TaxTMI 
TaxTMI 
2024 (10) TMI 1474
X X X X Extracts X X X X
X X X X Extracts X X X X
.... each year, therefore, these appeals were heard together with the agreement of both the parties and are being disposed off by this consolidated order. 3. At the outset, the ld. AR has submitted that the matter in ITA No. 922/JP/2024 may be taken as a lead case for discussions as the issues involved in the lead case are common and inextricably interlinked or in fact interwoven and the facts and circumstances of other cases are identical except the difference in the amount in dispute other cases. The ld. DR did not raise any specific objection against taking that case as a lead case. Therefore, for the purpose of the present discussions, the case of ITA No. 922/JP/2024 is taken as a lead case. 4. Before moving towards the facts of the case we would like to mention that the assessee has assailed the appeal in ITA No. 922/JP/2024 on the following grounds; "1. That in law and in the facts and circumstances of the case, the ld. Principal Commissioner of Income-tax grossly erred in initiating & passing an order u/s 263 of the Act and in holding that the assessment order passed by the ld. Assessing Officer u/s 143(3) r.w.s 153A of the Act is found to be erroneous in so far a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e department carrying the orders passed u/s. 263 got merged in a single email and the computer operator of the assessee's Chartered Accountant due to oversight could not understand that there are two different emails and took the printout of the subsequent order received for assessment year 2019-2020 only and handed over to the assessee's Chartered Accountant for further action. Copy of screen shots are as under: 5. The thereafter assuming that order dated 22.03.2024 has been passed by the ld. PCIT for the assessment years 2019-2020, the assessee asked Shri Siddharth Ranka to file appeal before the Hon'ble ITAT, Jaipur Bench, Jaipur. Accordingly appeal for A.Y. 2019-2020 was filed and the same was heard by the Hon'ble Bench and the order is reserved. 6. That recently the assessee received notices u/s. 142(1) r.w.s. 263 dated 25.06.2024 from the ld. ACIT, Central Circle, Kota for A.Y. 2018-2019 & 2019-2020 in reference to orders passed by the ld. PCIT. At that time the assessee applicant closely checked the email & income-tax portal and got to know that 2 notices dated 12.03.2024 were issued by the ld. PCIT for A.Y. 2018-2019 & 2019-2020 and 2 order....
X X X X Extracts X X X X
X X X X Extracts X X X X
....remises of "Sadhwani & Rohada Group, Kota" to which the assessee belongs. A number of persons / premises were covered u/s 132 of the Act. Cash, Jewellery and other documents were found and seized from some person's residence and business premises. The case of the assessee was also covered under search proceedings. The assessee filed return of income u/s 139 on 12.09.2018. The assessee also filed return in response to notice u/s. 153A dated 22.01.2021 declaring total income at Rs. 68,18,660/-. There is no difference between ITR filed u/s. 153A and 139 of the Act. Consequently, the case was taken up for scrutiny for A.Ys 2018-19. In the assessment proceeding ld. AO noted that during search operation mobile [iphone] phone was taken in custody and some business related charts were identified in the mobile phone of Shri Jitendra Sadhwani. Print out of total 28 pages of WhatsApp chats of plywood products to various parties by M/s. Sadhwani Wood Products Private Limited. Some payments are in cheque, some partly in cash and cheque and some payments were received in cash only. These transactions were asked to be verified to Shri Jitendra Sadhwani with supporting documents. In reply th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat the modus of out of books of cash purchase and sale by the assessee company is very clear by the material placed on record. During post search investigation, various other transactions of similar type are also found not recorded in the books of accounts. On the ground of the analysis of incriminating document / material seized / impunded at the time of search / survey proceeding conducted on 01.08.2019 the assessee has also accepted about cash component involved in these transactions as unaccounted in this regard. In the light of the evidences, gathered at the time of search / survey proceedings as well as during the post search investigation it has established that the assessee concern is engaged in making unaccounted cash sales which come to Rs. 141,80,82,030/- the year wise bifurcation determined by the ld. AO is as under Sr. No. F.Y Unaccounted cash receipts on account of unaccounted 1 2012-13 12,79,50,140 2 2013-14 14,32,00,134 3 2014-15 17,22,13,989 4 2015-16 21,95,85,706 5 2016-17 21,24,51,359 6 2017-18 22,40,32,276 7 2018-19 23,38,84,911 8 2019-20 (Till 31.07.2019) 8,47,63,515 &nbs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fficer. iii) During the search proceeding unaccounted cash sales was found and on the basis of which the huge addition of Rs 22,10,32,276/- had been made treating as business income iv) That