TaxTMI 
TaxTMI 
2023 (3) TMI 756
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....ection to the said submission. Mr. Dahiya appearing on behalf of the Revenue submitted that he has no objection as the facts remain the same in both the appeals. 3. Accordingly, we thus take up ITA 367/CHD/2022. The said appeal is an appeal filed by the assessee wherein the correctness of the order passed u/s 263 by the ld. PCIT, Patiala pertaining to 2017-18 assessment year is assailed. 3.1 When comparing the grounds in the respective appeals, it is seen that infact there is no difference in the grounds raised. The grounds raised in ITA 367/CHD/2022 are reproduced hereunder accordingly: 1. That the Ld. PCIT, Patiala has erred in assuming the jurisdiction to issue notice u/s 263 of the Income Tax Act, 1961 and, thereby, cancelling the assessment already framed by the AO vide order dated 28.06.2019 and holding the order passed by the Ld. Assessing Officer as erroneous and prejudicial to the interest of revenue and setting-aside the assessment already framed to the file of the Assessing Officer, with the direction to pass the assessment order, afresh in accordance with law, after granting sufficient opportunity to the assessee. 2. That the Ld. PCIT has failed ....
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....was accepted. This order has been subjected to the Revisionary Powers by the ld. PCIT, Patiala exercising the powers u/s 263 of the Act. Aggrieved by this, the assessee is in appeal. 5. The ld. AR inviting attention to the grounds raised in the present appeal submitted that ground No. 5 raised in the present appeal is not being pressed. The grievance posed by the assessee to the order, it was submitted, is addressed in ground No. 1 praying for quashing of the order. The ground numbers 2, 3 and 4, it was clarified are in support of the said prayer in the aforesaid ground. 5.1 Inviting attention to the assessment order, it was highlighted that though the impugned order is a cryptic order, however, the order was passed after hearing the assessee on the issues on various dates as found mentioned in the body of the assessment order itself under the heading 'DOH' (date of hearing). It was submitted that the AO was conscious of the fact that this case was selected for compulsory manual selection because it was a survey case and hence after making all necessary due enquiries, the order was passed. 5.2 Inviting attention to the impugned order, it was submitted, that the ld. PCI....
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....ingly, the impugned order, it was his prayer, may be quashed. Inviting attention to the order it was submitted that the assessee was show caused by the ld. PCIT as to why u/s 155BBE a higher rate of tax should not be imposed on the surrendered income. The following facts noticed in the impugned order in para 2 were highlighted for consideration of the Bench : "the survey u/s 133A of the Income Tax Act, 1961 (hereinafter 'the Act') was conducted on your business premises at M/s Gupta Electrico, Main Road, Samana-147101 on 18/05/2016 and you have surrendered a total amount of Rs.44,39,500/- during the course of survey consequent to the following discrepancies found by the survey team: Unexplained Advances made Rs.30,44,200/- Unexplained cash in hand Rs. 8,92,500/- Unexplained investment in building Rs. 5,02,800/- Total Rs.44,39,500/- Subsequently, you have filed ITR forA.Y. 2017-18 in which you have disclosed the surrendered income of Rs.44,39,500/- in the profit and loss account (PartA-P&L of ITR 2017-18) and paid tax at the rates applicable to normal business income. After that your case was selected under compulsory manual se....
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....s, it was argued the ld. PCIT strangely concluded that the assessee has only filed copy of the ledger account and has made no further submissions, hence, it has been incorrectly held that the assessee has chosen not to comply with the notice. Relying on the record containing the supporting evidences, it was argued that all queries stood replied to. Thus, what further submission was still required to be addressed, it was questioned. In view of this fact, the ld. PCIT holds that the order dated 28.06.2019 is not tenable as supporting general entries passed and treatment in the trial balance was not explained. The ld. AR inviting attention to the record submitted that what further explanation was still required. Explanation has been offered, supporting evidences from assessee's books of account have also been filed. In the circumstances, it was questioned what further remained to be explained. The fact that the AO has not examined the same is also not the case. The amended position of the provision was another factor taken into consideration and the ld. PCIT held that Section 68 to 69D were applicable. Reliance was incorrectly placed upon the decision of the jurisdictional High Co....
