TaxTMI 
TaxTMI 
2019 (11) TMI 410
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....lected for scrutiny assessment and notice under section 143(2) was issued and served upon the assessee. According to the Assessing Officer, during the course of survey proceedings, certain discrepancies were found. To cover-up these discrepancies, the assessee voluntarily disclosed additional income of Rs. 40.00 lakhs (Rs. 8.00 lakhs on account of excess cash and Rs. 32 lakhs on account of unexplained expenditure in building account) for the financial year 2011-12 relating to the Asstt.Year 2012-13. In the revised return, the assessee has shown income at Rs. 21,34,700/- including surrendered income at Rs. 40.00 lakhs. The ld.AO has passed assessment order on 19.2.2015. He made addition of Rs. 40 lakhs after giving credit of brought forward loss. He determined income of the assessee as under: Returned income Rs. 21,34,700 Less: Income disclosed during survey to be assessed separately as per parano.4.0 Rs. 40,00,000 Add: Addition as per para no.5.0 Rs. 368 Balance loss allowed to be c/f (-)Rs. 18,64,932/- Deemed income u/s.69,69A,69B &69C as discussed above Rs. 40,00,000/- Total taxable income Rs. 40,00,000/- 4. Appeal to the CI....
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....o section denying the benefit of set off of losses w.e.f. 1.4.2017 was retrospective in nature being curative in character. Alternatively it was contended that the issue was covered by the decision of the Jurisdictional High Court in the case of Kim Pharma Ltd. (supra), as per which these incomes could not be assessed under any heads as provided under the Act and therefore were not eligible to set off any losses against the same. 11. We have heard the rival contentions, perused the orders of the authorities below and have also considered various case laws referred to by both the parties before us. 12. The issues to be addressed in the present case can be summarized as relating to the categorization/characterization of income surrendered by the assessee during survey proceedings, whether from disclosed or undisclosed sources, and the allowability of claim of set off of losses ,both current and brought forward, against the same. 13. The controversy arises on account of the scheme of the Act which mandates incomes to be categorized under specific heads depending on their nature/source, for computation purposes under chapter IV and thereafter provides for setting off of losses in....
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....on, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the [2018][Assessing Officer], satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee of such financial year.] SECTION 69B [2019][Amount of investments, etc., not fully disclosed in books of account. Where in any financial year the assessee has made investments or is found to be the owner of any bullion, jewellery, or other valuable article, and the [2020][Assessing Officer] finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income, and the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the [2021][Assessing Officer], satisfactory, the excess amount may be deemed to be the income of the assessee for such financial year.] SECTION 69C [2022][Unexplained expenditure, etc. Where in any financial year an assessee has incurred any expenditure and h....
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....under any provision of this Act in computing his income referred to in clause (a) of subsection (1).] [3052] Omitted the words, figures and letters "for the previous year relevant to the assessment year beginning on the 1st day of April, 2012 or beginning on the 1st day of April, 2013 or beginning on the 1st day of April, 2014" by Finance (No. 2) Act, 2014 (w.e.f. 1-4-2015). Ins. by Finance Act, 2016 (w.e.f. 1-04-2017). [3052a] Ins. by Finance Act, 2018 (w.e.f. 1-04-2017). 15. As is evident from a bare reading of the above sections any investments, moneys and expenditure which are not disclosed in the books of the assessee, if any, maintained by it and the source of which has also been not explained satisfactorily by the assessee are treated as deemed incomes of the assessees. Thus, the amounts to be treated as deemed incomes are investments, moneys, or expenditure fulfilling the twin criteria of: (a) not being recorded in the books if any maintained and, (b) the source of which the assessee is unable to explain satisfactorily. 16. In other words, to put it simply, the unrecorded investments/assets/expenditures made out of unexplained sources are treated as deemed inc....