TaxTMI 
TaxTMI 
2020 (3) TMI 279
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....ssue raised in the additional ground is a legal one and is coming out of the facts and material placed on record. 3. The learned Departmental representative did not object to the admission of the additional ground of appeal and therefore, it was admitted and the learned authorised representative was directed to advance his arguments on the additional ground. For the sake of completeness, the additional ground taken by the assessee is reproduced below : "Because the Commissioner of Income-tax (Appeals) has erred on facts and in law in invoking the provisions of section 69A read with 115BBE ignoring the fact that the amount of Rs. 1.51 crores (being unaccounted sale proceeds) surrendered at the time of survey/search towards business income and offered to tax by crediting the same to the profit and loss account thereby upholding the addition as well as the denial of deduction under section 80JJA, which provisions are not applicable to the facts of the case, the treatment of the same as income under section 69A is misconceived, the deduction claimed under section 80JJA denied be allowed." 4. Explaining the facts of the case, the learned authorised representative submitted that the ....
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....Appeals) has also wrongly held the amount surrendered as undisclosed income whereas the same represented unrecorded sales. Inviting our attention to the provisions of section 115BBE read with section 69A the learned authorised representative submitted that section 115BBE can be applied if the ingredients of section 69A are proved. The learned authorised representative submitted that section 69A specifically states that where the assessee is found to be owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or other valuable article is not recorded in the books of account and the assessee offers no explanation about the nature and source of acquisition of such money, bullion, jewellery or other valuable article, or the explanation offered by him is not to the satisfaction of the Assessing Officer, only then the addition under section 69A can be made. It was submitted that in the present case, the assessee had offered the explanation regarding the entries recorded in the diary to be part of unrecorded sales and the Assessing Officer also did not raise any objection to the explanation of the assessee therefore, the addition itself was not w....
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....r it was to be taxed as a regular business receipt. To decide this issue, it is important first to visit the statement of the director of the assessee which was recorded during the course of survey. We have particularly gone through the answer to question No. 35 wherein the director of the assessee has clearly stated that the figures noted in the diary represented sales unrecorded in the books of account and these figures related to the period April 2015 to August 2015. For the sake of completeness, question No. 35 and its answer are reproduced below : 7.1 We find that the above answer to question, put up by the search authorities, clearly states that the amount, recorded in the diary, represented unrecorded sales and after that the search authorities did not put any ques tion to the assessee regarding explanation of these sales recorded in the diary. In the assessment order also, we find that the Assessing Officer did not raise any further query regarding unrecorded sales and therefore, he did not doubt the sales and therefore, accepted the same. If he was not satisfied with the explanation of the assessee regarding unrecorded sales, he should have recorded his dissatisfaction r....
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....er section 69A of the Act and if the addition cannot be made under section 69A, the provisions of section 115BBE will not be applicable. 7.3 We find that in a similar situation, the hon'ble Rajasthan High Court in the case of Pr. CIT v. Bajargan Traders in I. T. A. No. 258 of 2017, vide judgment dated September 12, 2017, had dismissed the appeal of the Revenue. The relevant question framed by the hon'ble High Court and its findings are reproduced below : "(i) Whether the Tribunal was legally justified in reversing the find ings of the Commissioner of Income-tax (Appeals) and deleting the addition of Rs. 70,04,814 which was surrendered by the assessee by holding that such amount was included in the purchases and was reflected in the sales and closing stock, specifically when the assessee failed to show that the said amount was included in the sales and closing stock ? (ii) Whether the Tribunal was legally justified in treating the invest ment in excess stock for Rs. 70,04,814 found during the course of survey as 'business income' instead of 'income from other sources' which was to be liable to tax under section 69 ? (iii) Whether the Tribunal was lega....
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....and its nature and source is not identifiable. Once such excess investment is taxed as undeclared business receipt then taxing it further as deemed income under section 69 would not be necessary. Therefore, the first attempt of the assessing authority should be to find out the link of undeclared investment/expenditure with the known head, give opportunity to the assessee to establish the nexus and if it is satisfactorily established then first such investment should be considered as undeclared receipt under that partic ular head. It is observed that there is no conflict with the decision of the hon'ble Gujarat High Court in the case of Fakir Mohmed Haji Hasan (supra) where investment in an asset or expenditure is not identifiable and no nexus was established then with any head of income and thus was not available for set off against any loss under any other head. Therefore, the hon'ble co-ordinate Bench held that where asset in which undeclared investment is sought to be taxed is not clearly identifiable or does not have independent identity but is integral and inseparable (mixed) part of declared asset falling under a particular head, then the difference should be treated ....