015 5 BOGUS TRANSACTIONS WITH KANAKIA GROUP DETECTED DURI NG THE COURSE OF SEARCH AND SINCE THE AMOUNT OF RS.6,36,115/- HAS NOT EVEN BEEN SURRENDERED DURING THE COURSE OF SEARCH WHILE RECORDING STATEMENT U/S 132(4) OF THE ACT AND EXPLAINING THE MANNER OF DERIVING SUCH INCOME AND S UBSTANTIATING THE SAME, WHICH IS UTMOST NECESSARY TO CLAIM IMMUNITY FROM PE NALTY U/S 271 AAA OF THE ACT, THE AO'S ACTION IN LEVYING PENALTY U/S.271 AAA OF THE ACT ON THIS GROUND WAS HELD TO BE JUSTIFIED BY THE LEARNED CIT( A) WHICH PENALTY ORDER OF THE AO WAS UPHELD/SUSTAINED BY LEARNED CIT(A) VIDE APPELLATE ORDERS DATED 01-10-2014 PASSED BY LEARNED CIT(A). 7. AGGRIEVED BY THE APPELLATE ORDERS DATED 01-10-20 14 PASSED BY THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUN AL. 8. NONE APPEARED FOR THE ASSESSEE. THE LD. D.R. SUB MITTED THAT PENALTY U/S 271AAA OF THE ACT WAS LEVIED BY THE A.O. ON THE AMOUNT OF RS. 6,36,115/- WHICH WAS NOT SURRENDERED BY THE ASSESSE E DURING THE COURSE OF SEARCH WHILE RECORDING THE STATEMENT U/S 132(4) OF THE ACT ON 30.03.3011 WHILE THE ADDITIONAL COMMISSION INCOME @2.5% OVER A ND ABOVE 0.75% COMMISSION INCOME ON ACCOMMODATION BILLS PROVIDED B Y THE ASSESSEE TO KANAKIA GROUP WAS SURRENDERED DURING ASSESSMENT PRO CEEDINGS WHILE RECORDING STATEMENT U/S. 131 OF THE ACT ON 19/03/20 13. DURING THE COURSE OF SEARCH, THE STATEMENT WAS RECORDED U/S 132(4) OF THE ACT ON 30/03/2011 WHEREBY THE ASSESSEE ADMITTED TO HAVE EARNED INCOME @ 0.75 % ON THE ACCOMMODATION BILLS PROVIDED TO KANAKIA GROUP. HOW EVER, IN ORDER TO BUY PEACE AND AVOID PROTRACTED LITIGATION WITH THE REVE NUE, 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 V IDE STATEMENT RECORDED ON 19/03/2013 U/S 131 OF THE ACT . THE LD. D.R. SU BMITTED THAT THE ITA 828/MUM/2015 6 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 RECORD ED U/S 132(4) OF THE ACT ON 30/03/2011 WHEREBY THE ASSESSEE HAD ADMITTED THA T THE ASSESSEE HAD EARNED COMMISSION INCOME @ 0.75% ON THE ACCOMMODATI ON ENTRIES PROVIDED BY HIM TO KANAKIA GROUP . THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHILE RECORDING STATEMENT U/S 131 OF TH E ACT ON 19/03/2013 DECLARED ADDITIONAL UNDISCLOSED COMMISSION INCOME FROM ACCOMMODATION BILLS TO KANAKIA GROUP @2.5% OF THE VALUE OF ACCOMM ODATION BILLS . THE DIFFERENCE AMOUNT OF RS.6,36,116/- WAS OFFERED BY T HE ASSESSEE TO TAX THROUGH A REVISED RETURN FILED ON 23/03/3013 WITH THE REVENUE DURING THE COURSE OF ASSESSMENT PROCEEDINGS WITH DUE TAXES PAI D TO THE REVENUE . THE ASSESSEE VIDE REPLY TO QUESTION NUMBER 2 WHILE RECO RDING STATEMENT ON 18/05/2011 HAS STATED AND CONFIRMED HIS STATEMENT R ECORDED U/S 132(4) OF THE ACT ON 30-03-2011 THAT HE EARNED COMMISSION @0. 