TaxTMI 
TaxTMI 
2025 (4) TMI 583
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....iction and various other reasons and further contrary to the real facts of the case hence the same may kindly be quashed. 2.1 The ld. AO as well as the ld. CIT(A) have grossly erred in law as well as on the facts of the case in treating the surrendered income on account of sundry debtors and excess cash found as income undisclosed or unexplained investment or money u/s 69 & 69A in place of "business income" as the same was generated from business or was of business income and also erred in making the addition of Rs. 2,05,00,000/- u/s 69 and 69A on account of surrendered income. also erred in making the addition without invoking the provision of sec. 145(3) and without rejecting the books of accounts, also erred in not considering the material and details in their true perspective and sense despite available on record. Which are against the provisions as per law and further contrary to the real facts of the case hence the ld. AO may kindly be directed to treat the surrendered income as business income and the additions may kindly be deleted in full. 2.2 The ld. AO as well as the ld. CIT(A) have also grossly erred in not giving the benefit of deduction, expenses or ....
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....by the ITO, Jhalawar which was duly served through registered e-mail by ITBA on 11.08.2018 and also served on 24.08.2018 upon the assessee through notice server. The case was received on transfer to ACIT/DCIT, Circle-1 Kota on 20.09.2018 as the jurisdiction over the case lies with that office. Notice u/s 143(2) was again issued on 12.09.2018 which was duly served through registered e-mail by ITBA on 12.09.2018 and served by registered post. Due to change in incumbent, fresh opportunity of being heard was issued on 08.08.2019. Notice u/s 142(1) and questionnaire were issued to the assessee on 23.08.2019 which was duly served to the assessee through e-mail. In compliance to notice u/s 142(1), the assessee has submitted his reply on e-filing proceeding module on various dates. 3.1 The assessee is a doctor and runs the hospital in the name of JK Hospital at Bhawanimandi. Besides this he is also engaged in to the business of real estate and developers. In the assessment proceeding the ld. AO noted that the assessee had disclosed unexplained investment in the form of sundry debtors at Rs. 2,05,00,000/- during the survey conducted on 04.07.2016. The receipt from sundry debtors had been....
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....income however appellant has not declared such undisclosed debtors u/s 69 of the IT Act in the income tax return but disclosed under income from other sources and tax paid at normal rate. Appellant had deposited old demonetized currency at Rs. 50,00,000 in to HDFC bank account No. 50200002190263 during the period of 09.11.2016 to 30.12.2016. During the course of assessment the appellant was asked to give source of this cash deposit into bank account. The appellant replied vide letter dated 20.09.2019 that the appellant had disclosed unexplained investment in form of sundry debtors at Rs. 2,05,00,000 during the survey conducted on 04.07.2016. The receipts from sundry debtors had been credited in the cash book till 25.08.2016 and the cash balance was available at Rs. 51,99,631 in the books as on 08.11.2016. Out of this cash in hand the appellant had deposited Rs. 50,00,000 in old currency note during demonization period. During the assessment proceedings, the appellant was provided opportunity by the show cause notice and in reply the appellant inter-alia objected on the contention that the rate of tax of 60% as provided under section 115BBE of the Act is not applic....
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....heir own. Further the contention of the appellant that the advances unearthed during the course of survey are the normal business debtors is incorrect and faulty. The appellant is a doctor and partner and shareholder in real estate businesses. In the submissions the appellant has not explained from which proprietorship business of the appellant such debtors were created. The figures of all the unexplained cash advances / claimed debtors are in round figures / whole figures of lakhs and each figure being less than 10 lakhs. Most of the figures are in the range of 4 to 7 lakhs. Figures mentioned in the page are "4 lakhs", "5 lakhs", "7 lakhs" etc. Such round whole amount figures are not expected to be debtors as the business debtors are in specific sums and many a times even exact rupee and paise. Further the details like address of such person, PAN, exact date of business transaction, details of the items sold on credit or services provided on credit, etc. are also not provided by the appellant and also not mentioned on the diary found during the course of survey. No contents have been mentioned in the diary which can indicate that these are the debtors and not the....
