TaxTMI 
TaxTMI 
2021 (8) TMI 1164
X X X X Extracts X X X X
X X X X Extracts X X X X
....4, the grounds of appeal raised by the assessee are as follows: "1) The ld. Pr. CIT has erred in law and on facts in invoking provisions of section 263 of the Act holding the assessment order as erroneous and prejudicial to the interest of revenue to the extent of failure of A.O. to treat income disclosed during survey as income chargeable u/s 68/69/69C and not to allow any standard deduction u/s 24 of the Act. 2) The ld. Pr. CIT has erred in law and on facts holding order erroneous and prejudicial to the interest of revenue due to failure of A.O. to add unaccounted income of Rs. 1,00,00,000/- admitted during survey proceedings but not disclosed in the return of the income by the appellant. 3) The ld. Pr. CIT has erred in law and on facts holding order as prejudicial and erroneous to the interest of revenue for A.O. granting set off of brought forward loss of Rs. 18.05 lacs against unaccounted business income violating provisions of section 115BBE of the Act. 4) The ld. Pr. CIT has erred in law and on facts directing AO to frame the assessment afresh in accordance with discussion & direction in order u/s 263 of the Act not appreciating the fact t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....can be considered as rental income. Thus without any evidence, the amount disclosed is actually taxable under sections 68/69/69C of the Act and taxed at the maximum marginal rate in the light of section 115BBE of the Act. Benefit of 30% standard deduction, against the sum of Rs. 1,30,00,000/- is therefore, not allowable. 6. The ld PCIT also observed that, assessee has been allowed set off of Rs. 18.05 lakhs against regular business income which is not allowable since the amount offered during survey should actually be taxed u/s 68/69/69C of the Act. 7. During the course of survey on 26/10/2013, various papers were impounded, out of which pages no. 120-127 impounded from the assessee's Bharat Nagar office were regarding land at 171/A and 171/B of TPS scheme which is of size 15030 square meter in Katargam, Surat. Partner of assessee firm, Shri Manjibhai Dungrabni, in his statement during survey on 26.10.2013, in response to question no. 15, has stated that in respect of these papers, he was offering Rs. 2.85 crores in hands of Gopal Builder for three years, namely Rs. 50,00,000/- for AY 2012-13,. Rs. 1,00,00,00/- for AY 2013-14 and Rs. 1,35,00,000 for AY 2014-15. However, no su....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... As far as the income of Rs. 1,30,00,000 is concerned it is not established from any impounded document or from any details given by the assessee during the assessment proceedings nor stated by the assessee in his statement to establish that the said amount of Rs. 1,30,00,000 was actually rental income. The AO has not enquired into the issue and has not querried the assessee to prove that the same can be considered as rental income. Thus without any evidence, the amount disclosed should actually be taxable under sections 68/69/69C of the Act and taxed at the maximum marginal rate in the light of section 115BBE of the Act. Benefit of 30% standard deduction against the sum of Rs. 1,30,00,000 is therefore, not allowable. It is further seen that, the assessee has been allowed set off of Rs. 18.05 lakhs against regular business income which is not allowable since the amount offered during survey should actually be taxed u/s68/69/69C of the Act. (v) During the survey proceedings on 26.10.2013, various papers were impounded, out of which page no. 120-127 impounded from Bharatnagar were regarding land at 171/A and 171/B of TPS scheme which is of size 15030 square meter in Katargam....