when a decision has been taken by the Assessing Officer consciously and which is legally correct, the assessment order cannot be said to be erroneous but the action now initiated is just a change of opinion. v) The Reliance has also been placed by the assessee on the following decision * PCIT v/s Manna Trust 2022 Rajasthan High Court * PCIT v/s Dharti Estate 2024 Gujarat high court * And many other orders of the ITAT The ld. PCIT considered all the facts and circumstances as detailed in the reply filed by the assessee but not found the reply convincing and thereby ld. PCIT thus held as under:- "7. I have examined the facts on record and have considered the position of law. The submission of the assessee has been perused carefully & it is observed that the AR of the assessee has in the submission tried to establish that the Assessment order passed by the Assessing Officer is not erroneous but the action now initiated is just a cha....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....Y under consideration. Further the assessee has also stated that his only source of Income is the business in the name & style of M/s Sadhwani Wood Pvt Ltd hence the source of unexplained money is the business only. In this regard Reliance is being placed on the decision of the Jurisdiction high court in case of M/s Bajargan Traders, Alwar v/s CIT where in the Honourable jurisdiction High Court decided on the issue of Surrender made on account of excess stock. The Honourable bench of the Rajasathan High Court had upheld the decision of the ITAT. Some of the important facts and observations arising from the judgement of Hon'ble ITAT as reproduced in the judgement Principal Commissioner of Income-tax v. Bajargan Traders [2017] 86 taxmann.com 295 (Rajasthan) are as under:- (i) The first attempt of the assessing authority, give opportunity to the assessee to establish nexus between unexplained investment & the regular source of income and if it is satisfactorily established then first such investment should be considered as undeclared receipt under that particular head. (ii) In a cases where source of investment/expenditure is clearly identifiab....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of unexplained money On examination of order of the Assessing Officer it is clear to me that the assessing officer has worked out the unexplained money generated through -out of books sales, and the assessee could not give the proper explanation how the unexplained money had been generated, hence the sum of Rs 22,10,32,276/- detected by the Assessing officer is liable to be taxed under the provisions of section 69 A r.w.s 115BBE and cannot be treated as business income. In order to treat such unexplained money as business income the assessee should have explained the complete chain of events, for generation of the unexplained money. Such nexus has not been given by the assessee. Thus it is clear that the assessing officer erred &did not take a conscious decision while taxing the unexplained money generated through cash sales made out of books as business income. Clearly, this error has caused prejudice to Revenue. Being a search/seizure case, it was essential that clarification/explanation of the addition made on account of unexplained money of Rs. 22,10,32,276/- u/s 69A of the Act should have been examined by the Assessing Officer. The tax implication o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... income disclosing therein Total Income of Rs. 68,18,660/- under the head 'Income from Business'. 4. During the course of post search & assessment proceedings carried out for A.Y. 2010-2011 to 2020-2021, several queries, notices, etc. were issued to the assessee by the ld. Assessing Officer. The assessee appellant always cooperated and submitted detailed replies. The assessee appellant in response to show cause notices issued by the ld. Assessing Officer submitted replies dated 17.09.2021. 5. The ld. Assessing Officer vide its assessment order dated 29.09.2021 passed for A.Y. 2018-2019 has made an addition of Rs. 22,40,32,276/- towards unaccounted cash sales as business income of the assessee appellant. The said assessment order has been passed after seeking approval of ld. Additional Commissioner of Income-tax, Central Range, Udaipur u/s. 153D of the Act. The assessee appellant has filed an appeal before the Hon'ble CIT(A) for the illegal addition made by the ld. Assessing Officer and the said appeal is currently pending. 