AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 756
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....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 to appreciate the fact that the assessment as framed by the....
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....iala 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. PCIT has passed the order ignoring the detailed reply filed by the assessee to the Show Cause Notic....
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....as 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 selection guidelines. The Assessing Officer, while framing the assessment order u/s 143(3) dated 28/06/2019 accepted the r....
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....ther 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 Court in the case of Kim Pharma Pvt. Ltd. V CIT 216 Taxman 153 (P&H) and various other decisions of the Courts which have no direct....
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....ave 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 the assessee is erroneous as well as prejudicial to-the interests of the revenue and therefore set aside the order to the file of the A.O. for passing a fresh order in accordance with law in respect of the issue discussed ....
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....ed 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 imposed even otherwise in the facts of the present case which was debatable. It was submitted that this issue not only on the facts of the surrender made when the amendment was not on the Statute but even otherwise by a play of fact....
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....ated 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. of the assessee in such details being S.No. 7. 45-47 14. Copy of the Annotated Reports of the Income Tax Officer, Sangrur, mentioning the debatable issue with regard to section 115BBE. 48-49 15. Copy of the Show Cause Notice dated 08.11,2019 issued u/s 263 of the Act by the Worthy PCIT, Patiala. ....
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.... 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 of the reply dated 07.02.2019 filed by the assessee. Referring to the same, attention was invited to reply to question No.3. Attention was also invited to Paper Book page 35 which is the reply containing detail of fixed assets provided by the assessee on the query raised by the AO informing that no additional depreciation was claimed. Attention was invi....
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.... 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 and the assessee's name is also referred to therein. The Show Cause Notices issued to the assessee by the ld. PCIT are placed in the Paper Book. In the said backdrop again, attention was invited to Paper Book page 58 onwards which are replies to the ld. PCIT again highlighting that the surrender was from the business income/transactions and these facts, it w....
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....l 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 applicable at that point of time. The amendment having been carried out on 15.12.2016 through Taxation Laws (2nd Amendment) Act 2016 in terms of the statements and objects of the Act itself would not have any application. It was further submitted that 115 BBE refers to Section 68 and 69 and in the face of the record, these provisions were not attracted. No bullion etc. or unexplained invest....
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.... 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 Bench, Chandigarh in the case of M/s. Venus Texspin Ltd. in ITA No.793/CHD/2017 vide order dated 12.12.2017 on the issue of u/s 263. 14. Copy of the judgment in the case of M/s. Arora Alloys vs. DCIT in ITA No. 1481/CHD/2017. 15. Copy of the judgment in the case of PCIT vs. DECCAN JEWELLERS P LTD. as reported in 132 Taxmann.com 73(AP). 5.21 The decision cited from S.No. 11, 12, 13 are relied again for the same proposition that once th....
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.... 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 such, thus, relying upon the proposition as considered in the case of M/s Sham Jewellers where the sources of expenditure / investment stood identified, the deeming provisions as considered in para 10.20 to 10.22 are not attracted. Referring to para 10.22, it was submitted that the decision in the case of Kim Pharma Ltd Vs. CIT in ITA No. 106 of 2011 (O&M) has been considered therein as reported by the Hon'ble Punjab & Haryana High Court, the decisi....
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....he 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. Accordingly, resting his case, it was his prayer that the impugned order may be quashed. 6. The Ld. CIT DR relied heavily upon the impugned order. It was his submission that the income having been surrendered during the survey, hence, necessarily the income is sustainable to tax u/s 68 & 69 or any of its deeming provisions. It was argued that once a deeming provision is invoked, applicability of section 115BBE is automatic. Thus, it was his submission that the so....
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....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 were being relied upon. Addressing the source of income which is sought to be questioned, reliance was placed on the decision of the Chandigarh Bench in the case of Sham Jewellers & others where the decision of the jurisdictional High Court in the case of Kim Pharma has been considered fully. Apart from that, it was argued there were various other decisions of the Chandigarh Bench namely Harish Sharma order dated 11.05.2021 in ITA 327/CHD/2020 (Paper Book page 116-124), M/s ....
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....e 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. The surrender made has been honoured by the assessee. The applicability of the prevalent rate and the higher rate post the amendment is a factor which was considered by the AO. The assessee relying upon the surrender letter has argued that the impounded documents relatable to the business income of the assessee considering which the amounts have been surrendered under specific heads. Relying on the facts, it has been pleaded the AO has examined this claim. Appropriate ledger en....
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....ssessee 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 raised by the assessee that the income was surrendered as income from job work but no evidence to prove the stand of the assessee has been brought on record. The assessee had also surrendered additional income of Rs. 10 lakhs in asst. yr. 2005-06 on account of sundry credits, repairs to building and advances to staff, which being relatable to business carried on by assessee was included as income from business. However, in respect of cash found during survey, which was not reflected in the books of accoun....
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....f 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, acquisition or expenditure, as the case may be, have not been explained or satisfactorily explained. Therefore, in these cases, the source not being known, such deemed income will not fall even under the head 'Income from other sources'. Therefore, the corresponding deductions which are applicable to the incomes under any of these various heads, will not be attracted in the case of deemed incomes which are covered under the provisions of ss. 69, 69A, 69B and 69C of the Act in view of the scheme of those provisions....
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....." 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 referred to the decision of the Hon'ble Karnataka High Court in the case of CIT v. S.K. Srigiri & Bros. [2008] 298 ITR 13/171 Taxman 264 and distinguished the same from the facts of Kim Pharma (P) Ltd. as in the facts of the said case before the Hon'ble Karnataka High Court, the income was explained as additional income from business. Accordingly, we find that in the facts of the present case, the decision of the jurisdictional High Court in the case of Kim Pharma (P) Ltd. is of no help. The arguments advanced on behalf of the Revenue that ....