75% ON TURNOVER OF RS.4,41,19,702/- FROM HIS FIRM G. CHIMANLAL AND COM PANY AND ON TURNOVER RS. 82,79,200/- FROM M/S ISHA TRADE LINKS WHICH MAT ERIAL HAVE BEEN PROCURED FROM M/S KARMA ISPAT AND A SUM OF RS.71,32 ,487/- FROM M/S G.CHIMANLAL AND CO. AND SUM OF RS.18,78,856/- FROM M/S ISHA TRADE LINKS WHICH HAS BEEN PROCURED FROM M/S ELPRO PACKAGING LI MITED .THE DETAILED PARTY WISE AND YEAR WISE BREAK-UP WAS SUBMITTED BY THE ASSESSEE (REFER PAGE 5-6 / CIT(A) ORDER) WHILE RECORDING STATEMENT ON 1 8/05/2011, WHEREBY THE ASSESSEE CONFIRMED THE STATEMENT RECORDED U/S 132(4 ) OF THE ACT ON 30-03- 2011 DURING SEARCH OPERATIONS. THE ASSESSEE EXPLAIN ED THE MODUS OPERANDI OF EARNING COMMISSION INCOME ON ACCOMMODATION BILLS WHILE REPLYING TO QUESTION NO 5 IN THE STATEMENT RECORDED U/S. 131 OF THE ACT DURING ITA 828/MUM/2015 7 ASSESSMENT PROCEEDINGS ON 19/03/2013 WHEREIN HE SU BMITTED THAT THE ASSESSEE IS PROVIDING ACCOMMODATION ENTRIES TO KANA KIA GROUP WHEREBY ON RECEIPT OF THE PAYMENT AGAINST THE ACCOMMODATION BI LLS THROUGH CHEQUE WHICH WAS DEPOSITED IN THE BANK AND AGAINST THIS CH EQUE THE ASSESSEE HAND OVER ANOTHER CHEQUE TO KARMA ISPAT OR ELPRO PACKAGI NG, FROM WHOM THE ASSESSEE USED TO TAKE ACCOMMODATION BILLS OF BOGUS PURCHASES PASSED ONTO THE KANAKIA GROUP THROUGH BROKERS WHO USED TO HANDO VER CASH TO THE ASSESSEE AFTER DEDUCTING 2.5% OF THE AMOUNT OF COM MISSION ON THE ACCOMMODATION BILL ON THE SALE DAY OR THE VERY NEXT DAY. THE ASSESSEE THEN HANDOVER CASH DIRECTLY TO CHARLES RUMAO OF THE KANA KIA GROUP AFTER HAVING DEDUCTED 3.25% OF THE VALUE OF THE ACCOMMODATION BI LL AMOUNT AND FROM THE ENTIRE TRANSACTION THE ASSESSEE EARNED NET COMMISSI ON INCOME @ 0.75% OF THE ACCOMMODATION BILL AMOUNT. THE ASSESSEE HAD SUBMIT TED THAT IN ORDER TO PROCURE THE ACCOMMODATION BILLS FOR THE KANAKIA GRO UP, THE ASSESSEE HAD TO PAY THE BROKERS COMMISSION @ 2.25% TO 2.5% ON EACH ACCOMMODATION BILL AMOUNT WHICH THE ASSESSEE USED TO MATCH THE SAID MA TERIAL IN THE ACCOMMODATION BILLS SUPPLIED TO KANAKIA GROUP AGAIN ST THE SAID MATERIAL PURCHASED AGAINST THE ACCOMMODATION PURCHASE BILLS TAKEN FROM M/S KARMA ISPAT OR ELPRO PACKAGING THROUGH BROKERS WHEREIN TH E ASSESSEE USED TO EARN NET COMMISSION INCOME@0.75% 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 KAN AKIA 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, WHIC H IN-FACT MATCHES WITH THE INITIAL STATEMENT OF THE ASSESSEE THAT HE EARNE D COMMISSION INCOME @0.75% OF THE ACCOMMODATION BILLS WHILE RECORDING S TATEMENT 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 EXPENDIT URE @2.25-2.5% OUT OF ITA 828/MUM/2015 8 BOOKS WAS PAID AFTER A GAP OF LONG TIME AS ALSO DUE TO OBVIOUS REASONS THAT THESE BROKERS TO WHOM COMMISSION EXPENDITURE WAS PA ID OUT OF BOOKS ARE NOW NOT COMING FORWARD TO INCRIMINATE THEMSELVES AN D TO FACE WRATH OF THE REVENUE