5.1. The ld. Assessing Officer vide its assessment order dated 29.09.2021 passed for A.Y. 2019-2020 has made an addition of Rs. 23,38,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mer for cash amount. Bills were issued only for cheque amount in the transaction. On the ground of all these transactions it is evidently prove that assessee is indulged in unaccounted purchasing of the wood products from various parties and selling these items without bills in cash. All these cash sales have not been recorded by the assessee company in the audited books of accounts since last years. During post search proceedings, in its written reply assessee accepted that company have purchased goods in cash without billing and sold these items without bills in cash as well. Ratio of unaccounted cash sales with total amount received in the particular transaction was determined by the search team during the search action and a ratio of suppression of sales was established by using weighted average method. A ratio of unaccounted sales of 52.1675782% comes on the ground of this method that is M/s Sadhwani Wood Products Pvt. Ltd's unaccounted sale of current year and last 6 financial years and same has not been recorded in its books of accounts. The final amount was calculated at Rs. 141,80,82,030 for F.Y. 2012-13 to 31.07.2019 on the basis of evidences gathered as per table at ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ons of Rs. 22,40,32,276/-, Rs. 23,38,84,911/- & Rs. 8,47,63,515/- was made by the Id. Assessing Officer for A.Y. 2018-2019, 2019- 2020 & 2020-2021 respectively towards unaccounted cash sales as business income of the assessee appellant when: * if the so-called unaccounted profit earned by the assessee appellant, as has been alleged by the Id. Assessing Officer were to be anywhere near to be true then the department would have at-least found some fraction of undisclosed profits as undisclosed assets in the nature of Jewellery, Ornaments, Loans & Advances to Persons, Stock-mismatch, Investment in Immovable Properties, etc. BUT no such unaccounted investment / asset was found, nor was any addition made on that account. * during the course of search, which comprises of total 16 individual members, i.e., 4 male adult members, 4 female adult members (married), 2 female adult members (divorcee), 4 female minor members and 2 male minor members the total jewellery including silver articles was found to the tune of 3,319 grams only which's market value at that time was equivalent to Rs. 1,11,46,377/- and out of which jewellery worth Rs. NIL was seized by the income tax ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted. There is no allegation raised by the department that the purchases made by the assessee are in cash. The purchases made by the assessee are found to be genuine and no addition was made by the ld. Assessing Officer. * during the course of search total cash found from the assessee group including individuals, firms, assessee, was to the tune of mere Rs. 40,35,740/- and out of which cash of Rs. 30,00,000/- was seized by the income tax department. Furthermore during the course of assessment proceedings, the assessee vide letter dated 17.09.2021 voluntarily offered a sum of Rs. 2,10,600/- [3869500 - 3658900] for tax in A.Y. 2020-2021 towards unexplained cash-in-hand found at the time of search. However, the ld. Assessing Officer made an addition of Rs. 4,17,627/- and taxed the same u/s. 69A r.w.s. 115BBE of the Act. * Relevant extracts of letter dated 17.09.2021 filed by the assessee is also reproduced as hereunder: 12. That thus out of Rs. 38,69,500/- found by the search officials a sum of (Rs. 7,15,128/-, Rs. 1,54,372/- & Rs. 35,187/- + Rs. 1257/- + Rs. 1,32,821/-) totalling Rs. 10,38,765/- and (Rs. 23,19,935/- & Rs. 3,00,200/-) totalling Rs. 26,20,135/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the ITAT Jodhpur (SMC) Bench vide its aforesaid referred to order dated 25.5.2018 held that the provisions of sect ion 115BBE of the Act were not applicable if the surrender was made on account of excess stock found during the course of survey. So, the issue was a debatable, therefore, the Ld. CIT(A) was not justified in confirming the action of the Assessing Officer for making the rectification u/s 154 of the Act. Accordingly, the impugned order is set aside and it is held that the provisions of sect ion 154 of the Act were not applicable in the present case and the Assessing Officer was not justified in making the rectifications u/s 154 of the Act. * Hon'ble ITAT, Lucknow Bench in the case of Kanpur Organics Pvt. Ltd. v. DCIT (2020) 3 TMI 279 has held: Taxation of income - whether the surrendered amount can be taxable under section 115BBE read with section 69A of the Act or it was to be taxed as a regular business receipt - HELD THAT:- To decide this issue, it is important first to visit the statement of the director of the assessee which was recorded during the course of survey. We have particularly gone through the answer to question No. 35 wherein the director of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s accordingly rejected and as a consequence thereto the plea that no set off of losses be allowed against the same u/s 115BBE of the Act also is rejected. 14. That we hereby voluntarily offer the sum of Rs. 2,10,600/- [38,69,500 - 3658900] for tax and applicable interest. You are kindly requested to grant credit from the cash-in-hand seized by the income tax department and refund the balance amount. 