TaxTMI 
TaxTMI 
2018 (4) TMI 787
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....fore Rs. 1,21,85,000/- cannot be treated as income/deemed income at all and same may please be allowed to be reduced from taxable income. 2. Without prejudice to ground no.1 as above, the Ld. CIT(Appeals) has erred in confirming and treating the business income of Rs. 1,21,85,000/- as deemed income u/s 69, whereas it is surrendered as business income. Therefore it is prayed that set off of business losses and depreciation losses may be allowed against the surrendered income of Rs. 1,21,85,000/- being a business income. The assessee craves leave to add, alter and amend any of the above grounds of appeal before the same is heard or disposed of. It is respectfully prayed that the relief may kindly be allowed to the assessee keeping in view of the aforesaid grounds of appeal." 3. The Revenue in its appeal has raised the following ground: "Whether on the facts and circumstances of the case, the CIT(A) was correct in treating the unaccounted surrendered income emanating from the seized document as business income against deemed income u/s 69 of the I. T. Act, 1961 assessed by the AO." 4. The ld. CIT-DR relying upon the assessment order submitted ....
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.... (ii) 3,00,00,000 (ii) In addition to Rs. 11.67 crores as aforesaid, a sum of Rs. 3.00 crores has been forfeited by the Company against advance for sale of aforesaid investment in shares. 2 SAB Industries 11,00,00,000 Offered as business income to cover any discrepancies in all the seized documents as found and seized during the course of search including as per the Annexure A -35 page no. 8 and the above stated receivable business income i.e. from the real estate transactions was earned in the same manner as business income reflected and recorded in the regular books of accounts and is derived from the same business carried by the assessee The above business income covers the amount receivable from various parties as per Annexure A-35 page no.8 against real estate transactions and that same is yet to be recorded as receivable business income in the books of accounts. 2 SAB Industries Limited 1,21,85,000 Offered as business income to cover any discrepancies in all the seized documents as found and seized during the course of search, if any. ....
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....be received by the assessee company. The director of the assessee company, Sh. R.K. Garg has also admitted that the bianas corresponding to these transactions carried out by the company have already been destroyed. Sh. R.K. Garg has admitted in his statement that these transactions are outside the regular books of accounts. He has, on behalf of M/s.SAB Industries Ltd., disclosed the receivable amount of Rs. 11 crores as unaccounted income of the company in the F.Y.2012-13. 5.4 Reading from para 5.3 of the assessment order, it was submitted, the assessee was confronted with this conclusion and required to explain the nature and manner of earning the surrendered income of Rs. 26.88 crores and substantiate the manner in which such income has been derived alongwith documentary evidence and show how it has been accounted in its return of income. The assessee was further required to also address whether the taxes due thereon have been paid on or before the specified date. It was submitted that the assessee in the detailed reply which has been extracted in para 5.3.1 from pages 12 to 19 by the assessing officer in its order offered a detailed explanation. Heavy reliance was pl....
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....of Rs. 11 cr. shall be considered separately and brought to tax in entirety as deemed income and taxes shall be payable on the same. The assessee however is eligible for credit of MAT as per provisions of Income Tax Act, 1961. 5.5 Reverting to the impugned order, it was submitted by the ld. AR that the CIT(A) from pages 2 to 16 has first discussed the view of the assessing officer including the prayer made on behalf of the assessee before him at page 16. The specific ground of the assessee is reproduced along with submissions originally advanced and the detailed submissions advanced qua the two issues, it was submitted, have been again set out in pages 19 to 20 considering which the CITA concluded the issue in para 5 of his order holding as under:- "5. Decision:- I have gone through the assessment order and submissions filed by the appellant and following observations are made:- Ground no. 1 relates to business income of Rs. 11,00,00,000/- treated as deemed income and set off of business losses and depreciation not allowed against this surrendered income. The AO has not accepted the contention of the appellant in the assessment order due to fo....
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....carried by the appellant. (iii) During the search proceedings, Shri R.K. Garg in his statement recorded u/s 132(4J of the Act had stated that the transaction at page no. 8 of annexure A-35 seized from corporate office reflect certain property transaction undertaken by SAB Industries whereby purchase and sale of property on bianas were made and the company is to receive the profit on these transactions. It was further stated that there are name of 5 property deals on this document and the total receivable amounts Rs. 11 crore which is income of the company for the year under consideration. (iv) Thus, it is apparent that this income of Rs. 11 crores is related to the receivables from business which was declared as unaccounted income during the year under consideration. (v) The AO in the assessment order at para 5.4 has accepted that the contention of the appellant that the recoverable income of Rs. 11 crore is from real estate transaction may be true. Thus, it is clear from the above fact that the income surrendered is 'Income from Business' on facts of the case and cannot be treated as deemed income as held by the AO. Further reliance is p....
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....f both the parties before the Bench that the relevant questions have been extracted in the orders and are readily available which fully address the issues, consequently, availability of statement was not necessary. However, not disputing the stand taken by the parties, it was deemed appropriate to adjourn the hearing and proceed only after the statement of the assessee is made available. 6.1 On the next date of hearing the statement of the assessee recorded by the assessing officer qua the issues was made available. On a perusal of the same the Ld. CITDR submitted that more or less same questions are relevant as only those which were relevant for addressing the issue have been extracted in the orders. Inviting attention to section 69A of the Act it was his submission that as far as the departmental appeal is concerned the deletion on facts was not warranted considering the specific questions put to the assessee in the course of the proceedings by the assessing officer. It was his submission that the income which has been surrendered is over and above the normal what has been recorded in the normal books of accounts as would be evident from page 10 of the assessment order page 16....
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....he coordinate Bench in the case of Gaurish Steels Private Limited (cited supra) relied upon by the Ld. AR and also considered by the CIT-A. Since the relevant extract from the respective orders have already been extracted in the earlier part of this order repetition thereof is refrained from. On a consideration thereof, in the light of the submissions of the parties before the Bench on the facts as available on record we are of the view that in the facts as they stand the ground raised by the Revenue has to be rejected. The surrender admittedly was made qua the biana received by the assessee allegedly for the five specific properties which had not been reflected and recorded in the regular books of accounts of the assessee. The consistent stand of the assessee is that records have been destroyed after the deals were done as would be evident from the specific question No.6 put by the Investigation Wing to the assessee. The transaction as per reply to question No. 5 was also through irregular market brokers whose addresses had not been retained and records were also not retained. The surrender, admittedly was on account of the property transactions. In the face of the material availa....
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....or taxation purpose. iii) As this amount disclosed by the appellant in the return of income has not been linked with any document/ source of business the same will be treated as unexplained money u/s 69A of the Act. iv) Thereafter, this income will be covered by the provisions of section 115BBE of the Act for the year under consideration and the appellant is liable to pay taxes as per provisions of section 115BBE(1) of the act and the appellant will not to be allowed any deduction in respect of any expenditure or allowance against this income as per provisions of the section 115BBE(2) of the Act. In view of the above, this addition made by the AO is confirmed and appellant's ground of appeal no. 2 and 3 are dismissed." 12. Addressing the background of the case and reiterating the arguments that the sole business of the assessee was real estate business it was his submission that the submissions already advanced on behalf of the assessee qua the issue raised by the Revenue in their appeal would fully address this ground also. It was his submission at the cost of repetition that the assessee's business was real estate and the assessee has admitted th....