SH. PREM PAL GANDHI,NAWANSHAHR vs. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE- II, JALANDHAR

The sole ground of appeal raised by the assessee is as under.

The brief facts of the case are that in the instant case, the Assessing Officer made an addition of Rs.22,76,000 on account of differences of commission alleged to be received and shown as actually received, which was challenged before the ld. CIT(A), who while partly deleting the said addition opined that the figure of Rs.30 Crores has not been worked out in systematic manner by the Assessing Officer as he has not been able to show, as to how this figure has been arrived at, in the assessment order. The photocopies of seized record submitted by the appellant had been perused and it is seen that there are huge nos. of noting on the impugned seized document and it is practically impossible to make a sensible total out of the same and, therefore, figure of Rs.30 Crores does not have very clear arithmetical basis and the adoption of 1.5% as rate of commission is on the basis of presumption and finally it was concluded by the ld. CIT(A) that in all, the working out of the gross commission on figure of Rs.30 Crores is arbitrary and the adoption of rate of 1.5% is also not based upon recordings done on the seized document and in that circumstances, total net income from commission as Rs.30,00,000/- seems best course of action. On the basis of partly confirmation of addition on account of commission

We have heard the parties and gone through with the facts and relevant material placed on record as it reflects from the orders passed by the A.O that in the instant case the addition was made on the basis of mere estimation of Rs.22,76,000/- on account of differences in commission estimated by the AO. The said amount was restricted to Rs.3,26,000/- only by the Ld. CIT(A) and on the basis of the same the AO levied the penalty u/s 271AAA of the Act, wherein the explanation describes penalty to be imposed for undisclosed income. The said penalty was confirmed by the Ld. CIT(A). Although, it was argued by the Ld. DR that the addition has been made on the basis of search and seizure operation carried out by the Revenue Department at the premises of the assessee, however, we are of the considered opinion that in the aforesaid circumstances, where the ld. CIT(A) in quantum order itself observed that the Assessing Officer has not based the estimation of figure on any recordings done by the assessee on seized document but purely on the basis of presumption and worked out the gross commission on estimated figure, which is arbitrary.

On the aforesaid analyzation, we are of the considered opinion that imposition of penalty under the peculiar facts and

In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 27.03.2018.