TaxTMI 
TaxTMI 
2017 (9) TMI 580
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....2009 declaring total loss at Rs.(-) 6,33,138/-. The ld. Assessing Officer has issued ten notices under Section 143(2) and 142(1) of the Act. All these notices remained uncomplied with; hence, the Assessing Officer has passed an assessment order under Section 144 of the Act, according to his best judgment. On an analysis of the details, ld. Assessing Officer found that the assessee did not carry out any specific business as per its Memorandum of Association. He observed that statement of the Director, Shri Jayesh Patel, as a witness in the case of Chartered Motors Pvt Ltd, was recorded on 08.03.2010. According to the details available with the Assessing Officer, it revealed that the assessee used to receive the funds and passed on the funds to another entity on the very same day or next day. The Assessing Officer found huge transactions in various bank accounts of the assessee. He, therefore, observed that the assessee is providing accommodation entries to other concerns. The Assessing Officer estimated the commission income at 0.5% of the entire withdrawals from the bank accounts of the assessee and determined the taxable income at Rs. 26,35,726/-. 4. The ld. Assessing Officer h....
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....A.O. and the estimated amount has been treated as net income. It is not the case that the assessee has received cash commission which has not been accounted for. Even if it is assumed that assessee was providing cheque entries, the income earned by the assessee will be difference of cheque entries received and given and the said income is duly reflected in the accounts of company which are also Audited. The income has been only estimated and there is no positive concealment has been detected and the estimated income by no stretch, of imagination can be treated as concealed income and the assessee cannot be charged of furnishing inaccurate particulars of income or concealing particulars of commission income. The said income as earned by the company is duly shown in the account and therefore the very basis of levying penalty for not disclosing commission income disappears or vanishes. The withdrawals in the bank accounts and deposit in the bank account are duly accounted for and the income flowing from such transactions has also been accounted for. It is settled legal position that on estimated income no penalty u/s. 271(1)(c) can be levied. In this connection your kind attention is ....
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....d the assessee's major contention was regard the rectification pending with this office. The assessee has stated that there is a mistake in computing withdrawals in Account no. 1817 with Vinayak Sahkari Bank Ltd., Kalupur, Ahmedabad. He has stated that as per Para no. 4.2 of assessment order the withdrawals of the said bank has been put at Rs. 16,65,38,138/- whereas the withdrawal relevant to A.Y. 2009-10 from said bank comes to Rs. 3,64,10,855/- which as resulted into excess computation of bank withdrawals by Rs. 13,01,27,283/-. It is pertinent to note here that the assessee has not co-operated during the assessment proceedings even after several reminders vide notice u/s. 142(1)/ 142(3) he has not submitted its reply. In absence of any information from the assessee the AO called for information from all the banks u/s. 133(6) of the Act, in which assessee was having accounts and computed his commission income accordingly. Further, the statement of Shri Jayesh Patel, director of assessee- company has confirmed that the company is engaged in providing cheque entries to other entities and has received the commission @ Rs. 0.50/- per Rs. 100/-. The undersigned has verified the wit....
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....dation entries to various tax payers is responsible for causing substantial loss of revenue to the exchequer and therefore, he does not deserve any sympathy. I therefore hold that this is a suitable case for levy of penalty u/s. 271(1)(c). The reliance placed by the appellant on various court decisions is of no help because the facts of those cases are entirely different. Levy of penalty u/s. 271(1)(c) in this case is confirmed. However, it has been pointed out by the appellant that commission income has not been correctly worked out by AO. From the perusal of bank statement of appellant it is found that this contention is correct. Moreover, the minimum penalty leviable in this case was Rs. 11,11,087/- whereas AO has levied penalty of Rs. 15,00,000/-. No reasons have been given for the same by AO in the penalty order. It will be fair and reasonable to restrict the penalty to the minimum amount. AO is therefore, directed to compute income of the appellant correctly and levy penalty @100% on the same. Ground No.1 of the appeal is partly allowed." 7. Before us, ld. Counsel for the assessee has raised an alternative contention. He filed an application for permission to raise an addi....
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....e penalty is being intended to initiate for concealment of income or furnishing of inaccurate particulars of income. But it is pertinent to observe that this show-cause notice was not replied by the assessee. The penalty proceedings are ex-parte. We failed to understand that what ambiguity caused in the mind of the assessee for putting its defense before the Assessing Officer. It has not put any defense in the assessment proceedings or in the penalty proceedings. The assessment order is ex- parte, passed under Section 144 of the Act. Similarly, penalty order is also ex-parte. The assessee has even failed to submit before us that how this non-specification of charge in the alleged show-cause notice puts hindrance in preparing its defense for absolving itself from the rigorous penalty. Apart from the above, we find that in paragraph No.5.1 of the penalty order, the Assessing Officer has imposed the penalty for concealment of the particulars of income. There is no ambiguity in the mind of the Assessing Officer as to whether he intends to impose the penalty for concealment of income or for furnishing inaccurate particulars. The conclusions are firm that the assessee has concealed parti....
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....t the income of the assessee was estimated and therefore, no penalty should be imposed upon the assessee is concerned, we are of the view that the assessee was not doing any specific business. It was indulged in providing accommodation entries to various tax evaders. Its activity has caused substantial loss of revenue to the exchequer. It helped the people to prepare false books of accounts. The assessee has not disclosed its business activity as providing of accommodation entries. It has not shown the income from this activity. So the charge against the assessee is that it has concealed particulars of income. The ultimate determination of income in such type of thing would always by way of estimation. It is not the case that some claim was not accepted by the Assessing Officer and thereafter he estimated the income. It is also not the case that the assessee has shown household expenses which were not accepted by the Assessing Officer and higher household expenses were taken for estimation of income. In such type of issues, it could be alleged that income was estimated; therefore, no penalty be imposed. In the present case, the computation of income on estimation basis is by compul....