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....should have been done and also includes the order which is passed allowing any relief without enquired into the claim. 5.8 Accordingly, considering the facts of various cases which have no applicability to the issue at hand, invoking Explanation-II of Section 263 the order was set aside holding as under : "5.5.......Moreover, the facts of the case are squarely covered by Explanation 2 of Sec.263, which is inserted w.e.f. 01.06.2015. It is as under :- 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 u/s 119 or d. The order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional high court or Supreme Court in the case of the assessee or any other person. 6. Hence, keeping in view the above discussed facts, figures of the case and lapses on the part of the A.O., I hold the assessment order dated 28.06.2019 for the A.Y. 2017-18 in the case of ....
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....it was his submission that the impugned order is an arbitrary order which is trying to re-look at the very same facts in order to bring to tax a higher rate. In view of the peculiar circumstances wherein the survey was conducted on 18.05.2016 and the relevant provision was not available on the Statute, the applicability of the higher rate of tax had been questioned by the AO as by then, the Statute stood amended. This specific query had been replied to by the assessee. A considered view had been taken since the provision had been brought on the Statute on 15.12.2016 i.e. much after the date of the survey. The AO, it was submitted, had considered the record which consisted of the surrender accepted the view of the Survey Team. Thus, where on facts the Survey Team has accepted the post dated cheques calculating the prevalent tax rate available on the Statute and the AO after enquiring and looking into the facts has also accepted that the tax was to be levied at the rate which was available on the Statute as on the date of the survey. Thus, in these undisputed facts on record, the action of the ld. PCIT in seeking to impose a higher tax rate as opposed to the tax rate correctly impose....
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....dated 31.12.2018 issued u/s 142(1) of the Act. The first questionnaire issued asking for the details. 24-28 6. Copy of the reply dated 07.02.2019 filed in response to the notice issued u/s 142(1) dated 31.12.2018. 29-31 7. Copy of the anothernotice dated 20.05.2019 issued u/s 142(1) of the Act. 32-33 8. Copy of the reply dated 10.06.2019 filed in response to the notice issued dated 20.05.2019. 34-35 9. Copy of another notice dated 26.06.2019 issued u/s 142(1) of the Act. 36-38 10. Copy of the reply dated 27.06.2019 to the letter dated 26.06.2019 issued u/s 142(1) of the Act by the Ld. Assessing Officer. 39-40 11. Copy of the letter dated 21.10.2019 of the Worthy DCIT, Circle Sangrur with respect to the proposal sent to the Worthy CIT for taking action u/s 263 of the Act. 41-42 12. Copy of the letter dated 01.02.2021 as sent by the Income Tax Officer, Sangrur to the Audit Officer regarding the issue of 115 BBE of the Act is highly debatable, and as such AO had taken possible view. 43-44 13. Copy of letter dated 17.08.2021 by the ITO, Ward- Sangrur sharing the details of the audit objections, the serial no.....
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....r : 5.13 It was his submission that the assessee has been subjected to a survey and no other source of income was found. In the circumstances, it is for the Revenue to show that the surrendered income was not from the known business sources but was from some other sources. Attention was invited to Paper Book page 25 which are postdated cheques dated 15.06.2016, 15.09.2016, 15.12.2016 and 15.03.2017 calculating the tax due on the surrendered income at the prevalent rate of tax. Attention was invited to Paper Book page 26 and 27 which is questionnaire issued to the assessee on 10.09.2018 on the ITBA Portal. Specific attention was invited to page 28 which is another questionnaire dated 31.12.2018 issued by the AO to the assessee accompanied by an Annexure at pages 29 to 32 wherein the nature of queries raised would show that all questions raised were on the normal business of the assessee. No other source has been referred to by the Survey Team, the AO or the PCIT. The questions raised shows that the assessee has been required to substantiate its returned income wherein the surrender stood honoured and included. Attention was also invited to Paper Book page 33 to 35 which is copy o....