X X X X Extracts X X X X
X X X X Extracts X X X X
....heet of Dhanajibhai Patel being assessed at Circle 1(3) and disclosed as asset in Return of income in AY 2017-18. Secondly, as regard sale of immovable property is concerned, there should be registered conveyance deed and therefore please provide us seized papers referred by in your show cause notice dated 14/03/2018 and copy statement of Manajiobhai Patel highlighting portion of admission of 2.85 cr. In his statement in name of Gopal Builders and also registered conveyance deed transferring ownership in said Katargam. Still if you have any other evidence of sale of Katargam land please also furnish such additional evidence. In view of above said, submission unless you provide evidence as stated hereinabove, there shall be complete failure of rule of natural justice and prima-facie it appears that there is no record justifying such revision and there appears to be neither application of mind having any mistake of law or fact." 9. However, the Ld.Pr.CIT has rejected the contention of the assessee and held that assessment order in the case of the assessee, dated 14.03.2016, passed u/s 143(3) of the IT Act for A.Y 2013-14 is erroneous and prejudicial to the interest of rev....
X X X X Extracts X X X X
X X X X Extracts X X X X
....an M. Dungrani. We invite attention to page no. 42 listing each and every individual and firm against whom disclosed amount is stated, taxable income for years for which income is to be disclosed and last column state income returned income (including income disclosed) while filling the return of Income. It is pertinent to note that aggregate amount offered, as disclosure as income was Rs. 12,00,41,000/- and Actual income disclosed is Rs. 14,50,78,987/- and aggregate of taxable Income returned by all assessee is Rs. 16,23,12,126/-. Photo copy of acknowledgement and statement of total Income with Assessment order are enclosed in Paper Book No. 1 at page No. 120 to 199. 4. Show cause notice and Final order U/s. 263 has directed A.O. as under: "In view of the above facts, the AO was required to treat the entire income disclosed during the survey as income taxable U/s. 68/69/69C and not allow any standard deduction U/s 24. The unaccounted income of Rs. 1,00,00,000/- admitted during the survey but not disclosed in the return of income was also required to be added by the AO, in view of the provision of section 115BBE, the wrong set-off of brought forward loss of Rs. 18....
X X X X Extracts X X X X
X X X X Extracts X X X X
....u/s68/69/69C of the Act being unaccounted income and no deduction in respect of any expenditure or allowance or set off any loss is allowable against such income in accordance with the provisions of section 115BBE of the IT Act. However, the assessee in the return of income filed for the year treated the said unaccounted income as income from House property and claimed deduction u/s 24 @ 30%, although it was not established from any impounded documents or from the assessee's statement given during the survey proceedings or from details submitted during the assessment proceedings that the said unaccounted income disclose during the survey was income from House property. The PCIT noted that Partner of the assessee firm, Shri Majibhai Dungrani in his statement during the survey, in response to question N.15 has stated that in respect of page numbers. 120 to 127 impounded from the Bharat Nagar premises pertaining to land at 171/A and 171/B of T.P. Scheme in Katargam Surat, he was offering Rs. 2.85 crores in hands of Gopal Builders in three years viz Rs. 80 lakhs for A.Y 2012-13, Rs. 1.00 Crore in respect of A.Y 2013-14 and Rs. 1.35 Crores in respect of A.Y 2014-15. However, no such inc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tify addition u/s 68 nor there is any investment, which is not recorded in the books justifying the addition u/s 69 of the I.T. Act nor there is detection of any undisclosed expenditure from the statement of Shri Manjibhai Dungrani. However, such statement from the side of the assessee not true, since, the sworn statement which is based on impounded material reveals unaccounted income and unaccounted investment which should have been recorded in the books of account but have not been recorded in the books of account as admitted in the statement. We note that assessee has argued before the ld PCIT that major source of income is rent from godown and calculation of godown rent is provided during assessment and as regards the amount declared in the statement by the Shri Manjibhai P. Dungrani is concerned, the assessee has already disclosed the source of the income and the mode of earning of the income. In this context, it is seen that, in the sworn statement record u/s 131 during the survey, the partner has nowhere stated the source of unaccounted income as rent income. On the contrary, he has stated in the statement that it was unaccounted income. So the wrong and untrue reflection....
