SMT. NIRMAL OBEROI,NEW DELHI vs. ACIT, NEW DELHI

First two appeals are in respect of additions made by the Assessing Officer and next two appeals are in respect of levy of penalty u/s 271(1)(c) of the Income-tax Act, 1961 [hereinafter referred to as 'The Act'].

Since the underlying facts in issues are identical, all these appeals are being disposed off by this common order for the sake of convenience and brevity.

Briefly stated, the facts of the case are that a search and seizure operation u/s 132 of the Act was carried out on 10.02.2010 on Raheja Group. During the course of search operations, the search party found bills for purchase of cement and TMT bars of M/s Amba Enterprises. It was found that Amba Enterprises was giving bogus bills to the Raheja Group of companies with an intention to inflate their purchases and lessen the instances of tax.

Pursuant to these clinching evidences, during the course of scrutiny assessment proceedings, the Assessing Officer recorded the statements of Shri Ashok Oberoi, the husband of the assessee, who, in his statement, explained the modus operandi and earning of commission. Shri Oberoi stated that by issuing accommodation bills, commission @ 10p to 15 paise per 100 paise was received. Taking a leaf out of this statement, the Assessing Officer estimated the income from commission @ 1% and made addition of Rs. 22,58,031/- in Assessment Year 2007-08 and Rs. 8,42,107/- in Assessment Year 2008- 09.

Proceeding further, the Assessing Officer further made addition of 1% on the basis of VAT returns filed by the assessee and made an addition of Rs. 1,67,989/- in Assessment Year 2007-08 and Rs. 95,000/- in Assessment Year 2008-09.

The assessee agitated the additions before the ld. CIT(A) but without any success.

Before us, the ld. counsel for the assessee stated that in this line of clandestine activities, the person who is giving accommodation bills earns commission ranging from 15p to 50p, and, therefore, the estimation made by the Assessing Officer is on the higher side.

The ld. DR strongly supported the findings of the lower authorities.

We have given thoughtful consideration to the orders of the authorities below. The undisputed fact is that the assessee was found to be engaged in issuing accommodation bills. It is also not in dispute that the assessee has been giving accommodation bills only to Raheja Group. It is also not in dispute that while making estimation of 1%, the Assessing Officer has not brought any comparable case on record. It is equally true that in such clandestine activities, commission ranges from 15p to 50p.

In our considered opinion, an estimation of addition @ 35p should meet the ends of justice. We, accordingly, direct the Assessing Officer to make addition taking 35p as estimated rate of commission earned by the assessee. In both the quantum appeals, the assessee will get part relief.

The other addition relates to the estimation of 1% as income made on the basis of VAT returns.

We are of the considered opinion that once the entire sale bills have been treated as bills for providing accommodation entries and on which an estimated profit has already been taxed, the same amount cannot be taken for double addition on the basis of VAT returns. The Assessing Officer, accordingly, is directed to delete the impugned addition.

Coming to the penalty appeals, though the ld. CIT(A) has dismissed the appeals of the assessee in limine, without considering the merits/demerits of the addition, we are of the considered view that the quantum additions have been estimated by the Assessing Officer which have been further reduced by estimation by us [supra].

Therefore, in our considered opinion, these are not fit cases for levy of penalty u/s 271(1)(c) of the Act. We, accordingly, direct the Assessing Officer to delete the penalty so levied.

In the result, the appeals of the assessee in & 6349/DEL/2017 are partly allowed and the appeals of the assessee in ITA Nos. 2254 & 2259/DEL/2017 are allowed.