8. Thus where the assessee appellant was found to be the owner of undisclosed money the ld. Assessing Officer has consciously treated the same as taxable u/s. 69A of the Act and where the addition made by him did not correlate with the undisclosed money the same is consciously treated by as income from business income and thus the same was taxable @ normal rates as has been done by him in other assessment years. The ld. Assessing Officer has specifically held that the income being added by him towards unaccounted cash sales is being added as business income. If the income has been consciously added as business income, then there is no scope for invoking the same as income from other source and in turn invoke provisions of section 115BBE of the Act. 15. The ld.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pur u/s. 153D of the Act. The ld. PCIT in its impugned SCN dated 12.03.2024 & order dated 22.03.2024 has not found the said approval as erroneous. In absence of same, entire proceedings u/s. 263 are bad in law and deserves to be quashed on this ground alone. We wish to rely upon: * Hon'ble Madhya Pradesh High Court in PCIT v. Prakhar Developers Pvt. Ltd. (2024) 4 TMI 498 has held: 07. Learned counsel for the appellant failed to answer the query made by this Court whether order passed by the Pune Bench in the case of Ramamoorthy Vasudevan (supra) was challenged before the High Court or Supreme Court on the issue of jurisdiction under Section 263 of the Act. Learned counsel submits that she could not lay her hands any order / judgment passed by the High Court as well as by the Supreme Court on this issue. In the case of Ramamoorthy Vasudevan (supra), in a similar facts and circumstances, reliance has been placed on judgments delivered by the Pune Bench of Tribunal in the case of Dhariwal Industries Limited v/s CIT (ITA No.1108 to 1113/PUN/2014), Lucknow Bench in the case of Mehtab Alam v/s ACIT (ITA Nos.288 to 294/Lkw/2014), Hyderabad Bench of the Tribunal in the ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ating to search cases are concerned, separate procedures have been laid down. Starting from Section 153A for assessments in the case of search or acquisition, Section 153B for time limit for completion of assessment u/s 153A, Section 153C for assessment of income of any other person and Section 153D i.e., prior approval necessary for assessment in case of search or acquisition. So far as Section 153D of the Act is concerned, the same reads as follows:- "153D. No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of [sub-section (1) of] section 153A or the assessment year referred to in clause (b) of sub-section (1) of section 153B, except with the prior approval of the Joint Commissioner:] 18.1. Now, on perusal of the above Section which states that a prior approval is necessary for assessment in case of assessment search or acquisition, it is specifically mentioned that no order of assessment or re-assessment shall be passed by an Assessing Officer below the rank of JCIT except with the prior approval of the Joint Commissioner. Before us, the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ctions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General or Principal Commissioner or ' Commissioner authorised by the Board in this behalf under section 120. It may be noted that Order of assessment passed with the approval of JOT under section 153D of the I.T. Act, 1961 could not be revised under section 263 of the I.T. Act, 1961. The Ld. D.R. has, however, relied upon the Order of ITAT, Panaji Bench, but, has not explained whether the Judgment of Hon'ble Allahabad High Court in the case of Dr. Ashok Kumar (supra) or different Benches of the Tribunal have been considered in this case by the Panaji Bench. It is not decided in this case that assessment order cannot be revised without revising the approval under section 153D of the I.T. Act and Explanation 1 to section 263 of the I.T. Act has also not been considered. Therefore, this decision relied upon by the Ld. D.R. would not apply to this case. Further the Judgment in the case of Param Transport (P.) Ltd. (supra), of Hon'ble Chhattisgarh High Court ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....Yrs. 2005- 06 to 2010-11 he submitted that the Tribunal in the said decision, following various decisions including the decision of Hon'ble Allahabad High Court in the case of CIT Vs. Dr. Ashok Kumar vide Income Tax Appeal No. 192/2000 order dated 06-08-2012, has held that assessment order approved by the Addl.CIT u/s. 153D cannot be subjected to revise u/s. 263 of the I.T. Act. 12. We have considered the rival arguments made by both the sides, perused the orders of the AO and the Ld.CIT and the paper book filed on behalf of the assessee. 14. We find merit in the above submission of the Ld. Counsel for the assessee. We find the Lucknow Bench of the Tribunal in the case of MehtabAlam Vs. ACIT vide ITA Nos.288 to 294/Lkw/2014 order dated 18-11-2014 while deciding an identical issue has observed as under. 14.1 We find the Hyderabad Bench of the Tribunal in the case of CH. Krishna Murthy Vs. ACIT vide ITA No.766/Hyd/2012 order dated 13-02- 2015 following the decision of the Lucknow Bench of the Tribunal in the case of MehtabAlam (Supra) held that CIT is not justified in assuming jurisdiction u/s. 263 when the order has been passed in terms of section 153....
