AI Drafter 
TaxTMI 
TaxTMI 
2022 (1) TMI 1092
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....ed as per law and facts may kindly be deleted. 2. The Hon. CIT(A) erred in disallowing the sum of Rs. 6,00,00,000/-, debited to the profit and loss account under the head "WIP declared u/s. 133A survey", not appreciating that the appellant had not claimed any deduction for such amount, as the same amount was included in the closing work-in-progress credited to the P & L A/c and therefore the entries were revenue neutral and accordingly no addition was justified for the year under appeal. 3. The Hon. CIT(A) erred in holding that as per the proviso to section 69C of the I.T. Act, 1961, the appellant was not entitled for deduction of Rs. 6,00,00,000/-, debited to the profit and loss account under the head "WIP declared u/s. 133A survey", not appreciating that the appellant had not claimed any deduction of the said amount in computing the total income for the year under appeal and therefore the addition was not justified for this reason also. 3. Brief facts of the case are as under:- Briefly stated facts of the case are that in this case the return of income, declaring total income at Rs. 3,54,73,890/-, was e-filed on 29.11.2014, for A.Y. 2014-15. The asse....
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.... amount of declaration of Rs. 6,00,00,000/-, made during the survey action, should not be treated as deemed income u/s. 68 r.w.s. 115BBE of the Act. In compliance the AR of the assessee filed written submission and contended that the amount of Rs. 6 Crores formed part of closing WIP of Rs. 27.05 Crores and that the assessee had declared profit of Rs. 6.63 Crores from its business, before interest and remuneration to partners, which was more than the income of Rs. 6 Crores, declared during the course of survey action. It was further claimed that none of element declared in survey was applied for computing cost of goods sold in current sales and on other hand the said income is capitalized to the balance stock and WIP. Accordingly it was contended by the assessee that income already offered as business income cannot be added again u/s. 68 of the Act. The AO, however, did not accept the contention of the assessee and added Rs. 2,45,26,110/- [Rs. 6,00,00,000/- (-) Rs. 3,54,73,890/-], to the income of the assessee, u/s. 68 r.w.s. 115BBE of the I.T. Act, 1961 by observing inter-alia as under- "The submission of the assessee have been perused carefully and the same are not accept....
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....use no source is disclosed at all on the basis of which the income can be classified under one of the heads of income under s. 14 of the Act, it would not be possible to classify such deemed income under any of these heads including income from 'other sources' which have to be sources known or explained. When the income cannot be so classified under any one of the heads of income under s. 14, it follows that the question of giving any deductions under the provisions which correspond to such heads of income will not arise. If it is possible to peg the income under any; one of those heads by virtue of satisfactory explanation being given, then these provisions of ss. 68, 69, 69A, 69B and 69C will not apply, in which event, the provisions regarding deductions etc applicable to the relevant head of income under which such income falls will automatically be attracted. Keeping in view the facts of the case and the above discussion, the provisions of section 68 r.w.s. 115BBE are applicable in this case. The income of the assessee is computed as under:- 1 Returned Income 3,54,73,890 2. Add: Unexplained income u/s. 68 r.w.s. 115BBE (Rs. 6000....
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.... has correctly pointed out his fact in the assessment order but has not grasped the adjustment made in the accounts fully. Considering all the factual aspects of the matter, I hold that, the appellant has not sincerely adhered to the disclosure of additional income made in the course of survey action u/s. 133A. The Rs. 6 Crores debited by the appellant to the profit and loss account as "WIP declared u/s. 133A survey" is disallowed as deduction. Resultantly, the said amount would be the additional income of the appellant as declared in the course of survey action out of the said sum of Rs. 6,00,00,000/-, the AO has already made addition of 2,45,26,110/-(Rs. 6,00,00,000 - Rs. 3,54,73,863). The said addition stands confirmed. The balance amount of Rs. 3,54,73,890/- (Rs. 6,00,00,000 (-). Rs. 2,45,26,110/-) is the enhanced income of the appellant resulting from the disclosure of additional income made in the course of survey action. Accordingly, the addition made by the AO of Rs. 2,45,26,110/- is confirmed by dismissing all the grounds of appeal and the income of the appellant is further enhanced by Rs. 3,54,73,890/- under the provisions of section 251(2) of the Act. The total addition,....