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....T, he is objecting to the conduct of the AO who has passed an order after due enquiries and after passing the order herself, the officer states that there is an error in the order. In the said situation, it was his submission that the invoking of Revisionary Authority causes prejudice to the assessee. As if on a debatable issue, the AO was of the view that 154 proceedings could not have been done, the Revisionary provisions consequentially also become inapplicable on this ground. Thus, it is upsetting the vested right of the assessee which is under challenge in such a manner, where first the AO passed an order after full and due enquiries and then attempt to unsettle a settled position by resiling from the view taken. From the body of the assessment order, it was highlighted the number of hearings recorded by the AO herself before the passing of the order itself would show that due enquiries have been made. The action of the very same AO to move a proposal knowing that it was a debatable issue, it was submitted, shows the high handedness to which the assessee is subjected to. 5.18 Referring to page 47 of the Paper Book, it was submitted that some Audit Memo has been referred to ....
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....g people to find illegal ways of converting their black money into black again, the Government should give them an opportunity to pay taxes with heavy penalty and allow them to come clean so that not only the Government gets additional revenue for undertaking activities for the welfare of the poor but also the remaining part of the declared income legitimately comes into the formal economy. Thus, money coming from additional revenue as a result of the decision to ban Rs.1000 and Rs. 500 notes can be utilized for welfare schemes for the poor. " 5.19 It was submitted that it had been highlighted that the amendment received the Presidential assent on 25.12.2016 and in view of the fact that survey stood conducted on 18.05.2016 on which date the assessee had surrendered, the relevant provision was not in existence. The documentary evidences which are on the basis of the seized records, it was submitted, cannot be brushed aside. Reliance upon aforesaid decisions of the ITAT in the said background have been placed. In response to another notice issued by the ld. PCIT, replies available at page 69 to72 was relied upon where it was highlighted that surrender was as per tax rate applicabl....
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.... 2. Judgment of ITAT, Chandigarh Bench in the case of Ganga Acrowools Limited Vs PCIT in ITA No.196/Chd/2021 for application of mind and on audit objection. 3. Commissioner of Income Tax vs. Anil Kumar Sharma 335 ITR 83 Delhi-HC. 4. CIT vs. Hindustan Marketing 8t Advertising Co. Ltd. 341 ITR 180 Delhi-HC. 5. Loil Continental Foods Ltd. vs. Pr. Commissioner of income Tax ITA No. 577/Chd/2019 Chd-Trib. 6. Commissioner of income Tax vs. Late Shri Vijay Kumar Koganti 195 DTR 428 (Mad High Court). 7. Copy of judgment of ITAT, Surat Bench in the case of Pramod Kasharich and Shah ITA No. 43/SRT/2018. 8. Shailesh Kumar Gandhi V/s. Pr. Commissioner of income Tax 195 DTR 259 CUTTACKTRIB. 9. Pr. CIT V/s. N K Proteins Ltd.429 ITR 493 Guj-HC. 10. Shree Balkrishna Commercial Co. Ltd. V/s. Pr. Commissioner of income Tax 11. Copy of the judgment in the case of PCIT VS Shreeji Prints (P) Ltd. [2021] 130 taxmann.com 294 (SC). 12. Copy of the judgement of ITAT, Chandigarh in the case of Sanjay Jain & Others in ITA No.140/CHD/2021 vide order dated 23.03.2022 on the issue of u/s 263. 13. Copy of judgment of ITAT, Chandigarh B....