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....but the unexplained cash advances/loans The appellant has also filed affidavit dated 05.06.2022, whereby it has been stated that diary was found during the course of survey wherein undisclosed debtors (which are found to be in the nature of undisclosed cash advances/loans) were mentioned and the appellant was pressurised to surrender the same. First of all this affidavit is not admissible as this is the additional evidence and no application under rule 46A has been filed by the appellant. The same is rejected on this ground. Further the allegation of pressure has been raised by the appellant after a period of six years as the survey was carried out on the date of 04.07.2016. This affidavit has been filed by the appellant after the completion of the assessment wherein tax demand has been raised on the appellant. Considering the totality of the facts and circumstances of the case, it is clear that this affidavit a mere afterthought and is baseless and not bona fide and is liable for rejection. The same is hereby rejected on merits as well. Appellate has not produced any complaint lodged with higher officials supported by affidavit swearing that the contents of state....
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....bsp; x x In the case of judgment in the case of Dr. S.C. Gupta vs. CIT [2001] 118 Taxman 252 (Allahabad), it is held by the Hon'ble Allahabad High Court as under :- x x x ....
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....f Hon'ble ITAT have been extracted. x x x x x x x x As per the above judgement (i) source of investment/expenditure is (should be) clearly identifiable and (ii) undisclosed asset has no independent existence of its own or (iii) there is investment/expenditure no separate physical identity of such Further, in the judgement of Hon'ble High Court in the case of Principal Commissioner of Income-tax v. Bajargan Traders [2017] 86 taxmann.com 295 (Rajasthan) [12-09-2017], the p....
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....t/expenditure is clearly identifiable and..........." Even as per the judgement of Hon'ble ITAT referred in the judgement of Bajarang Traders (supra), source of investment/expenditure must be clearly identifiable. The onus in this regard is on the assessee to prove the source. The appellant has not referred to judgement of Hon'ble Supreme Court in the case of Commissioner of Income-tax v. Devi Prasad Vishwanath [1969] 72 ITR 194 (SC)[01-08-1968. Wherein the similar underlying legal principle as discussed in the judgement referred by the appellant has been discussed and decided in favour of the revenue. As per the judgement of Hon'ble Supreme Court, unexplained credit (or investment) cannot be presumed to be business income. Onus to identify the source cannot be shifted on the assessing authority. If the assessee claims so, the assesse is required to prove the same. Further, in the case also it is held by the Hon'ble Supreme Court in the case of Roshan Di Hatti v. Commissioner of Income-tax [1977] 107 ITR 938 (SC)[08-03- 1977] that even after the items (stock in trade) were "introduced in the books of account of its business", the assessee ....
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....; x In the case of Kale Khan Mohammad Hanif vs. CIT [1963] 50 ITR 1 (SC) [08.02.1963] it is held by the Hon'ble Supreme Court as under :- x x x x As per judgments of Hon'ble Supreme Court in the case of CIT v. M. Ganpathi Mudaliar [1964] 53 ITR 623 (SC)/A. Govindarajulu Mudaliar v. CIT [1958] 34 ITR 807 (SC), where the assessee has failed to prove satisfactorily the source and nature....
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.... x x x SLP against the above judgment Suraj Bhan Oil (P.) Ltd vs. DCIT [2022] 138 taxmann.com 19 (Madhya Pradesh) was dismissed by Hon'ble Supreme Court. Reported at [2022] 141 taxmann.com 477 (SC)/[2022] 288 Taxman 635 (SC)[25.07.2022] x x x x &nbs....
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....does not amount to double taxation. [SVS Oil Mills v. Assistant Commissioner of Income-tax, Non Corporate Circle-6(1), Chennai [2020] 113 taxmann.com 388 (Madras)] Verifiable cash sources behind the unexplained cash advances otherwise unexplained: Ratio of judgement in SVS Oil Mills v. Assistant Commissioner of Income-tax, Non Corporate Circle-6(1), Chennai [2020] 113 taxmann.com 388 (Madras)]. As per this judgement, if the contention of the Assessee was to be accepted viz., by allowing the purchases corresponding to the alleged excess stock, the Assessee will have to now record verifiable purchases in his Books of Accounts and for that he will have valid as well as back-dated purchase Invoices from genuine and existing Sellers which is not possible. When the excess stocks were found during the Survey, there is no question of allowing the Assessee to record any additional purchases because actual purchases had already taken place and already been recorded in the books of accounts of the Assessee. Thus this is an impossible proposition of going back in time. Applying the same ratio, in the present case, the appellant is required to show the verifiable details of th....
