TaxTMI 
TaxTMI 
2023 (12) TMI 1258
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.... rate of taxes and not at the rates prescribed under section 115BBE of the Act. 2. That on the facts and in the circumstances of the case and in law, the Ld Pr. CIT erred in setting-aside the order as passed by the Assessing Officer by invoking the provisions of section 263 of the Income-Tax Act, 1961 and directing the Assessing Officer to reframe the assessment order in respect of applicability of section 115BBE of the Income-tax Act, 1961 on account of excess stock of Rs. 1,35,43,914/- found during the course of survey without properly appreciating the facts of the case and submissions made before him. even when the excess stock as found during the course of survey relates to business carried on by the appellant which being his main source of income is liable to be taxed under section 28 to 44 of the Income-tax Act, 1961 and not under section 69/69A of the Income-tax Act, 1961. Similar view has already been taken by Hon'ble Jurisdiction Bench in the case of Shri Vijay Kumar Surana [ITA No.644/Ind/2019]" 2. There was a survey u/s 133A of the Act in case of the assessee on 20.02.2018. During the course of survey proceedings excess stock of jewellery was fond and consequ....
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....on the said surrendered income in question no.5 which was paid by the assessee. Thus, the tax liability of the assessee on the said surrendered income was already calculated at normal rate of tax being the source of the excess stock as unaccounted business income of the assessee. Ld.AR has then referred to the notice issued by the AO u/s 142(1) dated 02.03.2021 along with questionnaire in Annexure to the said notice and submitted that the AO has raised specific query about complete details in respect of income declared during the survey u/s 133A as well as quantitative details of all the valuable items of gold and silver with valuation report showing in the balance sheet for the year under consideration. The assessee filed reply to section 142(1) vide letter dated 08.03.2021 and explained that during the course of survey excess stock of Rs.1,35,43,914/- had been declared by the assessee as current year income. The AO after considering the reply of the assessee has accepted the return income therefore, the AO has conducted due inquiry to verify the correctness of the return of income and after his satisfaction the AO has accepted the return income. Ld.AR has relied upon the judgment....
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....ssue of applicability of provisions of section 115BBE nor there was any explanation by the assessee for the sources and nature of surrendered income. Ld. DR has relied upon the impugned order of Pr. CIT and submitted that Pr. CIT in para no.4 of the impugned order has referred that the AO has simply accepted that the assessee has incorporated the excess stock in the profit and loss account without examining nature of surrender. 5. We have considered the rival submissions as well as relevant material on record. The Pr. CIT has invoked provisions of section 263 on the ground that the AO has not conducted due inquiry on the issue of applicability of provisions of section 115BBE in respect of surrendered income of Rs.1,35,43,914/- on account of excess stock found during the survey. Ld. AR of the assessee has challenged the impugned order of the Pr. CIT on the ground that the AO has conducted due inquiry and then accepted the returned income. The AO has issued a notice u/s 142(1) dated 02.03.2021 placed at page no.46 & 47 of the paper book as under: 5.1 In the said show cause notice the AO has raised two quarries (iv) & (v) regarding the details of income declared during the surve....
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....ocuments available on records. On examination of the records, it is found that the applicability of Section 115BBE is clearly applicable owing to the fact that the assessee has offered the entire unaccounted income admitted during the course of survey for taxation in the form of unaccounted stock by showing additional income, which in turn proves beyond doubt the admittance on the part of the assessee that they had unaccounted stock of Rs. 1,35,43,914/- as on the date of survey which should have been treated as unexplained investment within the meaning of Section 69/69A of the Act which is liable to be taxed under the provisions of Section 115BBE. The AO has completely ignored the section 115BBE, inserted in the Income Tax Act with effect from 1st day of April, 2013, which clearly lays out the path that as to how the taxation rates will be applied in respect of addition made under section 68, section 69, section 69A, section 69B, section 69C or section 69D. AO has simply accepted that the assessee has incorporated the excess-stock in the P&L account without examining the nature of surrender. Needless to mention that the function of assessing authority is not only of adjudi....
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.... revenue" Further, the Hon'ble High Court of M.P. in the case of CIT Vs Deepak Kumar Garg, 299 ITR 435 has held as under: "From the order of the assessing officer, it is clear that for want of time, assessing officer had done only a semblance of enquiry and that too, in very slip-shod manner, as is clear from the post script in the order of assessing officer. Assessing Officer accepted the version of the assessee without proper enquiry as a result substantial amount of taxable income was not brought to tax. In such case assessment order would be erroneous and prejudicial to the interest of the revenue because law enjoins upon the assessing officer to make assessment order bringing all taxable income to tax. The enquiry held in a perfunctory manner could not be said to be a proper enquiry before passing the assessment order. This cannot be ground to shut out the jurisdiction of the Commissioner that an adequate enquiry was conducted by the assessing officer. We may clarify that order of the Commissioner is in two parts. Part one consists of reasons for issuing the show cause notice, and later part deals with findings recorded by the Commissioner after affording....
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....s" in so far as it is prejudicial to the interest of the revenue. I, accordingly set aside the assessment order on the limited issues discussed in para 4 above. Accordingly, I direct the assessing officer to tax the stock surrender addition of Rs. 1,35,43,914/- under section 69/69A r.w.s. 115BBE of the IT Act 1961 in the limited set-aside proceedings. Assessing Officer is also directed to initiate penalty proceedings under section 271AAC of I.T.Act 1961 in the limited set-aside proceedings as the AO has initiated penalty proceedings in a wrong section in the original order (in view of the fact that the AO has failed to invoke Sec. 115BBE resulting in penalty getting invoked in Sec. 270A). 6. In the result, for the reasons mentioned above, the assessment order u/s 143(3) r.w.s. 143(3A) & 143(3B) dated 16.03.2021 for Assessment Year 2018-19 is directed to be set aside on the limited issues as discussed above. The Assessing Officer is directed to reframe the assessment order after considering above said issues after giving proper opportunity of being heard to the assessee." 5.4 Thus, the Pr. CIT has referred and relied upon various decisions including the decision of the j....
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....age 47 PUNYA SHREE JE VET CRO AV. 2018-19 BA STAR12022712 1977; Please refer to the above and notice u/s143(2) of the IT Act dated 28/09/2019 issued to and duly served upon you. As your case has been selected for scrutiny in the reasons for scrutiny selection mentioned in the ITBA are: Survey under section 133A 2. In this regard, you are required to fumish the following details: i. Please submit a detailed note on the nature of business activities undertaken in the previous year i.e.F.Y 2017-18 relevant to A.Y.2018-19. ii. Please fumish the copy of computation of income, audited accounts, i.e. Trading Account, Profit & Loss account, Balance-sheet with all detailed annexure for the last two years ie F.Y. 2016-17 & F.Y. 2017-18. iii. Please submit the copy of assessment order for earlier years, if any passed. iv. Please submit complete details with supporting evidences of income declared during the survey proceedings ufs 133A of the Act. v. Please submit quantitative details of all the valuable, itoms i.e. gold, silver with valuation report shown in balance sheet for the year under consideration. vi. Please submit complet....