TaxTMI 
TaxTMI 
2023 (3) TMI 306
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....Y. 2017-18 3. The brief facts of the case are that the assessee has been in the business of Milk Chilling Centre. The survey action u/s 133A of the Income Tax Act was carried out at the premises of the assessee on 03.05.2016. During the survey, again certain discrepancies were found into the account of the assessee which included excess cash found of Rs. 9,60,000/- and advance given to farmers not accounted for in the books of account of Rs.83,40,000/-. The assessee, when confronted with the above, surrendered an amount of Rs.97,00,000/- out of the income of the assessee for assessment year 2017-18. Thereafter, in the return of income, the assessee showed the said surrendered amount as his additional business income. 4. During the assessment proceedings, the Assessing Officer (in short 'AO') show caused the assessee as to why the said surrender of Rs.97 lacs be not treated as income from unexplained sources and thereby be taxed at a higher rate of tax as provided u/s 115BBE of the Income Tax Act ('the Act'). The assessee replied that the said surrendered amount was duly incorporated in the Profit & Loss Account. That the assessee did not have any other business or source of i....
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....asonable opportunity of being heard to the assessee. 6. Being aggrieved by the said order of the ld. PCIT, the assessee has come in appeal before us. 7. At the outset, ld. counsel for the assessee has submitted that the AO vide questionnaire dated 09.12.2019 issued u/s 142(1) of the Act had specifically raised query about the taxability of amount of Rs.93 lacs surrendered during the survey action and a specific reference has been made to the applicability of Section 115BBE of the Act. The ld. counsel for the assessee in this respect has referred to Paper Book page 23-24, which is copy of the notice wherein aforesaid query has been raised by the AO. The ld. counsel has further invited our attention to page 25 of the Paper Book which is the copy of the reply filed by the assessee dated 23.12.2019, wherein, the assessee had duly explained that the aforesaid cash/advance given to the milk supplier was generated from the business income of the assessee and that the assessee did not have any other source of income except the milk supply business. It was also explained in the said reply that the provisions to Section 115BBE were not applicable to the case of the assessee as the obje....
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....s further relied upon decision of the Hon'ble Supreme Court in the case of CIT Vs Manjunathesware Packing Products & Camphor Works, order dated 02.12.1997 to submit that the word 'record' does not only mean the 'record' which was available to the Income Tax Officer at the time of passing of the assessment order, however, it could also include the new material which comes to his possession and he would be entitled to take that no new material into account and that it would be open to take into consideration all records available at the time of examination by him. The ld. DR in this respect has submitted that ld. PCIT was justified in taking into consideration the Audit Report and the proposal submitted by the AO for the purpose of forming the opinion that the impugned assessment order was erroneous and prejudicial to the interests of the Revenue. 10. We have considered the rival contentions and have gone through the record. As per the provisions of Section 115BBE of the Act, the income tax on income referred to in Section 68 or Section 69 or Section 69A or Section 69B or Section 69C or Section 69D are chargeable to tax at a higher rate. Now a perusal of the provisions of Sect....
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.... disclosed this income voluntarily if the survey operation had not been conducted at his premises, this surrender income of Rs. 93,00,000/- are income of the assessee as income referred in section 69, section 69A 69B Section 69C or Section 69D. Therefore, those such income shall be taxed as per section 115BBE (applicable w.e.f. A.Y. 2013-14) tax was to be calculated @ 30% upto A.Y. 2016-17 and 60% for the A.Y. 2017-18 onwards on this additional income. 12. A perusal of the above observation of the Audit Party reveals that the Audit Party has pointed out that had the survey action be not taken at the premises of the assessee, the aforesaid additional income would not have been discovered and thereby offered by the assessee. The Audit Party, therefore, held that the surrendered income of the assessee was the income as referred to u/s 68 to 69D of the Act. 13. Now coming to the proposal made by the AO to the ld. PCIT for invoking Revisionary power u/s 263 of the Act, wherein, the ld. AO has made the following proposal : 5. The observation raised by the audit party has been examined that the assessee has surrendered additional income of Rs.93,00,000/- over and above its ....
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.... AO after considering the submissions and explanations of the assessee accepted the contention of the assessee that the surrendered income was out of the business income of the assessee. The perusal of the impugned order of the ld. PCIT would show that the ld. PCIT has not pointed out as to why the explanation offered by the assessee to the AO was not satisfactory and further what more enquiries are required to be conducted in this case, which the AO had failed to conduct. The ld. PCIT has simply based his opinion and order on the Audit Objections/Report as pointed out even in the Audit Report that since the same was undisclosed income of the assessee which was surrendered by the assessee during the survey action and therefore, the same was to be assessed under the provisions of Section 68 to 69D of the Act. The above reasoning of the survey party is not in accordance with the relevant provisions of the Act. Therefore, we do not find any justification on the part of the ld. PCIT in invoking the Revisionary jurisdiction in this case. The Co-ordinate Bench of the Tribunal in the case of Gandhi Ram Vs PCIT itaNo.121/CHD/2021 order dated 04.08.2022, under somewhat similar circumstances....
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....T himself is not clear about the applicability of relevant provisions and in the same breath holding the Assessing officer to task by not invoking the said provisions is clearly shooting in the dark which cannot be sustained in the eyes of law and the order so passed therefore cannot be held as erroneous in the eyes of law. 9. Now, coming to the findings of ld PCIT that the Assessing officer has failed to enquire about the source of income in order to assess the income under the appropriate head of income or the relevant deeming provisions of the Act. In this regard, we find that there are documents in form of statement of the assessee recorded u/s 133A during the course of survey and the surrender letter dated 21.10.2016 submitted by the assessee at the time of survey and these documents are very much part of the records which is available at the time of assessment as well as at the time of examination by the ld PCIT. In the statement so recorded at the time of survey, the assessee was specifically asked about the source of his income and in response, he has submitted that he is getting income from Gandhi General Store and share of profit from partnership firm, M/s Gandhi....
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....ead "business income" and didn't invoke the deeming provisions as so suggested by the ld PCIT, we do not believe that there is any error on part of the Assessing officer and the order so passed by him cannot be held as erroneous. As we have stated above, the ld. PCIT without recording any specific findings as to the applicability of deeming provisions has gone ahead and held that the deeming provisions are applicable in the instant case. Even for sake of argument, where such a view is taken on face value, it would be a case where a different view has been expressed by the ld PCIT, however, the same doesn't lead to the conclusion that the view taken by the Assessing officer as erroneous as the AO has taken into consideration the entirety of facts and circumstances of the case, the explanation offered by the assessee during the course of survey regarding the source of such income and thereafter, has assessed the income under the head "business income". The view so taken by the Assessing officer is after due application of mind and therefore cannot be held as unsustainable in the eyes of law. In the facts and circumstances of the present case, where there are specific questions asked ....