TaxTMI 
TaxTMI 
2024 (7) TMI 824
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....id ab-initio. 2.0 That on the facts and circumstances of the case and in law, the Principal Commissioner of Income-tax (PCIT) Rajkot-1 erred in holding that the assessment order is erroneous and prejudicial to interest of revenue on the issue of applicability of section 115BBE. 2.1 That on the facts and circumstances of the case and in law, the Principal Commissioner of Income-tax (PCIT) Rajkot-1 erred in exercising jurisdiction u/s 263 by setting aside the aforesaid issue even though the same had been discussed and scrutinized by the Assessing Officer in detail while framing the assessment u/s 143(3) of the Act. 2.2 That on the facts and circumstances of the case and in law, the Principal Commissioner of Income-tax (PCIT) Rajkot-1 erred in setting aside the order by stating that the assessing officer has not conducted any inquiries or applied his mind on the issue of applicability of section 69A and section 115BBE of the Act." 3. As transpires from the order of the ld.Pr.CIT, revisionary powers were exercised finding the assessee to have been incorrectly allowed the income surrendered by it during survey ,of Rs. 15.00 lakhs, to be treated as being in ....
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....he provisions of section 263 of I.T. Act are that the order passed by the AO is erroneous and prejudicial to the interest of revenue. The assessee has submitted that he has disclosed the unaccounted professional receipts during the course of survey and the source of income was the medical practice which has been explained in the statement recorded u/s.131(1A) of the Act. The assessee's submission that the undisclosed income was professional receipt or otherwise needs verification from the facts available on record including the records pertaining to survey proceedings. To determine the issue one has to go to the records / documents found during the course of survey, the statements recorded of the assessee and outcome of any enquiries during the course of survey and thereafter in the assessment proceedings. However, none of the above verifications have been carried out by the AO while completing the assessment which ought to have been done so to determine the taxability under the provisions of section 115BBE of the Act. 6. The above facts will indicate that AO has not conducted any inquiries / applied his mind and law in respect of taxing the undisclosed income....
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....the jurisdictional High Court or Supreme Court in the case of the assessee or any other person. 9. As per the Explanation 2, the order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interest of the revenue if the order is passed allowing any relief without inquiring into the claim. However, the AO did not conduct any such inquiries or verification and simply accepted the assessee's submission. In this manner the assessee's case is also covered under para 'a' of Explanation 2, of section 263(1) of I.T. Act. Therefore the order passed by the AO is erroneous and prejudicial to the interest of revenue to that extent." 7. Thus, the finding of the error by the ld.Pr.CIT in the assessment order in the present case is vis-à-vis lack of inquiry by the AO on the issue of surrender made by the assessee during the survey, before accepting it as professional receipts of the assessee. Having gone through the order of the Ld.PCIT, the assessment order passed u/s 143(3) of the Act sought to be revised by the Ld.PCIT and having heard both the parties and considered all documents referred to before ....
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....nother specific query, being question no.10 was also pointed out as raised regarding his approximate income for the year, in response to which the assessee surrendered Rs.15 lakhs on account of additional unaccounted professional receipts. They read as under: 11. It is clearly evident from the above that inquiries were conducted by the AO regarding the nature of income surrendered during survey by the assessee. 12. Our attention was also drawn to judicial pronouncements to the effect that where the assessee has no other source of income, other than the business income and the AO had conducted inquiry and perused the details submitted, and taken a decision to accept the explanation provided by the assessee after proper application of mind, the provision of section 115BBE of the Act could not be invoked to tax the income as deemed income. That therefore the view of the ld.Pr.CIT invoking the provisions of section 263 on this aspect was not justified. Reference in this regard was made to the decision of ITAT, Bangalore Bench in the case of Karthik Estate Vs. Pr.CIT, ITA No.432/Bang/2022 dated 24.8.2022. Copy of the order was placed before us. 13. Our attention was also drawn ....
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....ords/documents pertaining to the survey cannot be basis for finding the assessment order erroneous. The documents pertaining to the survey form part of the record which was there before the Ld.PCIT also and was required to be examined by him for finding error in the assessment order. He was duty bound to go through these records, and point out how the documents pertaining to the survey revealed the acceptance of Rs.15 lakhs surrender made by the assessee as business income, to be an error on the part of the AO. The ld.Pr.CIT - could have arrived at a valid finding of error on the basis of his own examination of records including document or statement recorded of the assessee during survey action undertaken by him under section 133A of the Act. He has not pointed out as to how the documents pertaining to survey could not have lead to a reasonable belief as entertained by the AO that the income surrendered pertained to his professional receipts. 16. We therefore hold that there is no basis for the finding of error by the Ld.PCIT of no inquiry by AO in the assessment framed in the present case and the facts on record reveal otherwise. The order passed u/s.263 of the Act is therefor....
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....nt in earlier submission dated 15.11. 19. IT Ack & Computation 2016-17 Attachment-1 of Income Tax Audit Report along 2016-17 Attachment-2 with accounts Attachment in this submission Attachment-1 Attachment-2 From the above documents it can be seen that the amount disclose in survey of Rs. 15,00,000/- is already considered in the profit amount disclose in the audit report. It can be found as follows in audited profit & loss account: Particulars Total Revenue Remarks Total Expense Net Profit Amount 86,99,932 60,06,496 26,93,436 It can be verified in the audited profit & Loss account Add: Income Disclosed in Survey 15,00,000 Total Income 41,93,436 In audited profit & loss account it is shown as Exceptional Items and in "Note-19" annexed to the audited P&L Profit as per Audited P&L Document 3 During the survey the discloser of Rs. 15,00,000/- was the unaccounted professional receipts and the same was declared in the audit report. Accordingly the source of income is from my medical practice and same was explain during my statement recorded u/s 131(1A). I am maintaining the....