X X X X Extracts X X X X
X X X X Extracts X X X X
....en passed after receiving approval u/s 153D of the Act, Ld. PCIT erred in revising order u/s 153A of the Act without first revising the order u/s 153D of the Act as which means that no defect has been observed by ld. Pr. CIT in approval u/s 153D of the Act. Thus the action of the ld. Pr. CIT assuming jurisdiction u/s 263 of the Act cannot be held to be tenable, the impugned proceedings deserves to be quashed on this grounds itself. 19. The additions of Rs. 22,40,32,276/-, Rs. 23,38,84,911/- & Rs. 8,47,63,515/- was made by the ld. Assessing Officer for A.Y. 2018-2019, 2019- 2020 & 2020-2021 towards unaccounted cash sales as business income of the assessee appellant viz-a-viz 263 invoked by PCIT is as follows: Assessment Year Assessment Order 263 Invoked 2018-2019 29.09.2021 YES 2019-2020 29.09.2021 YES 2020-2021 29.09.2021 NO 19.1. If the assessment order for A.Y. 2018-2019 has been found to erroneous & prejudicial to the interest of revenue, how come, assessment orders for A.Y. 2020-2021 where similar nature of additions were made by the ld. Assessing Officer were not found to be erroneous & prejudicial to the interest of revenu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essing Officer however, the assessee appellant is not found to be consequential owner of any money, bullion, jewellery or other valuable article. Hence, invocation of section 69A r.w.s. 115BBE as sought by the ld. PCIT is itself bad and erroneous. 22. It is reiterated that the nature of addition made by the ld. Assessing Officer against the assessee on account of unaccounted cash sales which is in the nature of business income and not in the nature of income from other sources. However, the amount of addition made by the ld. Assessing Officer is itself highly debatable and is unlike to be confirmed and the assessee is hopeful of complete deletion in the appellate proceedings as the said addition is completely based on pure guesswork, conjectures & surmises and without finding any underlying undisclosed asset against the assessee. Where the assessee was found to be the owner of undisclosed money the ld. Assessing Officer has consciously treated the same as taxable u/s. 69A of the Act and where the addition made by him did not correlate with the undisclosed money the same is consciously treated by as income from business income and thus the same was taxable @ normal rates as....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... order is erroneous; and (ii) the same is also prejudicial to the interest of the revenue is not satisfied. Each and every erroneous order cannot be the subject matter of revision because the second requirement also must be fulfilled. There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation, a lesser tax than what was just, has been imposed. 25. The phrase "prejudicial to the interest of the revenue" has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue has a consequence of an order of Assessing Officer cannot be treated as prejudicial to the interest of the revenue. For example, when an Assessing Officer adopted one of the courses permissible in law and it has resulted in loss of revenue or where two views are possible and the Assessing Officer has taken one view with which the CIT did not agree with, it cannot be treated as an erroneous order prejudicial to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r tax rate is required to be charged. HELD THAT:- In the facts of the case, during the course of assessment proceedings, as the Assessing Officer had made due inquiries and was aware of the fact that the assessee had disclosed the income as business income in his return of income in respect of which it had claimed expenditure in relation to interest and remuneration paid to partners and after making inquiries, Assessing Officer allowed the claim of the assessee by treating undisclosed income found during the survey as assessee's business income and in view such finding of facts arrived at by the Tribunal, we are of the opinion that no substantial question of law arises from the impugned order of the Tribunal. Decided against revenue. * Hon'ble Madhya Pradesh High Court in PCIT v. Krishna Kumar Verma (2024) 3 TMI 1018 has held: Undisclosed income surrendered during the Search and Seizure action - to be taxed at normal rate or tax rate stipulated u/s 115BBE of the Income Tax Act - ITAT confirming the Order of CIT(A) that the undisclosed income surrendered during the Search and Seizure action, is liable to be taxed at normal rate instead of the tax rate stipulated under Secti....