TaxTMI 
TaxTMI 
2020 (10) TMI 27
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....g a tax u/s 115BBE@ 60% on the sum of Rs. 1.00 crore. 3. That he was further not justified to arbitrarily give directions to the Ld. Assessing Officer to bring to tax the amount of Rs. 2.64 crores u/s 115BBE. 3. Vide Ground No. 1 and 2 the grievance of the assessee relates to the confirmation of action of the A.O. in imposing the tax under section 115BBE @ 60% on the sum of Rs. 1.00 Crore. 4. Facts of the case in brief are that the assessee belongs to M/s AP Group of Companies where search and seizure operation had been conducted on 31/08/2016 and certain documents were seized including the valuables like jewellery, cash etc. During the course of search proceedings gold jewellery worth Rs. 77,08,316/- was found out of which jewellery wroth Rs. 31,63,785/- had been seized alongwith cash of Rs. 1,51,600/-, a pocket diary was also found & seized which contained the details of certain real estate transactions and profit earned thereon including commission thereof by the Directors of the company i.e; the assessee and his father Shri Ravi Nandan Goyal, the said diary was duly confronted to the assessee. In his statement the assessee surrendered profit earned on real est....
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....ose proceedings. 4.4 In response the assessee submitted as under: Q.8. You are again requested la Rive reply to the Q.no. 7 regarding nature and contents of entries mentioned in the pocket diary-oddy? Ans. I have consulted my counsel Sh. Kul Bhushan Goyal. CA It is stated that these entries are related to sale/purchase of immovable properties made by me and my family members. Q.9 Please explain source of Investment made In immovable properties by you and your family members along-with documentary evidence and also state about the manner of earnings. Ans. The source of investments is out of commission income earned from real estate transactions in past. There is no documentary evidence available with me as real estate transactions were entered into by me and family members on the basis of agreements (Biana) which were destroyed after completion of transactions. But the details of the transactions are mentioned in the diary. However, to buy peace of mind and to avoid litigation with the department, I hereby voluntarily offer commission income as well as profit earned on real estate transactions as an additional income of Rs. 2.64 Cr. (Rs. 30 lac....
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.... Issue has been examined accordingly. Assessee has also pointed out that additional income has been surrendered after recording of statement u/s 132(4) and all the taxes arising thereon have been paid to the Government account. Accordingly, the income declared as per the return including the additional amount surrendered at Rs. 3.64 Crore is being assessed as such. However, amount of Rs. 1 Crore is being added back separately u/s 69 as unaccounted investment as declared by the assessee and it is being charged to tax separately u/s I15BBE @ 60% as mentioned above. Accordingly the A.O. assessed the sum of Rs. 1.00 Crore under section 115BBE @ 60% and the remaining income amounting to Rs. 3,35,71,070/- shown by the assessee was charged to tax separately. 5. Being aggrieved the assessee carried the matter to the Ld. CIT(A) and submitted as under: Sub: - Written submission in the case of Sh. Bhuwan Goyal, Ludhiana for the A.Y. 2017-18. This is with reference to an appeal filed in the case of Sh. Bhuwan Goyal (herein after referred to as "the appellant") against intimation under Section 143(3) of the Income-Tax Act, 1961 for the captioned assessment year. ....
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....the grounds of appeals is being made. During the course of assessment proceeding, a show cause notice was issued, in which the appellant was asked as to why the additional income disclosed in his return of income for AY 2017-18 be not taxed at the rate of 60% u/s 115BBE as this is liable to be assessed u/s 69 of the Income Tax Act, 1961. A detailed reply to the same was submitted which is being reproduced as under :- 1. The assessee, amongst other companies, is a Director in the company M/s A.P Refinery Private Limited, which is a pioneer in the field of Rice Bran Oil (RBO), with over a decade of experience in the industry. Starting operations as a solvent extraction plant for Rice Bran in 1998, the Company has developed capabilities across the edible oil refining value chain. The company set up a refinery in 2008 at Jagraon in the district of Ludhiana, India's highest paddy yielding area. The company also generates employment to large number of workers from various background in Ludhiana/Jagraon. 2. Prior to entering into refinery business, the family was doing similar businesses. The family was always engaged in business activities and has, over the....
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....eturn filed as income from business as the same falls under purview of Section 28 of the Income Tax Act, 1961. 8. The diary/spiral note found and seized constitutes books of account, transactions recorded therein constitutes real estate transactions and the same as a whole shall constitute real estate business carried out by the assessee. 9. In order to determine whether a transaction would fall within the purview of Section 69, it would be important to review the said provisions, which are reproduced herein: Unexplained investments. 69. Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books o f account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year. (Emphasis Supplied) 10. From a perusal of the above provisions, it is noted that the said provision is applicable,....
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....e said diaries, or any other information found during the course of search that can suggest that the assessee has made an investment which has not been explained to fasten any liability under section 69 of the Income Tax Act 1961. d. During the course of search conducted by the Income Tax Authorities, no such investment was found which has not been explained by the assessee. Thus, it is submitted that based on the above facts, the amounts offered are towards transactions of real estate and not towards any unexplained investments. 14. It is also submitted that with respect to the diary/book which is being used to fasten a liability on the assessee, if the amounts are to be believed then the description and nature is also to be believed and if the description/nature is to be disbelieved, the entire amount offered to tax deserves not to be treated as income and accordingly income to be recomputed. 15. It is respectfully further submitted that the provisions of section 69 of the Income Tax Act 1961 would not apply to the income offered under section 132(4) of the Act as the income from real estate business found recorded in the diary/spiral note for ....
