TaxTMI 
TaxTMI 
2018 (4) TMI 787
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..../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 that the order of the CIT(A) on facts qua the sole issue of the Revenue may b....
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....id 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. Total 26,88,99,169 5.2 Referring to the said document the assessing officer it was submitted concluded that it has the heading " SAB industries 'and contain certain entries of names with figures written in front of them the total....
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..... 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 placed on the said order. Reverting to the assessment order, it was submitted that the assessing officer rejected the explanation in para 5.5 of his order. Aggrieved by this the assessee filed an appeal before the CITA. The relevant finding of the assessing officer was challenged before the CITA which is reproduced hereunder : "5.5 ....
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....ssed 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 following reasons:- (i) The AO has stated that the recoverable income of Rs. 11 crores is from real estate transactions may be true but the fact remains that on the due date of search, the appellant had not recorded the same in books of accounts and also admitted u/s 132(4) statement through its promoter that he had already destroyed the bianas to substantiate the same ....
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....at 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 placed on the judgment of Hon'ble ITAT Chandigarh in the case of Garuish Steels Pvt Ltd vs ACIT 173 TTJ 764. In view of the same, this income of Rs. 11,00,00,000/-is held to be business income and the appellant will be allowed to adjust the same against current business losses; if any as per provisions of law. 5.6 In the background of the said findings of the respective authorities, it was his submission that there is no dispute that the assessee w....
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....ed 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 of the CIT(A)'s order page 11 of the assessment order and page 19 and 20 of the CIT(A)'s order. Thus, it was his submission that the prayer of the assessee may not be allowed. Addressing the ground, it was his submission that it has never been offered by the assessee and it is unexplained money of the assessee as such section 69A of the act is attracted. 7. The Ld. AR sought permission to address this new argument made in reply by the Revenue. Inviting att....
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.... 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 available on record where the surrender is made on account of seized documents and the stated business of the assessee being only real estate business we find no good reason to vary the conclusion arrived at by the Ld. CIT-A. Being satisfied with the consistent explanation offered on behalf of the assessee which stands unrebutted and considering the legal position thereon the departmental ground is dismissed. 9. In the result the appeal of the revenue is dismissed 1....
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....spect 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 that there were certain transactions which were not recorded and infact the record of the unrecorded transactions has not been retained thus by way of hyper caution the assessee had specifically made a blanket surrender of the said amount stating clearly and categorically that it would cover any discrepancies in all the seized documents as found and seized during the course of search. Thus, in these circumstances, it was argued the occasion to consider the same as deemed income in the peculiar facts and circumsta....