TaxTMI 
TaxTMI 
2024 (10) TMI 747
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....gned assessment order must be erroneous and that error must be prejudicial to the interest of the revenue. In the present case, ld. AO has passed the reasoned assessment order after analysing all details and therefore there was no error in the impugned assessment order so as to justify action u/s. 263 of the Act. Under the circumstances, the very assumption of power u/s. 263 of the Act is unjustified and bad in law and therefore, order u/s. 263 of the Act deserves to be quashed. 3. The subject order u/s. 263 passed by ld. PCIT is illegal and bad in law in the absence of any finding of the ld. PCIT as to how the alleged error of the AO has resulted in loss of revenue particularly when tax has been duly paid on the impugned income. 4. The subject order u/s. 263 passed by ld. PCIT is illegal and bad in law in the absence of any finding of the Id. PCIT as to how the alleged error of the AO has resulted in loss of revenue particularly when business loss has rightly been claimed. 5. The ld. PCIT has further erred in law in not coming to any concrete conclusion and without conducting any inquiry or investigating the issue, merely directed the AO to frame the ass....
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....not erroneous or prejudicial to the Revenue. The assessee submitted that the A.O. had conducted adequate inquiries and that the unaccounted income had been properly disclosed during the survey. The assessee firm claimed that the figures disclosed were genuine, and the current year's business loss should not be considered as it was merely an expense against gross profit. However, Principal CIT found the assessee's arguments unconvincing for several reasons. The firm failed to submit required journal entries and could not substantiate the nature of the unaccounted income. The stock revealed during the survey was classified as undisclosed and treated as unexplained investments under Section 69 of the Act. The reported income and investment in stock, recorded after the survey, could not be treated as regular business income. Additionally, the firm did not provide details regarding the source of the unaccounted stock purchases. In light of these findings, Principal CIT held that the undisclosed income was liable to be taxed under Section 115BBE, and the current year's business loss could not be set off against it due to the provisions of Section 115BBE(2). Principal CIT was of t....
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....claimed by the assessee. In response, the assessee filed a detailed submission dated December 4, 2019, and reiterated the findings from the earlier survey under Section 133A of the Act, confirming the excess physical stock of gold and silver that had been identified. The total value of the excess stock was confirmed as Rs. 4,29,81,940/-, which included the previously noted amounts of gold and silver. The valuation of this excess stock had been conducted by Government-approved valuer during the survey, and a copy of the valuation report was provided to the A.O. Additionally, the partner of the firm, Pareshkumar Vavadia, also made a statement during the survey that was also submitted for review. The assessee submitted that tax on the disclosed amount of Rs. 4,29,81,943/- related to the excess stock had already been paid as advance tax for the assessment year, with copies of all relevant challans and documentation included in the submission. Finally, the A.O. framed the assessment on December 18, 2019, under Section 143(3) of the Act, accepting the returned income of the assessee without any adjustments or modifications, concluding that the documentation and explanations provided were....
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....e. The firm declared a gross profit of Rs. 3,20,82,598/- and reported the survey disclosure as a separate line item. Furthermore, the assessee listed the deductions claimed, which included business expenses amounting to Rs. 38,55,964/- and interest and remuneration to partners totalling Rs. 3,18,48,395/-. This resulted in a net profit of Rs. 3,93,60,181/-, leading the total of net profit and partner remuneration to Rs. 7,12,08,576/-. Since this final profit exceeded the disclosure of Rs. 4,29,81,942/-, the assessee argued that there was no basis for adjusting the current year's loss. The response was supported by a certificate from their Chartered Accountant, Maheshbhai Godani, and all requested details of the survey proceedings were provided to the A.O. The assessee contended that there was no error in the A.O.'s order and that the assessment order was neither erroneous nor prejudicial to the revenue's interest. Thus, the assessee submitted that the proceedings under Section 263 were unwarranted and amounted to a mere change of opinion. Despite the detailed response, Principal CIT was not satisfied with the explanations provided by the assessee. Therefore, the Counsel for the ....
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....higher tax rate of 60% does not apply. The Counsel for the assessee relied on the case of CIT v. Vatika Townships P. Ltd. 367 ITR 466 (SC) and Samir Shantilal Mehta v. CIT (ITA 42/SRT/2022).Consequently, Section 69 is not applicable in this scenario, and thus the question of applying the provisions of Section 115BBE, especially the amended sections, does not arise. The A.O.'s order stands correct, and the PCIT is not justified in taking revisionary action regarding this matter. 8. On the issue of denying the set-off of the current year's business loss of Rs. 34,83,712/- in light of Section 115BBE(2) of the Act, the Counsel for the assessee submitted that no such loss has been adjusted against any income. The firm declared a gross profit of Rs. 3,20,82,598/-, with the survey disclosure of Rs. 4,29,81,942/- reported separately. Deductions claimed include business expenses of Rs. 38,55,964/- and interest and remuneration to partners amounting to Rs. 3,18,48,395/-. This resulted in a net profit of Rs. 3,93,60,181/-, with the sum of net profit and partner remuneration totaling Rs. 7,12,08,576/-. Given that this final profit exceeds the disclosed amount, there is no basis for adju....
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....ng Officer. Further, we observed that vide notice dated 30.11.2019, the Assessing Officer again inquired into the working of the stock as on the date of survey and asked the assessee to reconcile the stock physically found, with the stock as per books of accounts, along with supporting material to establish the accuracy, genuineness and allowability of purchase and other expenses claimed. In response, the assessee filed reply dated 04.12.2019, in which the necessary reconciliation was submitted to the Assessing Officer as per his requirements. We observe that the Assessing Officer had duly inquired into matter and had also taken the legally plausible view in the matter. In the case of Parshottambhai Maganlal Ramotia vs. PCIT 157 taxmann.com 5148 (Rajkot), the ITAT held that where assesses, a medical practitioner, voluntarily surrendered certain amount during survey as his unaccounted professional receipts and taxed said receipts at normal rate, since assessee had no other source of income, other than business income and AO had conducted inquiry and perused details submitted, and taken a decision to accept explanation provided by assessee after proper application of mind, provision ....
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....ts is not sustainable. We also agree with the contention of the assessee that if statement of the partner at the time of survey was to be relied for making this addition/disallowance, the statement should not be relied in part and should have been relied in full. Since at the time of survey, assessee disclosed the entire income as business income, the AO was not justified in bifurcating the same into income from other sources and income from business or profession. In view of this, the order passed by Ld. CIT(A) treating the disclosed income of the assessee as business income and allowing the partner's remuneration amounting into Rs. 13 lacs u7s. 40(b) of the Act is hereby upheld. Ground No. 1 & 2 of revenue's appeal are dismissed." 14. In the instant case, admittedly assessee has only one source of income and therefore, looking into the instant facts, in our considered view the Assessing Officer has not erred in facts and law in not invoking the provisions of Section 115BBE of the Act. Further, we also observe that in the instant case, the survey was conducted on the assessee on 23.09.2016, whereas the amendment in Section 115BBE of the Act came into force on 15.12.2016....