Tribunal sets aside tax orders, directs full income tax at normal rate. No separate taxation under sections 69 & 115BBE.

The Tribunal allowed the appeal, setting aside the lower authorities' orders. It directed the Assessing Officer to tax the entire surrendered income of Rs. 3.64 crores at the normal rate, rejecting the separate taxation of Rs. 1.00 crore under section 69 and the imposition of tax under section 115BBE. Additionally, the Tribunal annulled the direction to tax Rs. 2.64 crores under section 115BBE, highlighting the lack of power to remand the issue back to the A.O.

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Issues Involved:

1. Justification of treating Rs. 1.00 crore as income under section 69 of the Income Tax Act, 1961.
2. Imposition of tax under section 115BBE @ 60% on the sum of Rs. 1.00 crore.
3. Directions to tax the amount of Rs. 2.64 crores under section 115BBE.

Issue-wise Detailed Analysis:

1. Justification of treating Rs. 1.00 crore as income under section 69 of the Income Tax Act, 1961:

The assessee, part of M/s AP Group of Companies, was subjected to a search and seizure operation on 31/08/2016, during which documents and valuables were seized. The assessee surrendered Rs. 3.64 crores as income from real estate transactions and commission. The Assessing Officer (A.O.) noted that the assessee could not provide complete details of the real estate transactions, leading to the assessment of Rs. 1.00 crore as unexplained investment under section 69, chargeable to tax under section 115BBE @ 60%. The Ld. CIT(A) upheld this action, considering the Rs. 1.00 crore as deemed income under section 69 due to lack of documentary evidence. However, the Tribunal found that the income was declared in the return filed under section 153A, and the source of investment was explained as commission and profit from real estate transactions. The Tribunal concluded that the A.O. was not justified in separately taxing Rs. 1.00 crore under section 69, as the income was already declared and explained.

2. Imposition of tax under section 115BBE @ 60% on the sum of Rs. 1.00 crore:

The A.O. imposed tax @ 60% under section 115BBE on Rs. 1.00 crore, considering it as unexplained investment. The Ld. CIT(A) upheld this, stating that the amended provisions of section 115BBE, effective from 01/04/2017, were applicable for A.Y. 2017-18. The Tribunal, however, noted that the income was declared under section 132(4) and included in the return filed under section 153A, not section 139. Therefore, the provisions of section 115BBE (1)(a) were not applicable. The Tribunal directed the A.O. to tax the entire surrendered income of Rs. 3.64 crores at the normal rate, rejecting the separate taxation of Rs. 1.00 crore under section 115BBE.

3. Directions to tax the amount of Rs. 2.64 crores under section 115BBE:

The Ld. CIT(A) directed the A.O. to take necessary action to tax Rs. 2.64 crores under section 115BBE, based on the assessee's statement during the search. The Tribunal found this direction unjustified, as the income was already declared as business income from real estate transactions recorded in the seized diary. The Tribunal emphasized that the Ld. CIT(A) does not have the power to remand the case back to the A.O. under section 251(1)(a) of the Act. Consequently, the Tribunal annulled the Ld. CIT(A)'s direction to tax Rs. 2.64 crores under section 115BBE.

Conclusion:

The Tribunal allowed the appeal, setting aside the orders of the lower authorities. It directed the A.O. to tax the entire surrendered income of Rs. 3.64 crores at the normal rate, rejecting the separate taxation of Rs. 1.00 crore under section 69 and the imposition of tax under section 115BBE. The Tribunal also annulled the Ld. CIT(A)'s direction to tax Rs. 2.64 crores under section 115BBE, emphasizing the lack of power to remand the issue back to the A.O.

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