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.... submission that this decision was fully applicable to the facts of the present case also. 5.23 Even on merits, it was his submission that the provisions of section 115BBE are not attracted. For the said purpose, attention was invited to the decision at Sl.No. 3 (pages 33 to 90) of the Chandigarh Bench of the Tribunal in M/s Sham Jewellers & Others in ITA NO. 375/Chd/2022 order dated 22.08.2022, copy at pages 33 to 90. Specific attention was invited to page 82 of the same for the proposition that no evidence has been brought on record by the Revenue to show that there was any other source of income despite the fact that a survey stood conducted on the assessee, documents stood impounded. Thus, it was his submission that in the facts of the present case, none of the deeming provisions of section 68 or 69 were attracted. Attention was also invited to the fact that in para 10.19 in the aforesaid decision in the case of M/s Sham Jewellers (supra). Reliance have been placed in the case of Famina Knit Fabs Vs. ACIT reported in 176 ITD 246 (Chd-Trib) as in the facts of the present case also the proceeds were from the known business sources of the assessee, these have been accepted as s....
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.... the fact that in the peculiar facts, deeming provisions were not attracted from the proposition relied upon. 5.26 Reliance was placed on the decision mentioned at Sr. No. 7 i.e. Smt. Rekha Shekhawat Vs. PCIT (2022) 218 DTR 171 (Jaipur-Trib.) Reading from the Head Note therein it was submitted that the issue herein was also the revisionary powers of the PCIT and the deeming provisions invoked by the said authority which on facts was found to be emanating from the Real Estate Business and, hence, applicability of the section 115BBE was ousted. 5.27 Relying on the brief synopsis filed, it was submitted that the assessee has relied on several judgements to argue that proposal has been sent by the AO, accordingly the objection of the assessee may be noted even if the Bench is not inclined to give any findings on the source of information. It was highlighted that the assessee's objection is on the ground that the very same AO having passed the order instead of carrying out rectification u/s 154 if she so believed instead sends a proposal for 263 proceedings again on a debatable issue. The manner in which assumption of jurisdiction is sought to be justified, is strongly objected to....
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....not be a bar. Accordingly, it was his prayer that the amended provision would fully apply in terms of the decision of the Ld. PCIT. It was further submitted that anyway the ld. PCIT has left the issue open and assessee's case has not been outrightly discarded. The assessee, accordingly, is still free to argue before the AO. Accordingly, it was his prayer that the order may be upheld. 7. The Ld. AR in reply submitted that section115BBE is not automatically attracted. This issue, it was submitted, has been considered at length in the decision of the Gandhi Ram v PCIT (supra) (available at pages 1 -16 of the paper book ). It was submitted that it is attracted only when the source is not satisfactorily explained, only then that the deeming provisions are attracted. Reading from the surrender letter, the conduct of the survey team in accepting those cheques and the AO passing the original assessment order, it was submitted that the Assessing Officer's interpretation was a plausible view, hence, the decision relied upon which laid down the proposition that once the AO takes a possible view after full and due enquiries. Revisionary powers are ousted was fully applicable and w....
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....rts relied upon therein which have held the case to be allowable, the AO forming his view after due enquiry has passed a valid order and may not be permissible to be upset by the order passed. Accordingly, it was his prayer that the impugned order may be quashed. 8. We have heard the rival submissions and perused the material available on record. In the facts of the present case, on a perusal of the decisions cited by the ld. CIT-DR and on the facts as available on record, we find that the decision in the case of Kim Pharma (P) Ltd. (cited supra) rendered by the jurisdictional High Court does not afford the Revenue any specific help in seeking to support the impugned order. The reasons for coming to the said conclusion, we propose to address hereinafter. 8.1 However, before addressing the legal position as canvassed by the Revenue, it is necessary to set out the admitted facts on record. In the facts of the present case, the Survey Team has impounded the books and on the basis of that survey, the assessee has surrendered specific income under specific heads. On the basis of the surrender and the heads, specific cheques for specific dates have been collected by the Survey Team....
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....rence, we reproduce the relevant finding from the aforesaid decision : 3. We have heard learned counsel for the assessee. 4. Learned counsel for the assessee submitted that the amount surrendered by the assessee was business income and assessable as such. He relied upon a decision of the Karnataka High Court in CIT v. S.K. Srigiri & Bros. [20081 298 ITR 13/171 Taxman 264. 5. The point for determination in this appeal is, whether Rs. 5,00,000 which was surrendered by the assessee during the course of survey under s. 133A of the Act would form part of business income or was assessable under s. 69A of the Act. The AO, the CIT(A) and the Tribunal after considering the factual aspect noticed that the amount surrendered during the survey was not reflected in the books of account and no source from where it was derived was declared by the assessee and, therefore, it was, deemed income of the assessee under s. 69A of the Act. The findings recorded by the Tribunal in this regard are as under: "In the facts of the present case, we find that assessee during the course of survey had surrendered the income as income from other sources though a plea has been r....