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... correct each and every type of mistake or error committed by the AO; it is only when an order is erroneous as also prejudicial to Revenue's interest, that the provision will be attracted. An incorrect assumption of the fact or an incorrect application of law will satisfy the requirement of the order being erroneous. The phrase 'prejudicial to the interest of the Revenue' has to be read in conjunction with an erroneous order passed by the AO. However, every loss of revenue as a consequence of the order of the AO cannot be treated as prejudicial to the interest of the Revenue. For example, if the AO has adopted one of the two or more courses permissible in law and it has resulted in loss of revenue, or where two views are possible and AO has taken one view with which the PCIT does not agree, it cannot be treated as an erroneous order and it is prejudicial to the interest of the Revenue, unless the view taken by the AO is totally unsustainable in law. We draw strength from case of Malabar Industrial Co. Ltd. vs. CIT (2000) 243 ITR 83 (SC) and also from the case of CIT vs. Max India Ltd. (2007) 295 ITR 282 (SC). * Hon'ble ITAT Chandigarh Bench in Tarlochan Singh v....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... there is an undisclosed asset which existed independently and thus, what is not declared to the department is receipt from business and not any investment as it cannot be co-related with any specific asset and the difference should thus be treated as business income. Thus the income surrendered during the course of survey cannot be brought to tax under the deeming provisions of section 69 of the Act and the same has to be assessed to tax under the head "business income". In absence of deeming provisions, the question of application of section 115BBE doesn't arise and normal tax rate shall apply. The AO is thus directed to assess the income under the head "Income from Business/profession" and apply the normal rate of tax. * Hon'ble ITAT Amritsar Bench in Deepak Setia v. DCIT (2023) 9 TMI 942 has held: Addition of income u/s 69A or Business income - surrender of income during survey proceedings - Charge tax as per provisions of Section 115BBE - HELD THAT:- During survey proceeding the assessee surrendered total income of Rs. 29 lacs out of which amount was related to other discrepancies/miscellaneous business income which was treated as income u/s 69A and calculated tax und....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iness premises of the assessee doesn't mandate the Assessing officer to automatically invoke the deeming provisions and before invoking the deeming provisions, he has to call for the explanation of the assessee and only where the explanation so offered is not found satisfactory, he can proceed and invoke the deeming provisions. In the instant case as well, we find that the difference in stock so found out by the authorities has no independent identity and is part and parcel of entire stock, therefore, it cannot be said that there is an undisclosed asset which existed independently and thus, what is not declared to the department is receipt from business and not any investment as it cannot be co-related with any specific asset and the difference should thus be treated as undeclared business income. Following the said decision of DCIT Vs. Shri Ram Narayan Birla [2016 (9) TMI 1354 - ITAT JAIPUR] has taken a similar view holding that the excess stock so found during the course of survey was part of the stock and the Revenue has not pointed out the excess stock has any nexus with any other receipts other than the business being carried on by the assessee. The surrender on account of adv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ovisions of section 69-69B - AO has duly taken cognizance of the findings of the survey team, the documents found during the course of survey, the statement of the Shri Sandeep Singh, the surrender letter and the return of income and after examination thereof and due application of mind, the income has been rightly assessed under the head business income. We are of the considered view that the order so passed by the AO cannot be held as erroneous due to lack of inquiry or for that matter requisite inquiry on the part of the AO. As we have held above, there is no findings recorded by the Ld. Pr. CIT as to how the deeming provisions are applicable in the instant case and the order so passed by the AO is erroneous. We therefore find that merely stating that there was survey operation at the business premises of the assessee and provisions of Section 115BBE of the Act are attracted, the same can be a basis for exercise of jurisdiction u/s 263 of the Act. In view of the same, order so passed by the Ld. Pr. CIT under section 263 is set aside and that of the AO is restored. Appeal of assessee allowed. * Hon'ble Jurisdictional ITAT Jaipur Bench in Rekha Shekhawat v. PCIT (2022) 8 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng the survey operation has also accepted that it has received onmoney for its real estate project - Due application of mind by the AO during the assessment proceedings and therefore assessment cannot be held as erroneous in so far prejudicial to the interest of revenue on account of non-verification. PCIT in his order has referred the explanation 2 to section 263 of the Act, in holding that the necessary inquiries were not carried out by the AO during the assessment proceedings. However, we find that the Ld. PCIT in the notice issued u/s 263 of the Act has nowhere made any reference to the explanation 2 to section 263 of the Act, and therefore we hold that the Ld. PCIT erred in holding assessment order as erroneous and prejudicial to the interest of Revenue after referring to the explanation 2 of section 263 of the Act. To tax any item of income/ expenditure, unaccounted investment at the specific rate r.w.s. 115BBE of the Act, it is necessary to classify the income under the head deeming provision under section 69, 68, 69B etc. In the present case, the income surrendered was to be classified u/s 69 - As per the direction of the Ld. PCIT, however, we find that the Ld. PCIT has now....