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....ined satisfactorily i.e, sources are out of genuine disclosed/taxed income in that case and section 68/69/69A etc. are not applicable even in that case section 115BBE will not have application. However if the asset/credit/expenditure is treated as income because of the applicability of section 68/69/69A etc. in that case section 115BBE will have application. The incomes mentioned under these sections are not specific to any head of income. Section 69C even clearly mentions that such unexplained expenditure will not be deductible under any head of income. Loans given / stock in hand / loan received etc. are otherwise not taxable as these are in the nature of asset/liability/capital nature in the hands of the taxpayer and not in the nature of revenue income. However when these are unexplained in terms of sections 68/69/69A etc. these become income and become taxable. Section 14 of the Income-tax Act, 1961 Heads of income - Assessment year 1984- 85-Whether opening words of section 14, 'save as otherwise provided by this Act." clearly leave scope for 'deemed income of nature covered under scheme of sections 69, 69A, 69B and 69C being treated separatel....
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....68/69/69A etc. the income is even if earned in earlier year but detected during the year in the form of unexplained credit / unexplained investment etc. is to be taxed in the year in which the application of such income is found. Once sections 68/69/69A etc. are applicable, there is no dispute regarding the applicability of section 115BBE of the Act. Complete code: The opening words of section 14 'Save as otherwise provided by this Act' clearly leave scope for 'deemed income' of the nature covered under the scheme of sections 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 sections 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. Section 69C even clearly mentions that such unexplained expenditure will not be deductib....
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....tions that such unexplained expenditure will not be deductible under any head of income. Loans given / stock in hand / loan received etc. are otherwise not taxable as these are in the nature of asset/liability/capital nature in the hands of the taxpayer and not in the nature of revenue income. However when these are unexplained in terms of sections 68/69/69A etc. these become income and become taxable. These are the special provisions dealing with the situation and the incomes which are the subject matter of the contention in the appeal and being the specific provisions they are preferred and override the general provisions. Once the income is as per these sections, there cannot be any dispute regarding the applicability of section 155BBE of the Act. These sections 68/69/69A etc. along with section 115BBE are in the nature of complete code in itself. In this regard it is held by Hon'ble Gujarat High Court in Fakir Mohmed Haji Hasan v. Commissioner of Income-tax [2002] 120 Taxman 11 (Gujarat)/[2001] 247 ITR 290 (Gujarat)/[2001] 165 CTR 111 (Gujarat) [10- 08-2000] that "6.2 The opening words of section 14 'Save as otherwise provided by this Act' clearly leave sco....
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....nto such unexplained cash advances (without details of sources of funds) to be treated as explained. The assessee is required to show and explain the source of the investment in such unexplained cash advances. [Ratio of judgements of Hon'ble Supreme Court in the cases of Commissioner of Income-tax v. Devi Prasad Vishwanath [1969] 72 ITR 194 (SC) [01-08-1968 and Roshan Di Hatti v. Commissioner of Income-tax [1977] 107 ITR 938 (SC)[08-03-1977] (d) Once it was found by Assessing Officer that there was unexplained cash advances, in absence of explanation by assessee, conclusion was inescapable that such cash advances, if any, was from undisclosed sources - Further once assessee's explanation, if any, had not been accepted, resultant position was that there was unexplained cash advances undisclosed in books of account and non disclosure was only with a view to suppress income. [Suraj Bhan Oil (P.) Ltd. V. Deputy Commissioner of Income-tax [2022] 138 taxmann.com 19 (Madhya Pradesh)] [SLP against this judgement was dismissed - reported at [2022] 141 taxmann.com 477 (SC)/[2022] 288 Taxman 635 (SC)[25-07-2022) (e) Undisclosed income or undisclosed investment cannot....