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....om real estate business offered under section 132(4) of the Income Tax Act 1961 and the tax liability on this additional income was worked, which has not been challenged till date. 20. It must be appreciated that the real estate business has been admitted as undisclosed income of the assessee for the impugned year during the course of search in the statement recorded under section 132(4) of the Income Tax Act 1961 and this section specifically authorize an officer to examine in person on oath. After these statements were recorded the search was concluded. The assessee has honoured the surrender made of the real estate business and paid the legitimate taxes on this income and now proposal for invoking the provisions of section 69 read with 115BBE of the Income Tax Act, 1961, by not accepting these statements made during the course of search seriously jeopardizes the present business activities of the family and heavy tax liability on account of no fault of the assessee(s) shall cause genuine hardship and irreparable damage. In view of above facts and circumstances of the case it is respectfully prayed that section 69 of the Income Tax Act 1961 read with section 115....
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....estment u/s 69 and further considering the same for tax purposes as per the provisions of section 115BBE of the Act @ 60 %. Reliance is also placed on the Judgement of the Hon'ble'ble Income Tax Appellate Tribunal, Jaipur Bench in the case of The Assistant Commissioner of Income Tax, Central Circle-2, Jaipur Vs M/s Sanjay Bairathi Gems Limited in ITA No. 157/JP/2017 wherein their Lordships have held that the excess stock found during the course of survey is a part of the business income and the case laws relied upon by the AO is not applicable and the additional income declared by the assessee is not liable to tax as per the provisions of section 155BBE of the Act. Further the reliance is also placed on the judgement of the Hon'ble'ble Apex Court in the case of CIT Vs M/s Vatika Township Private Limited reported in 367 ITR page 466 wherein it has been held that it is a settled law that any amendment which increases the tax burden of the assessee has to be considered prospective and not retrospective. Also, the legislations which modify accrued rights or which impose obligations or which impose new duties or attach a new disability have to be treated as pro....
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....at a sum of Rs. 1.00 Crore was to be treated as deemed income of the assessee under section 69 of the Act and that the A.O. was right in treating the same separately although the return of income had been accepted. Accordingly the action of the A.O. in treating Rs. 1.00 Crore separately under section 69 of the Act as an unaccounted investment under section 115BE of the Act and charging the tax @ 60% was upheld. 6.2. As regards to the submissions of the assessee that the amendment which increased the tax burden of the assessee was to be considered prospectively and not retrospectively, the Ld. CIT(A) observed that the A.O. had invoked the provisions of Section 115BBE of the Act as amended by the Taxation Laws (Second Amendment)Act, 2016 with effect from 01/04/2017. Therefore the amended provisions were applicable for the A.Y. 2017-18 and there was no infirmity in the action of the A.O. in applying the same to the case of the assessee. 6.3. Ld. CIT(A) also directed the A.O. to take necessary action on paying the tax on the income amounting to Rs. 2.64 also, under section 115BBE of the Act by observing as under: Before concluding it is relevant to mention that in the sh....
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....tered by me in my individual capacity and nothing to do with the company i.e. M/s A.P. Refinery Pvt. Ltd." In view of the above statement of the assessee, the AO is therefore directed to take necessary action to bring to tax the amount of Rs. 2.64 crore also u/s 115BBE after providing an opportunity of being heard to the assessee on this issue by way of a showcause notice before doing so. 7. Now the assessee is in appeal. 8. Ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the assessee surrendered an income of Rs. 3.64 Crores during the course of search in his statement recorded under section 132(4) of the Act and disclosed the source of the transactions which was commission income and profit earned from Real Estate transactions recorded in the pocket diary found & seized during the course of search. It was emphasized that the Real Estate transactions from which the assessee earned undisclosed income were recorded in the seized pocket diary which has been accepted by the A.O. also who considered the sum of Rs. 2.64 Crores as income earned from commission and profit from Real Estate Business but did n....
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....BE. (1) Where the total income of an assessee, - (a) Includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D and reflected in the return of income furnished under section 139; or (b) Determined by the Assessing Officer includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, if such income is not covered under clause(a), the income-tax payable shall be the aggregate of- (i) the amount of income-tax calculated on the income referred to in clause(a) and clause(b), at the rate of sixty per cent; and (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause(i). 2. Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed to the assessee under any provision of this Act in computing his income referred to in clause(a) and clause (b) of sub-section (1). From the aforesaid provisions it would be clear that the provisions of Section 115BBE (1)(a) o....
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....d by the assessee elsewhere and not in the investment of the property. Therefore we are of the view that the A.O. was not justified in taxing the aforesaid income of Rs. 1 Crore separately particularly when nothing is brought on record to substantiate that the assessee had made separate investment different from the income earned on real estate transactions recorded in the pocket diary found & seized during the course of search. Accordingly the impugned order passed by the Ld. CIT(A) on this issue is set aside and the A.O. is directed to tax the entire surrendered income of Rs. 3.64 at the normal rate of tax. 11. Vide Ground No. 3, the grievance of the assessee relates to the direction given by the Ld. CIT(A) to the A.O. to bring to tax the amount of Rs. 2.64 Crores under section 115BBE of the Act. 12. As regards to this issue Ld. Counsel for the assessee submitted that the Ld. CIT(A) has no power to restore the matter to the A.O. under section 251(1)(a) of the Act and if he was satisfied then he should have brought the aforesaid amount to tax under section 115BBE of the Act himself. It was further submitted that the assessee declared the income from Real Estate business whic....