TaxTMI 
TaxTMI 
TaxTMI 
2022 (11) TMI 195
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.... at the premises of the assessee on 17.08.2016 wherein the assessee had admitted additional income of Rs. 65,00,500/- largely on account of unexplained cash, unexplained advances to suppliers & unexplained investment in plot & jewellery. Ld. Revisional Authority to observed that he assessee had also shown surrendered income as normal business income in his original ITR. Ld It was of view that in view of amended provisions of Section-115BBE with Taxation Laws(Second Amendment) Act, 2016, the assessee was required to pay tax u/s 115BBE (Maximum Marginal Rate) on unexplained income in nature of unexplained cash, unexplained advances to suppliers & unexplained investment in plot & jewellery surrendered during the course of survey proceedings. It was of view that the surrendered income represented the undisclosed income of the assessee which would have never come to light had there been no survey action upon the assessee u/s 133A of the Act. Since the assessee had not objected for the income surrendered amounting to Rs. 65,00,500/- during survey proceedings and this income comprises of unexplained cash, unexplained advances to suppliers & unexplained investment in plot & jewellery. Thus....
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....never come to light had there been no survey action upon the assessee u/s 133A of the Act. Since the assessee had not objected for the income surrendered amounting to Rs. 65,00,500/- during survey proceedings and this income comprises of unexplained cash, unexplained advances to suppliers & unexplained investment in plot & jewellery . Thus, the same could not be treated as normal business income and all the unexplained income have to considered u/s 68 to 69D. However, the AO failed to do so. From the plain reading of the amended section-115BBE, it is also clear that the same is having effect from 01-04-2017 i.e. commencing date of assessment year 2017-18. As the amendment in Finance Act, 2016 was brought before 01-04- 2017, the same is applicable on the A.Y. 2017-18 in full spirit. The government has again cleared its intentions by bringing all the income surrendered during survey under the purview of Section-115BBE vide Finance Act, 2022 only to mitigate litigations. Therefore, the assessee failed to submit any proper reasons/explanations for showing the surrendered income as normal business income and paying taxes at normal slab rates. Thus, the AO should have invoked the provisi....
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....during the survey proceedings shall not be considered as normal business income and is required to be taxed as per the special provisions. 3. That the PCIT has erred in law & on facts in applying the provisions of Section 115BBE in the instant case, ignoring that the same is not applicable in the given case, as the amended provisions of the Statue, came into operation by Taxation Second Amendment Act, 2016, w.e.f. 15.12.2016 and hence could not be considered as applicable prior to 08.11.2016, in the present case the income was surrendered during the survey proceedings which was conducted in the case of the appellant on 17.08.2016. 4. That in the given facts and circumstances of the case, the PCIT has erred in law in invoking the provisions of section 263, also on the amount of Rs. 42 lacs (included in the total surrendered amount), which pertains to the purchase of property in ELDECO made by Smt. Poonam Bansal i.e. wife of the appellant, ignoring that no part of the investment has been made by Appellant. 5. That the view taken by the PCIT while invoking the provision of 263 is against the settled jurisprudence that when two views are possible, the one which is beneficial to a....
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.... course of survey proceedings is available in paper book submitted by the assessee. At page No. 5 of the statement of the assessee was question with regard to excessive cash of inventory of Rs. 9,75,500/- and which the assessee having failed to explain and he offered over and above regular income. Further the assessee was asked to explain the difference of Rs. 3,75,000/- being in the stock inventory. The same was also offered as additional income over and above regular business income. The assessee was then questioned to explain the entry of Rs. 3,46,500/- available in the diary about purchase of jewellery which was also offered by him over and above regular income. The assessee was question with regard to buying a plot of Rs. 38 lakhs at Eldico, Panipat for which he explained that he had bought the plot for Rs. 42 lakhs which includes stamp duty and as he was not able to explain the source of Rs. 42 lakhs then he offered an additional income of Rs. 42 lakhs over and above the regular income. Then during the survey a diary was found where entry was shown of an advance to supplier of Rs. 6,03,500/-. Again not having any explanation about the source he offered it as additional income....
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....es for the year under consideration including the sales not shown up to survey period is not more than 74 to 75 lakhs. On the excess sales up to survey period I have already offered additional business income of Rs. 1954000/- in form of advances to suppliers, diff in stock and excess cash thus net profit on the sales less shown up to the date of survey may not be twice added to my income as alleged. The total surrender was made in view of various documents gathered during survey and these were before the survey party and on the basis of discrepancies in documents impounded. The income surrendered is profit generated out of excess turnover documents impounded hence the said discrepancy may not be treated to make additions over and above the amount already surrendered." 13. The AO thus concluded as under:- "5.1 The reply filed by the assessee has duly been considered but not fond tenable. The assessee has submitted that he has declared sales at Rs.14,00,000/- approximately upto the date of survey because the profit earned out of sales of Rs.36 Lakh has been offered as additional income in the form of cash, excess stock and advances to suppliers. Further, the assessee has submitt....
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....the assessee to establish nexus and. if it is satisfactorily established then first such investment, should be considered, as undeclared receipt under that particular head. It is only where no nexus is established with any head 'then it should' be considered as deemed income under section 69, 69A, 69B & 69C as the case may be. It is because when assessee fails to explain satisfactorily the source of such investment then it should be taxed under section 69, 69A, 69B & 69C as the case may be. It should not 'be done at the first instance without giving opportunity' to the assessee to establish nexus. Therefore, there is no conflict with the decision of Hon. 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, we hold 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 he....