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Income Tax Appellate Tribunal, MUMBAI BENCH “E” MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI N.K. PRADHAN
ORDER PER N.K. PRADHAN, A.M. This is an appeal filed by the assessee. The relevant assessment year is 2010-11. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-38, Mumbai and arises out of the penalty order u/s 271(1)(c) of the Income Tax Act 1961, (the ‘Act’). 2. The ground of appeal filed by the assessee read as under: -
1. The Ld. Appellate Commissioner has erred in law and in facts in passing the order u/s 271(1)(c) of the Act.
The Ld. Appellate Commissioner has erred in law and in facts in passing the order without complying with the principles of natural justice.
The Ld. Appellate Commissioner has erred in law and in facts in levying penalty u/s 271(1)(c) of the Act at Rs.21,67,000/-. 3. Briefly stated, the facts of the case are that the assessee-company M/s Talent Infoways Ltd. (TIL) was covered by the search and seizure action conducted by the Department u/s 132 on the Alag Group of Companies. The Assessing Officer (AO) noted that the total receipt of TIL during the FY 2009-10 was Rs.28,88,63,776/-. The break-up is as under: Total receipts as per bank accounts managed by the assessee Rs.4,35,70,876/- Total receipts as per bank accounts managed by agents Rs.24,52,92,900/- Total Rs.28,88,63,776/- The AO estimated the net commission of TIL @ 2% on the total receipts of Rs.28,88,63,776/- considering the facts that during the course of search enough material was found and seized, which proved beyond doubt that it was charging commission @ 1.5% to 3.5%. The AO thus made an addition of Rs.57,77,280/-. Then the AO levied a minimum penalty of Rs.17,33,184/- u/s 271(1)(c) on the above amount of Rs.57,77,280/- 4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) has held that though the determination of commission income @ 2% is an estimate, but the same is based on relevant statements and seized incriminating documents.
Since the correct income from commission was not disclosed by TIL in the return of income, the Ld. CIT(A) held that the concealment of particulars of income was established. Therefore, he upheld the order of the AO.
Before us, the Ld. counsel of the assessee submits that the quantum appeal of the assessee has been decided in its favour by the ITAT ‘E’ Bench, Mumbai for the impugned assessment year (ITA No. 6389/Mum/2012) and therefore, the penalty order does not survive.
On the other hand, the Ld. DR supports the order passed by the Ld. CIT(A).
We have heard the rival submissions and perused the relevant materials on record. The Co-ordinate Bench in quantum appeal in the case of TIL for the impugned assessment year has followed the order dated 01.06.2016 of Tribunal in a related case of Goldstar Finvest Pvt. Ltd. (ITA No. 6114-6120/M/2012) and directed the AO to apply net profit @ 0.15% on the bank deposits of the assessee. Thus the commission income estimated by the AO @ 2% was reduced by the Tribunal to 0.15% of the bank deposits. Further we find similar penalty levied by the AO has been cancelled by the Co-ordinate Bench in the case of M/s Mihir Agencies Pvt. Ltd. vs. DCIT for AY 2005-06 & 2007-08 (ITA No. 7533 & 7535/Mum/2015), Mr. Mukesh Choksi vs. DCIT for AY 2005-06 (ITA No. 996/Mum/2015), M/s Wavecom Builders Pvt. Ltd. vs. DCIT for AY 2008- 09 (ITA No. 685/Mum/2015).