AND HENCE THE ASSESSEE WILL NOT BE ELIGIBLE FOR DEDUCTION OF THESE COMMISSION PAID BY THE ASSESSEE @2.5% AGAINST THE G ROSS COMMISSION INCOME EARNED @3.25% ON ACCOMMODATION BILLS PROVIDE D BY THE ASSESSEE TO KANAKIA GROUP. IT WAS SUBMITTED THAT BROKERS THROU GH WHOM TRANSACTIONS WERE CARRIED OUT ARE NOW NOT AVAILABLE TO TESTIFY T HE PAYMENT OF BROKERAGE TO THEM BY THE ASSESSEE @2.25-2.5% IN CONNECTION WITH THE ACCOMMODATION BILLS PROVIDED BY THE ASSESSEE DUE TO SALES TAX ACT ION AGAINST THEM. THE ASSESSEE HAD SUBMITTED THAT HE DID NOT HAD ANY OTHE R EVIDENCE TO PROVE THAT HE HAS ACTUALLY EARNED NET 0.75% COMMISSION INCOME ON ACCOMMODATION BILLS AND HAVE ACTUALLY PAID THE BALANCE 2.25% TO SUCH BR OKERS OUT OF BOOKS. HOWEVER, THE ASSESSEE IN ORDER TO BUY PEACE OF MIND AND TO AVOID PROTRACTED LITIGATION , ADMITTED 2.5% OF THE UNDISCLOSED INCOM E FROM THESE ACCOMMODATION BILLS OVER AND ABOVE 0.75% DECLARED I N THE STATEMENT RECORDED U/S 132(4) OF THE ACT RECODED ON 18/05/201 1 AS THE ASSESSEE WAS UNABLE TO PROVE THE PAYMENT OF COMMISSION @2.25-2.5 % TO THE BROKERS AND OFFERED TO BE TAXED AT 3.25% BEING GROSS COMMISSION INCOME EARNED ON ACCOMMODATION BILLS PROVIDED BY THE ASSESSEE TO THE KANAKIA GROUP WITHOUT CLAIMING DEDUCTION OF BROKERAGE PAID BY THE ASSESSE E W.R.T. THESE ACCOMMODATION BILLS PROVIDED BY THE ASSESSEE TO THE KANAKIA GROUP. THE ASSESSEE AGREED TO FILE REVISED RETURN OF INCOME WI TH ENHANCED UNDISCLOSED INCOME OF 2.5% OF THE VALUE OF ADMITTED ACCOMMODATI ON BILLS AND PAY TAXES , WITH THE UNDERSTANDING THAT NO PENALTY SHALL BE LEV IED AGAINST THE ASSESSEE AND NO PROSECUTION SHALL BE LAUNCHED AGAINST THE AS SESSEE. WE FIND THAT THE ASSESSEE HAS DULY DISCLOSED THE UN DISCLOSED INCOME FROM COMMISSION INCOME @0.75% EARNED ON ACCOMMODATION BI LLS PROVIDED TO KANAKIA GROUP AT THE TIME OF SEARCH ACTION WHILE RE CORDING STATEMENT U/S ITA 828/MUM/2015 9 132(4) OF THE ACT ON 30/03/2011 THAT HE HAS EARNED @ 0.75 % COMMISSION INCOME ON ACCOMMODATION BILLS PROVIDED BY HIM. THE ASSESSEE ALSO DETAILED THE MANNER IN WHICH THE SAID COMMISSION INCOME 0.75 % ON ACCOMMODATION BILLS HAVE BEEN GENERATED OUT OF BOOKS DURING COURS E OF SEARCH WHILE RECORDING STATEMENT U/S 132(4) OF THE ACT. IN THESE TRANSACTIONS WHICH ARE ENTERED INTO OUT OF BOOKS ON WHICH NO TAXES ARE PAI D BEING UNDISCLOSED INCOME , THE TRANSACTIONS CANNOT BE PROVED TO THE H ILT AS THE RECIPIENT OF THE BROKERAGE WOULD NOT LIKE TO COME FORWARD AND SELF I NCRIMINATE THEMSELVES FOR THE OBVIOUS REASONS OF SAFE-GUARDING THEMSELVES FRO M THE WRATH OF THE REVENUE , WHICH LED THE ASSESSEE TO SURRENDER ADDIT IONAL COMMISSION INCOME @ 2.5% OF ACCOMMODATION BILLS ISSUED BY THE ASSESSE E 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 TH E 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 