TaxTMI 
TaxTMI 
2022 (11) TMI 122
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....ey amounting to Rs.50,00,000/-, which should be treated as unexplained investment under section 69 and same is to be taxed under section 115BBE of the Income tax Act, 1961 and no set off of loss shall be allowed to the assessee against the said income. 3. The learned Principal Commissioner of Income tax (Central), Bengaluru grossly ignored that, the sum of Rs.50,00,000/- once taxed in the original assessment order as well as bringing the same to tax in the order under section 263, which amounts to double taxation, since the said sum of Rs.50,00,000 is a business income declared as stock in trade. 4. The learned Principal Commissioner of Income tax (Central), Bengaluru, has failed to appreciate the fact that, the said excess stock has already been added to the income as unexplained investment, in the original assessment order passed under section 143(3), dated 11.12.2019 and hence, question of erroneous so far as it is prejudicial to the interest of the revenue, does not arise. 5. For these and any other grounds that may be urged before the Hon'ble ITAT, it is prayed that the Hon'ble ITAT may allow the appeal with cost." 2. The assessee is a par....
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....ck is disputed before the CIT(Appeals), Panaji. The assessee's submission has been perused and it is found that the contention does not have any merit, as the appeal before CIT(A) pertain to addition of excess stock of Rs.50,00,000/-. The issue of taxation of excess stock of. Rs.50,00,000/-under section 69 read with section 1.15BBE is left unexamined/undecided by the AO, the same is not a subject matter of appeal before CIT(A). In view of the above discussion, the contention of the assessee is not sustainable. 8. Hence, it is held that the Assessment Order passed by the Assessing Officer is erroneous so far as it is pre-judicial to the interest of the Revenue as per the provisions of Clause (a) of Explanation (2) to the Section 263 of the Income Tax Act, 1961. The details of excess stock found during survey proceedings needs to be verified and enquired into as to whether the same is in the nature of unexplained investment u/s 69 in the books of account and whether the same is required to be taxed u/s 115BBE (2) of the I T Act, no set off of loss shall be allowed to the assessee against any income considered as unexplained investment u/s 69 rws 115BBE of I T Act. Hence,....
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....by the Assessing Officer 89[or the Transfer Pricing Officer, as the case may be,] is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, 90[including,- **** Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer 94[or the Transfer Pricing Officer, as the case may be,] shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal 95[Chief Commissioner or Chief Commissioner or Principal] Commissioner or Commissioner,- (a) the order is passed without making inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision ....
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....etation a lesser tax than what was just has been imposed." 11. There is no dispute that u/s. 263 of the Act, the PCIT does have the power to set aside the assessment order and send the matter for a fresh assessment if he is satisfied that further enquiry is necessary and the assessment order is prejudicial to the interests of the Revenue. However, in doing so, the PCIT must have some material which would enable to form a prima facie opinion that the order passed by the AO is erroneous, insofar as it is prejudicial to the interests of the Revenue. In the present case, the PCIT has not brought out any material on record to substantiate that the source for the excess stock declared as additional income during the search proceedings is anything other than the income from business of the assessee. The AO has given a clear finding with respect to additional income offered by the assessee as business income since the same is arising out of the difference in stock between the books of accounts and the physical stock. The AO has also taken cognizance of the submissions of the assessee with regard to the reconciliation of book stock and physical stock by stating that the authorities have ....
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.... and the loans were squared up amounts in the format prescribed therein. In compliance to thereof, the assessee has furnished complete details of the unsecured loans outstanding/ squared up vide para 3 of his letter dated 2-11-2015 placed as Annexure-2 at page 4 of paper book. The assessee has also furnished details consisting of copy of ledger account, copy of acknowledgment of income filed for A.Y. 2012-13 and 2013-14 and copy of bank statement reflecting the payment received was paid during the financial year 2012-13 relevant to assessment year 2013-14 which are placed at paper book, page 9 to 49 in respect of GTPL as well as PAFPL. This indicate that the assessee has furnished account confirmation of the depositor, acknowledgment of income of the parties, audited balanced sheet and profit and loss account of the parties and bank pass book and bank statement of the parties. During the course of assessee proceedings, form these facts it is clear that the assessee has not only proved the from these facts it is clear that the assessee has not only proved the identity of the lenders but also the genuineness of the transactions and credit worthiness of the lenders. Accordingly, the L....