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....urces 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 a satisfactory explanation being given, then these provisions of ss. 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. The opening words of s. 14 'save as otherwise provided by this Act' clearly leave scope for 'deemed income' of the nature covered under the scheme of ss. 69, 69A, 69B and 69C being treated separately, because such deemed income is not income from salary, house property, profits and gains of business or profession, or capital gains, nor is it income from 'other sources' because the provisions of ss. 69, 69A, 69B and 69C treat unexplained investments, unexplained money, bullion etc. and unexplained expenditure as deemed income where the nature and source of investment,....
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....hether the plea qua the surrendered income is to be accepted or not. From the aforesaid decision of the Hon'ble Court, their Lordships have extracted in para 6, ".....lt follows that the moment a satisfactory explanation is given about such nature and source by the assessee, then the source would stand disclosed and will, therefore, be known and the income would be treated under the appropriate head of income for assessment as per the provisions of the Act. However, when these provisions apply because no source is disclosed at all.........." Accordingly, on a reading of the aforesaid decision of the Hon'ble jurisdictional High Court as well as the decision of the Hon'ble Gujrat High Court, we find that the Courts have not held that every income surrendered during the survey necessarily is brought to tax under the deeming provisions. The Courts considering the scheme of the Act have left the door open for the assessees wherever they can, to argue on facts if available that a specific income surrendered was under a specific head. It is the explanation of the assessee supported by documents which would bring the deeming provisions into play. Their Lordships have also refer....
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....shed. Appeal of the assessee is allowed. 9. Since facts and submissions in ITA 366/CHD/2022 remain identical, accordingly, both to the appeals of the assessees stand allowed. Order pronounced in the Open Court on 12th January, 2023. ============= Document 1 ML: 01764 220195, 500 GUPTA ELECTRICO Deals In All Kind of Electricht Goods MAIN ROAD SAMANA The Joint Come 0.05.2010 Deted 24 A survey was conducted by the income tax department w/ 33 (A) of the income Tax Act 1901 on Ca RS 892500.00 Fourty four tacs thirty made to cover all the discrepandes and differences found during the survey. The surrender amount transactions of the firm. My this surrender is for the 2016-17 relevant to AY 2017-18 Thanking you Auth. Dealers of Cromotes free 13.3L Auth, Distibutor of Luminous Batteries & Inverters Havells bridia Ltd. Exide Batteries Finolex Cateits Document 2 ANNEXURE 01. During the course of survey operation dated 18.05.2016, cash inventory was prepared on 19.05.2016 and excess cash of Rs. 8,92,500/- was found at your business premises. Please produce cashbook and receipt books for verification. Produce c....
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....siness will be produced for verification as desired. 2) Explanation regarding amount of Rs. 502802/- involved at page no. 02 of the note book was explained at the time of survey conducted as 133A of the Income Tax Act. This amount has already been surrendered in the Income Tax Return subject to no penal action. Tax due on this additional income has also already been paid. 3) Explanation regarding note book containing amount to the tune of Rs. 3044200/- was explained at the time of survey conducted us 133A of the Income Tax Act. This amount has already been surrendered in the Income Tax Return subject to no penal action. Tax due on this additional income has also already been paid. 4) Comparison of major expenses along with figures of trading account in pre and post survey period is furnished as required. ༠39 5) Complete set of account books such as cash book, ledger, bill book, receipt book, purchase/ voucher file, etc. maintained in the regular course of business will be produced for verification as desired. 6) The requisite chart showing comparison of returned income, gross profit and expenses with last year is attached ....