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Assessing Officer 460-466 9 Hon'ble Supreme Court in Radha Soami Satsang v. CIT (1991) 11 TMI 2 467-473 10 Hon'ble Jurisdictional Rajasthan High Court in PCIT v. Manna Trust (2022) 1 TMI 693 474-476 11 Hon'ble Gujarat High Court in PCIT v. Dharti Estate (2024) 1 TMI 1197 477-481 12 Hon'ble Madhya Pradesh High Court in PCIT v. Krishna Kumar Verma (2024) 3 TMI 1018 482-486 13 Hon'ble Jurisdictional ITAT Jaipur Bench in Gayatri Devi v. PCIT (2023) 10 TMI 23 487-520 14 Hon'ble ITAT Chandigarh Bench in Tarlochan Singh v. DCIT (2024) 1 TMI 795 521-537 15 Hon'ble ITAT Amritsar Bench in Deepak Setia v. DCIT (2023) 9 TMI 942 538-541 16 Hon'ble ITAT Chandigarh Bench in Parmod Singla v. ACIT (2023) 8 TMI 525 542-559 17 Hon'ble ITAT Chandigarh Bench in Ravinder Kumar Bansal v. PCIT (2023) 12 TMI 716 560-582 18 Hon'ble Jurisdictional ITAT Jaipur Bench in Rekha Shekhawat v. PCIT (2022) 8 TMI 791 583-599 19 Hon'ble ITAT Rajkot Bench in Vaidya Realities v. PCIT (2024) 1 TMI 970 600-609 Index Sno. Particulars Pages 1 Written Submissi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on for section 68, 69, 69A,B, C&D of the Act. When the addition is under disputed and while making that addition ld. AO did not invoke those provision consequent thereupon, ld. PCIT cannot impose upon her view on the ld. AO. Not only that the amount of addition made was disputed before the ld. PCIT. In this case ld. AO with open eyes considered as unrecorded cash sales and considered as business income of the assessee at page 140 and page 163 wherein ld. AO intend to tax cash sales which was in part cheque and part in cash so one transaction cannot be considered for separate two treatment under the Act. Based on the whatsapp slip addition were considered for cash sales making weighted average. In the search carried out by the revenue no variation in stock was found, no variation in the investment in the assets were found, no loan taken or given out of books were found and no proof of unaccounted purchase were found. Thus, merely on sum slip found in the whatsapp addition were made and that cannot be considered as unexplained credit in the hands of the assessee company. It is not a cash of revenue that ld. AO was not aware about the provision of section 115BBE, AO was conscious abou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ined money of the assessee and based on that fact the addition was made as unexplained cash sales and the same is not chargeable as normal rate but is subjected to tax as per provision of section 115BBE of the Act. 14. We have considered the submissions advanced by learned counsel for the parties, orders of lower authority, judicial precedent cited and have also perused material placed on record in the paper book. Ground no. 1 to 3 raised by the assessee challenges the order of the PCIT proposing to invoke the provision of section 115BBE of the Act on the addition made by the assessing officer pursuant to the search conducted in the group concerns. Brief facts related to the dispute are that Assessee Company derives income from retail and wholesale sale of woods, timber, laminates and adhesives and allied activities. A search & seizure operation under section 132(1) of the Income Tax Act, 1961 was carried out on 01.08.2019 at the various premises of "Sadhwani & Rohada Group, Kota" to which the assessee belongs. A number of persons / premises were covered u/s 132 of the Act. Cash, Jewellery and other documents were found and seized from some person's residence and business premis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re issued only for cheque amount in the transaction. Based on that set of facts ratio of unaccounted cash sales with total amount received in the particular transaction was determined by the search team during the search action and a ratio of suppression of sales was established by using weighted average method and thereby unaccounted sale of current year and last 6 financial year was calculated for an amount of Rs. 141,80,82,030/- for Financial year 2012-13 to 31.07.2019 on the basis of the evidence gathered as per table at page 6 of the statement of Shri Jitendra Sadhwani. In the assessment proceeding ld. AO gave an opportunity to the assessee get verified cash sales in these transactions and asked to produce the relevant bills / vouchers. But the assessee failed to produce any documentary evidence in this regard. Thus, after considering the various explanation and based on the statement read with the evidences found ld. AO noted that assessee company is regularly engaged in out of books cash