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....s case. However, we find that the Pr. CIT has not mentioned in the show-cause notice issued under section 263 that he is going to invoke the Explanation 2 to 263 hence, invocation of Explanation in the order without confronting the assessee is not appropriate and sustainable in law in support of this contention, the ld. Counsel has placed reliance on the following decision: CIT v. Amir Corporation 81 CCH 0069 (Guj.), CIT Mehrotra Brothem -270 ITR 0157 (MP,CIT v. Ganpet Ram Bishnoi - 296 ITR 0292 (Raj.), Cadila healthcare Ltd. v. Cl 7, Ahmedabadh-1 [ITA no. 1096/Ahd/2013 & 910/Ahd/2014], Sri Saí Contractors v. ITO [ITO no. 109Nizag/2002] and Pyare lal Jaiswal v. CIT, Vamnesi [(2014) 41 taxmann.com 27 & (AII Trib.)]. It was contended by the Learned Counsel that clause -(a) & (b) of Explanation 2 of Section 263 are not applicable as the Assessing Officer has made enquiry and verification which should have been made. Further, in the show cause notice, the Explanation-2 of section 263 was not invoked by the PCIT and it was referred in the order u/s.263 of the Act. Therefore, in the light of decision of the Co-ordinate Bench of Mumbai ga in the case of Narayan Tatu Rane -....
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....e Assessing Officer is erroneous in so far as it/s prejudicial to the interests of the Revenue, he may, after giving the assessee an opportunity of being heard and after making an enquiry pass an order modifying the assessment made by the Assessing Officer or cancelling the assessment and directing fresh assessment. 53.2 The interpretation of expression "erroneous in so far as it/3 prejudicial to the interests of the revenue" has been a contentious one. In order to provide clarity on the issue, section 263 of the Income-tax Act has been amended to provide that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner. (a) the order is passed without making inquiries or verification which, should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been passed in accordance with any decision, prejudicial to the assessee, rendered by the jurisdi....
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....the jurisdiction under section 263 of the Act. The case laws relied by the ld. CIT(D.R.) are distinguishable on facts and in law hence, by the ld. Counsel as well and we concur the same hence not applicable to present facts of the case. Therefore, in absence of the same, the ld. CIT ought to have not exercised his jurisdiction under section 263 of the Act. Therefore, we cancel the impugned order under section 263 of the Act, allowing all grounds of appeal of the Assessee." 5. The Tribunal has found that in the order passed by the PCIT, Explanation 2 of section 263 of the Act, 1961 is made applicable. The Tribunal observed that the PCIT has not mentioned in the show cause notice to invoke the Explanation 2 of section 263 of the Act 1961. Therefore, by invocation of Explanation in the order without confronting the assessee and giving an opportunity of being heard to the assessee is not appropriate and sustainable in law. 6. Thus, the Tribunal has considered in detail the aspect of revisional power to be exercised by the PCIT in the facts of the case and has given a finding of facts that the Assessing Officer has made inquiries in detail and after applying mind, acce....
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....ade after one and half years that the statement was given under stress, pressure and humiliation and the statement was signed only to end the search proceedings is without any merit 9.10 When there is a clear and categoric admission of the undisclosed income by the assesses himself different statements and the undisclosed income being voluntarily declared in a statement dated 16.02.2017 there is no way the assessee can retract the same after 18 months contending that the under stress, pressure and humiliation. 9.11 The fact is when there is a clear admission, voluntarily made by the assessee, that would constitute a good piece of evidence for the purpose of assessing the income. 9.12 There is no evidence on record that statement was obtained under coercion or threat of any kind. The assessee was completely aware of the statement he was giving and at no point of time filed any letter immediately after the search/survey stating that the statement was given under threat or coercion. 9.13 Hence once it is shown that the statement was voluntary then, me assessee cannot to retract as held by the judgment of the Hon'ble Supreme Court in We case of Surje....
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.... 115 of the Evidence Act and hence it was not open to the assessee to retract from the same and after the departmental authorities had accepted the same and altered their position by closing the search. It further observed that declarations falling under section 115 of the Evidence Act do not require any corroboration and upheld the order of the Assessing Officer in rejecting the retraction and treating the impugned sum as undisclosed income. 9.27 From the principles of law laid down in the aforesaid judgments, it may be deduced that, admission is one important piece of evidence and is rebuttable. It is open to the assessee who made admission to establish that confession was involuntary and the same was extracted under duress and coercion. However the burden of proving that the statement was obtained by coercion or intimidation lies upon the assessee. Where the assessee claims that he made the statement under the mistaken belief of fact or law, he should prove the same with evidence. 9.28 The retraction should be made at the earliest opportunity and the same should be established by producing any contemporaneous record or evidence, oral or documentary, to substant....