TaxTMI 
TaxTMI 
2023 (3) TMI 612
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....he Income Tax Act, 1961 ['the Act']. 2. The learned CIT(A) erred in fact and in law in confirming the action of the Id. AO in exercising power u/s. 154 on the issue which is debatable and which cannot be rectified u/s. 154 of the Act. Addition of Rs. 17,00,00,000 u/s. 115JB of the Act 3. The learned CIT(A) erred in fact and in law in confirming the action of the Id. AO in re-computing the book profits u/s. 115JB of the Act by making an addition of Rs.17,00,00,000/- 4. The learned CIT(A) erred in fact and law in confirming the action of the Id. AO in re-computing the book profits u/s.115JB of the Act by considering the adhoc disclosure of Rs.17,00,00,000/- made during the course of survey as income of the Appellant for the purpose of computation of book profits u/s. 115 JB of the Act. 5. The learned CIT(A) erred in fact and law in confirming the action of the Id. AO in re-computing the book profits u/s. 115JB without appreciating the facts of the case in proper perspective. 6. The learned CIT(A) erred in fact and law in confirming the action of the Id. AO in re-computing the book profits u/s. 115JB of the Act by relying upon irrel....
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....any made during survey. That therefore it was nota clear cut case of the said income being necessarily treated as part of the book profits of the assessee so as to effect the rectification in this regard under section 154 of the Act. There is no dispute vis a vis the position of law with regards to section 154 of the Act, that the same is applicable only for rectifying mistakes which are obvious ,clear and patent and not involving two opinions or debate. 5. Having said so, it is necessary to consider the facts relating to the rectification made by the AO vide his order passed under section 154 of the Act which was upheld by the ld.CIT(A) also. As stated above, there was survey conducted on the assessee under section 133A of the Act on 23.6.2011 at its business premises. The impugned assessment year before us is Asst.Year 2011-12. This survey was thus conducted after close of the financial year relevant to the impugned assessment year i.e. after 31.3.2011 relevant to Asst.Year 2011-12, which is impugned before us. The surrender of Rs.17 crores by the assessee during survey has been detailed in the assessment order passed by the AO dated 25.2.2014. Copy of which was placed befo....
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....n 143(3) or the rectification order passed under section 154 of the Act or for that matter even order of the ld.CIT(A) passed in appeal filed against the order passed under section 154 of the Act, we find, makes any mention of surrender of Rs.17 crores made by the assessee being in relation to any incriminating material or documents found during the survey at the assessee's premises. Undoubtedly, the same was also surrendered not as "business income" but as "income from other sources". 8. The question to be determined in the light of the above is, whether on the basis of these facts, this surrender of income of Rs.17 crores ought to have been invariably made part of the book profits of the assessee for the purpose of paying taxes under section 115JB of the Act. 9. The term " Book Profits " has been defined u/s 115JB of the Act as the profit as shown in the profit and loss account of the assessee as prepared in accordance with Schedule III of the Companies Act 2013, complying with all accounting standards, policies adopted for preparing the Profit and loss account for laying before the company at its annual general meeting. Section 115JB(2) and Explanation (1) to the said sect....
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....ned during the year accounted for following prescribed accounting policies and standards. 11. The issue for consideration is whether the surrender of 17Crs made by the assessee during survey; adhoc and without being corroborated with any incriminating material, should have been invariably made part of its profit and loss account. That is, could the said surrender be treated as representing profits earned by the assessee to be disclosed to its shareholders in AGM, without any doubt. 12. We are in agreement with the ld.counsel for the assessee in this regard that it is surely not a clear case of the amount being invariably included in the book profits of the assessee on the basis of the facts before us. In the absence of any incriminating material found, substantiating the surrender made, the same cannot invariably be said to represent the profit of the assessee for disclosure to its shareholders. If the surrender was corroborated with some undisclosed asset or incriminating document found, revealing the nature and manner of earning the income surrendered, it necessarily represented profits which needed to be disclosed in the profit and loss account also for the benefit of shar....