X X X X Extracts X X X X
X X X X Extracts X X X X
....5 lakhs against regular business income which is not allowable in view of the provisions of section 115BBE of the I.T. Act, since the amount offered during survey should actually be taxed u/s 68/69/69C of the Act. It is therefore understood that the assessee has no explanation to offer on this point and agrees that the claim of set off of brought forward loss against business income is a wrong claim, is required to be disallowed. In view of the above facts, the ld PCIT was of the opinion that AO was required to treat the entire income disclosed during the survey as income taxable u/s 68/69/69C and not allow any standard deduction u/s 24 of the Act. The unaccounted income of Rs. 1,00,00,000/- admitted during the survey but not disclosed in the return of income was also required to be added by the AO. In view of the provision of section 115BBE, the wrong set-off of brought forward loss or Rs. 18.05 lakhs against unaccounted business income should have been disallowed by the AO. Since no such disallowance and addition have been made by the AO in the assessment order u/s 143(3) dated 14/03/2016, therefore ld PCIT held that assessment order is erroneous and prejudicial to the interes....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nded from Bharat Nagar to tax, and even failed to anlyze the documents impounded, and statement given. The ld PCIT observed that in profit and loss account of assessee , the assessee had credited rental income of Rs. 12,69,19,247/-, however in computation of income, has reduced godown rent of Rs. 3,79,19,247/- for year under consideration and then calculated net rental income of Rs. 2,05,29,075/- after deducting 30% standard deduction of Rs. 87,98,175/- and municipal tax of Rs. 85,91,997/-. It was further seen that assessee has given detail of rent received only for Rs. 1,69,19,247/- during assessment proceedings. Thus, it is clear that assessee has rental income supported with evidence of only Rs. 1,69,19,247/-, and has claimed rental income of Rs. 2,10,00,000/- without any evidence that from whom received for which property received etc. This amount of Rs. 2,10,00,000/- is actually rental income also not supported by any of evidence found/impound during the survey or even stated by during statement. The AO had considered same rental income, without even asking any question from assessee. Thus, this amount of Rs. 2,10,00,000/- should have been treated undisclosed income u/s 68 of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on was made in case of Karan Patel. The assessee in his submission dated 08.12.2016 filed during the assessment proceedings has submitted the documents in respect of land at Atodara. But the AO concerned failed to verify that as per impounded document, total purchase price agreed was at Rs. 2,87,45,788/- and payment schedules were specifically recorded therein. However, during the assessment proceedings, it was stated in submission dated 27.12.2016 that despite conveyance deed in April, 2013, regarding purchase of the said land, payment of Rs. 1,37,45,000/- was not made as possession of the land was not given due to part encroachment and therefore the amount of Rs. 1,37,45,000/- was not offered for taxation and the disclosure made of Rs. 1,53,00,000/- was adequate. Contention raised by the assessee is not at all acceptable as the basic presumption in case of documents found during the course of search and survey action is that the transactions recorded therein are true and if the transaction has been carried out, transactions recorded for future dates should also be considered at the value given in impounded/seized papers. In the instant case, the said transaction in land is comple....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or in name of some real person, has not been investigated. All these facts narrated above have been accepted without proper verification which has resulted in the assessment order being erroneous and prejudicial to revenue. In view of facts and above observations of ld PCIT we hold that assessment order passed by the AO is erroneous in so far it is prejudicial to the interest of revenue. Therefore, we do not find any infirmity, so far the above findings of ld PCIT is concerned for assessment year, 2014-15. We, therefore, uphold the above findings of ld PCIT for assessment year 2014-15. 19. We note that issues raised by the ld PCIT were not responded by the assessee during the assessment stage. The assessing officer also did not raised the queries by issuing notice under section 142(1) of the Act, therefore, it is a case of complete lack of inquiry. During the course of hearing, the Bench asked the ld Counsel to produce copy of notices issued by assessing officer for assessment years 2013-14 and 2014-15, under section 142(1) of the Act, however, ld Counsel has failed to produce the notices issued by assessing officer under section 142(1) of the Act, during assessment stage. Hence....