sale of plywood items. Most of the plywood items purchased in out of books in cash from local companies and no accounting of these transactions were made by the company. Ld. AO noted that th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eeding for the present assessment year. In that reply the assessee contended that the income is assessed as business income and not as other income. The difference in stock found was very nominal as compared to the huge addition made by the ld. AO and even the ld. AO consciously added the same as business income and not under the provision of section 69A of the Act. When the decision has been made by the ld. AO consciously and there is no dispute about the computation of the same merely the head of income cannot be changed considering it as erroneous and the change of opinion is not permitted. The assessee for that cited decision of our High Court in the case of PCIT Vs. Manna Trust (Supra). The submissions made by the assessee did not find any favour to the assessee and ld. PCIT taken a view that the assessing officer erred and did not take a conscious decision while taxing the unexplained money generated though cash sales made out of books as business income. Clearly this error has caused prejudice to revenue and accordingly she hold that the order of the AO is therefore, liable to revision under the explanation (2) clause (b) and clause (a) of section 263 of the Act. The ld. PCI....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ggest part of the money reflected in the books and part not. Thus, the source of addition made is explained by the assessee and ld. AO has taken a plausible view on the matter. Not only that the amount of addition is disputed and as supported by the seized material it is merely mathematical calculation which is disputed by the assessee and therefore, the case of the assessee is squarely covered by the decision of our High Court in the case of Manna Trust (Supra). Not only that as regard the chargeability of disclosed income the Gujarat High Court in the case of PCIT Vs. Dharti Estate has held that when the assessing officer has made sufficient inquiry and as such during the course of assessment included. The Hon'ble Gujarat High Court also held that there was nothing stated in either pre-amended or post amended provisions of section 115BBE that when the assessee surrendered undisclosed income during the search action for the relevant years, higher tax rate is required to be charged. 20. Thus, when the order passed by the ld. AO is perfectly dealing with the issue and there is no error or prejudice as such ld. PCIT cannot invoke the provision of section 263 just to say different ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he investment in the assets, no loan taken or given out of books were found and no proof of unaccounted purchase were found. Thus, merely on sum slip found in the whatsapp, addition were made and that cannot be considered as unexplained credit in the hands of the assessee company. It is not a cash of revenue that ld. AO was not aware about the provision of section 115BBE, AO was conscious about the provision of section 115BBE of the Act, because while dealing with the addition of unaccounted cash found for an amount of Rs. 4,17,627/- was added and while doing so he invoked the provision of section 115BBE of the Act while dealing with the subsequent year case. Here also while invoking the provision of section 263 there is no variation was proposed in the computation of income of the assessee, but only for rate of tax and that with the facts already on record being disputed and not crystallized the order is neither erroneous nor prejudicial to the interest of the revenue. Not only that as argued by the ld. AR of the assessee their case is also covered with the decision of M. P. High Court in the case of PCIT Vs. Prakhar Developers P. Ltd., [4 TMI 498 ] wherein the Hon'ble High Court ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the decision taken by us in ITA No. 922/JP/2024 for the Assessment Year 2018-19 shall apply mutatis mutandis in the case of Sadhwani Wood Product Private Ltd. in ITA No. 398/JP/2024 for the Assessment Year 2019-2020. In terms of these observations, the appeal of the assessee in ITA no. 398/JP/2024 is allowed. In the result, both the appeal of the assessee are allowed. Order pronounced in the open court on 16/10/2024. ============= Document 1Rahul Khandelwal Franchisee-Dear Sir, PFA herewith agreement for Rajkot Zudio Store. Thanks & Regards Mar 12 Bhawna Baheti E-Chem Polymers-Please send Computations as prepared for El-Chem Polymers for the A.Y 2019-20, 2020-21, 2021-22 and 2022-23. Need to check the table... Mar 12 DANILMANTRI BANK LONG TERM SHORT TERM REPORT OF SHRI TEJENDER SINGH CHADDHA - From: SRSPL KOTA Bhupendra Gupta Mar 12 Rahul, me 2 BANK INTIMATION TDS 26AS Required --- Dear Sir/Madam, Please find attached. Thanks, M/s Chatter and Co. Infocom House, Goverdhanpura Circle, Jhalawar.. Mar 12 Chemicals India Fwd: Notice u/s 133/6) of the Income Tax Act, 1961 for XXXXX9873X, for FY: 2020-21-- --Forwarded message From: D... Mar 12 JAIPUR.CIT.CEN 2....