W ITH BONAFIDE EXPLANATIONS TO FULFILL THE MANDATE OF SECTION 271A AA(2) OF THE ACT AND THE ASSESSEE IS ENTITLED FOR IMMUNITY GRANTED FROM PENA LTY AS ALL THE CONDITIONS ARE MET . THE ASSESSEE HAS SUBSTANTIATED THE CLAIM WITH RESPECT TO THE MANNER OF EARNING OF THE EARNING OF UNDISCLOSED INC OME BY WAY OF ADDITIONAL COMMISSION INCOME @2.5% ON ACCOMMODATION BILLS PROV IDED BY THE ASSESSEE. IN OUR CONSIDERED VIEW, THE ASSESSEE HAS MADE TRUTH FUL DECLARATION WHILE RECORDING THE STATEMENT U/S 132(4) OF THE ACT WHERE BY THE ASSESSEE CLAIMED THAT HE EARNED COMMISSION INCOME @0.75% OF THE ACCO MMODATION BILLS PROVIDED BY THE ASSESSEE AND ALSO EXPLAINED THE MAN NER IN WHICH THE SAID COMMISSION INCOME ON ACCOMMODATION BILLS IS DERIVED , WHILE IT IS A DIFFERENT MATTER THAT AT LATER STAGE WHILE RECORDING STATEMEN T U/S 131 OF THE ACT IN 19/03/2013, THE ASSESSEE IS NOT ABLE TO PRODUCE THE BROKERS TO WHOM COMMISSION EXPENDITURE @ 2.25% WAS PAID DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN 2013 TO PROVE SUCH PAYMENTS OUT OF B OOKS DUE TO OBIOUS REASONS CITED BY US AS SET OUT ABOVE AND THE ASSESS EE WAS LEFT WITH NO CHOICE ITA 828/MUM/2015 10 BUT TO SURRENDER ADDITIONAL 2.5% TO BUY PEACE AND T O AVOID PROTRACTED LITIGATION WITH THE REVENUE BUT THE FACT REMAINS TH AT THE ASSESSEE EARNED 0.75% NET COMMISSION INCOME ON ACCOMMODATION BILLS PROVIDED BY THE ASSESSEE , WHILE IT IS A DIFFERENT MATTER THAT THE ASSESSEE DECLARED NET COMMISSION INCOME 0.75% OF THE ACCOMMODATION BILLS PROVIDED BY THE ASSESSEE, AFTER CLAIMING EXPENDITURE OF 2.5% TOWARD S BROKERAGE PAYABLE BY THE ASSESSEE TO BROKERS WHICH WAS ULTIMATELY SURREN DERED BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS AS THESE BROKERS WERE NOT TRACEABLE DUE TO SALES TAX RAID ON THEM AND THE ASSESSEE WAS UNABLE TO PROVE BROKERAGE EXPENDITURE INCURRED BY HIM DUE TO REASONS SET OUT ABOVE. THUS, BASED ON OUR ABOVE DETAILED DISCUSSIONS AND REASONING AS SET OUT ABOVE , IN OUR CONSIDERED VIEW, THE PENALTY IS NOT LEVIABLE IN THE INSTANT CASE U/S 271AAA OF THE ACT AS THE ASSESSEE IS ENTITLED FOR IMMUNITY FR OM PENALTY U/S 271AAA(2) OF THE ACT AND THE PENALTY LEVIED BY THE AO AND AS SUSTAINED BY LEARNED CIT(A) U/S 271AAA OF THE ACT IS HEREBY ORDERED TO B E DELETED. WE ORDER ACCORDINGLY. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IN I TA NO. 828/MUM/2015 FOR THE ASSESSMENT YEAR 2011-12 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH OCTOBER, 2016. # $% &' 25-10-2016 ( ) SD/- SD/- (C.N. PRASAD) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 25-10-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS ITA 828/MUM/2015 11 !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI E BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI