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PER PAWAN SINGH, JUDICIAL MEMBER: 1. These three appeal by assessee under section 253 of the Income-Tax Act (“The Act”) are directed against three different order ld. CIT(A)-40, Mumbai dated 27.06.2014 for Assessment Year (AY) 2008-09 to 2010-11, which in turn arises from the order of penalty levied under section 271(1)(c) by the Assessing Officer. In all appeals, the assessee has raised identical grounds of appeal
, facts of all the appeals are also identical. Thus, all appeals were heard together and are decided by a consolidated order.
2. For AY 2008-09. The assessee has raised the following grounds of appeal:
1.The ld. CIT(A) has erred in confirming the action of Learned Assessing Officer levying the penalty u/s 271(1)(c) of the Act amounting to Rs. 2,88,381/- whereas as per the facts and circumstances the same should not be levied. to 5785/M/2014- Bikram Mohanty
Brief facts of the case are that search and seizure action under section 132 was conducted on 13.12.2010. The assessee had filed return of income on 31.03.2009 declaring total income of Rs. 1,48,520/-. Consequent upon search a notice under section 153A dated 07.12.2011 was issued to the assessee. The assessment was completed under section 143(3) r.w.s. 153A on 25.03.2013. The Assessing Officer (AO) while passing the assessment order made the addition of Rs. 1,95,693/- on account of commission, added Rs. 2,40,000/- as Income from Salary and Rs. 4,97,500/- on account of cash credit in the bank account. The AO initiated penalty while passing the assessment order. Notice under section 274 r.w.s. 271(1)(c) was issued to the assessee. On service of notice under section 274, the assessee filed his reply dated 17.04.2013. The reply was not found satisfactory by AO. The AO levied the penalty @ 100% of tax sought to be evaded for furnishing the inaccurate particulars of income. The AO worked out the penalty of Rs. 2,88,381/- in its order dated 16.09.2013.
Similarly, for AY 2009-10, the assessee filed return of income declaring taxable income of Rs. 2,86,160/- on 29.03.2010. The assessment was completed on 25.03.2013 under section 143(3) r.w.s. 153A determining the total income at Rs. 10,64,280/-. The AO made the addition @ 1% of commission income from Rs. 4,85,254/- and income from salary of Rs. 2,40,000/-. The penalty of Rs. 2,24,103/- under section 271(1)(c) for to 5785/M/2014- Bikram Mohanty furnishing inaccurate particulars of income was levied vide order dated 16.09.2013. The penalty was levied @ 100% of tax sought to be evaded. 5. Similarly, for AY 2010-11, the assessee filed return of income on 28.09.2010 declaring taxable income of Rs. 3,64,390/-. The assessment was completed on 25.03.2013 determining the total income of Rs. 11,22,150/-.
The AO made the addition on account of commission income @ 1% for Rs. 3,73,943/- and salary income of Rs. 2,40,000/-. The AO levied the penalty on both the disallowances @ 100% of tax sought to be evaded. The AO worked out the penalty of Rs. 1,89,708/- in its order dated 16.09.2013. For all three years, the ld. CIT(A) upheld the penalty order. Thus, aggrieved by the order of ld. CIT(A), the assessee has filed the present appeal before us.
None appeared on behalf of assessee when the appeal was taken for hearing. The perusal of order-sheet reveals that the hearing was adjourned on 06/04/2016 on the requested of assessee for 20/06/2016. The appeal was adjourn from time to time; however, the assessee has not appeared on 04.09.2017 and again on 07.09.2017. We left no option except to proceed with on the basis of material available on record and to decide the appeal after hearing the submission of ld. DR for the Revenue. The ld. DR for the Revenue supported the order of authorities below. It was argued that in the assessment order for AY 2008-09, the AO made three additions consisting of commission income, addition on account of cash credit and salary income. For assessment order AY 2009-10 and 2010-11, the AO made two 3 to 5785/M/2014- Bikram Mohanty additions consisting of commission income and salary income. The assessee has not disputed the assessment order and not filed any appeal against the assessment order. The additions have become absolute. The AO levied the penalty for furnishing inaccurate particulars of income. The ld. DR for the Revenue prayed for dismissal of the appeal.
We have considered the submission of ld. DR for the Revenue and perused the order of authorities below and the material placed on record. The AO while passing the assessment order for AY 2008-09 made three additions.
First the addition on account of commission income of Rs. 1,95,693/- the addition was made on the basis of transaction of Rs. 1,95,69,284/- in the bank account of assessee during the relevant financial year under consideration. The assessee was asked to explain the modus operandi of high transaction. The assessee in his reply contended that the transaction in his bank account relates to business of the assessee. The assessee received advance from the customer for supply of goods, however the supply commitment could not be fulfilled and the amount were returned back. The AO in absence on any supporting evidence estimated the commission income of assessee @ 1% of the transaction. Second addition relates to the addition on account of unexplained cash credit of Rs. 4,97,500/-. The AO made the addition of Rs. 4,97,500/- under section 68 of the Act, as the assessee could not explain the source of cash deposit. Third addition relates to salary income of Rs. 2,40,000/-. The addition of salary income was made 4 to 5785/M/2014- Bikram Mohanty on the basis of statement recorded during the search action under section 132(4) on 30.12.2010. In the statement, the assessee has accepted that he was getting salary income from M/s Panama Overseas Pvt. Ltd. and M/s TAC Technosoft Pvt. Ltd. No appeal was filed by assessee against the quantum assessment.
We may note that penalty proceeding are separate and independent and based on different parameters. Mere non-filing of appeal against the addition would not tantamount to attract the penalty on the additions made in the assessment order. Each and every addition/ disallowance has to be examined independently for the purpose of levying the penalty. We have noted that addition on commission income of Rs. 1,95,693/- was made on the basis of estimated/adhoc addition. It is settled law that no penalty is leviable on estimated/adhoc addition. Thus, no penalty is leviable on the addition of Rs. 1,95,693/-. So far as other addition which relates to addition under section 68 for Rs. 4,97,500/- and addition on account of salary income of Rs. 2,40,000/- the assessee could not substantiate his defense. No material is placed before us to take a contrary view. Hence, we direct the AO to delete the penalty qua the addition of commission income of Rs. 1,95,693/- and for two other addition under section 68 for Rs. 4,97,500/- and addition of Rs. 2,40,000/- on account of salary income, we confirmed the penalty order. In the result the appeal for AY 2008-09 is partly allowed. to 5785/M/2014- Bikram Mohanty
For AY 2009-10, the AO made two addition, First addition relates to commission income of Rs. 4,85,254/- and second addition relates to salary income of Rs. 2,40,000/-. As we have already deleted the penalty in respect of commission income which is based on the estimation. Thus, following the principle of consistency, the AO is directed to delete the penalty qua the addition of commission income of Rs. 4,85,254/-. The penalty in respect of addition on account of salary income is confirmed. In the result the appeal for AY 2009-10 is partly allowed.
Similarly, for AY 2010-11, the AO made two addition, (i) the addition of Rs. 3,73,943/- on account of commission income @ 1% of the value of transaction and (ii) the addition of Rs. 2,40,000/- on account of salary income. The AO levied the penalty on both the addition. As we have already deleted the penalty in respect of commission income for two earlier assessment years. Thus, following the principle of consistency, the penalty qua the commission of Rs. 3,73,943/- is deleted. However, the penalty for addition on account of salary income for Rs. 2,40,000/- is confirmed. In the result the appeal for AY 2010-11 is partly allowed. 7. In the result, all the appeals filed by assessee are partly allowed. Order pronounced in the open court on 10th day of January 2018. Sd/- Sd/- (SHAMIM YAHYA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 10/01/2018 S.K.PS 6 to 5785/M/2014- Bikram Mohanty