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....ast 3 years and filing his I.T. Return regularly. In this case a survey action u/s 133A was carried out at the business premises of the assessee on dated 04.07.2016 where a diary was found in particulars of unaccounted debtors to the tune of Rs. 2,05,00,000/- which was not recorded in the books of accounts. The statement of assessee was also recorded u/s 133A. On being asked at question no. 13 about the sundry debtors submitted that related to the business is being surrendered as undisclosed income for the current year and entries in dairy at page no. 1 and 2 are related to business unrecorded debtors which are not recorded in the books of accounts, the amount of total unrecorded debtors are Rs. 2,05,00,000/- which is being surrendered as undisclosed income for the current year(PB32-333). As, at the time of surrender on the date of 05.07.2016 the tax rate was 30%. Thus the assessee firm has made total surrendered of the Rs. 2,05,60,000/- on dated 05.07.2016 at the tax rate of 30%. 2. Thereafter, the assessee firm has filed the return of income on dt.06.11.2017 declaring the total income of Rs. 2,16,03,180/-, which are related to the surrendered amount shown under the head ....
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....d legal position. The ld. AO has confirmed the order of the AO. He has not given any adverse finding on our WS and legal position of law. Thus the ld. CIT(A) has summarily dismissed the appeal. Hence this appeal SUBMISSIONS: 1. Firstly on perusal of the assessment order it is clear that the assessment has been made on invoking of Sec. 69 and section 115BBE for taxing the surrender income of Rs. 2,05,00,000/- at the rate of 60% and Surcharge @25% +3% cess in place of normal rate and raised the extra demand, which is not the part of the limited scrutiny. 2. Invalid assessment : At the very out-set it is submitted that the ld. AO has issued the notice u/s 143(2) on dt. 11.08.2018, 09.08.2018 and 12.09.2018 for the limited Scrutiny on the following reasons i. Cash deposit during the year ii. Share capital/Capital dt. 19.09.2016 (PB-42) by stating that return of income filed by you for A.Y. 2017- 18 on 06.11.2017 is selected for scrutiny". The Id. AO has provided the reason for scrutiny that for what reason it has been selected, as it was mandatory on the part to mention or write the reason in the notice of 143(2) vide CBDT ....
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....T Circular issued u/s 119 of the Income Tax Act is binding on the Income Tax Authorities. The Assessing Officer's jurisdiction is limited to the issue identified by the CASS in case of Limited Scrutiny' cases. In the assessee's case under consideration the issue of mismatch of sales shown in the audit report vis-à-vis ITR was for 'Limited Scrutiny' but the assessing officer has expanded the scope of limited scrutiny without taking permission from the concerned Pr.CIT/CIT, since there is no whisper of any sanction or approval of the Pr.CIT/CIT therefore action of Assessing Officer to assess the loss of Rs. 42,97,440/- is beyond his jurisdiction and in violation of the CBDT circular which he was bound to obey. Therefore, action of the Assessing Officer to make addition on account of loss is beyond jurisdiction and therefore null in the eyes of law. In the case of Dev Milk Foods Pvt. Ltd. vs. Add. CIT12th June, 2020 (2020) 59 CCH 0104 DelTribAssessment-Conversion of limited scrutiny into complete scrutiny-Assessee company's main source of income was freight income and long term capital gains-Return of income was filed-Case was selected for limit....
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....rdinate bench of ITAT at Chandigarh in case of PayaKumari in ITA No.23/Chd/2011, vide order dated 24.02.2011, has held that even Section 292BB cannot save infirmity arising from infraction of CBDT Instructions dealing with subject of scrutiny assessments where assessment has been framed in direct conflict with guidelines issued by CBDT-Therefore, on an overall view of factual matrix as well as settled judicial position, instant conversion of case from limited scrutiny to complete scrutiny cannot be upheld as same is found to be in total violation of CBDT Instructions No.5/2016-Assessee's appeal allowed. In the case SMT. MANJU KAUSHIK vs. DCIT IN ITANo. 1419/JP/2019 December 9, 2019(2019) 57 CCH 0607 JaipurTrib it has been held THAT Assessment- Scrutiny assessment-No proper approval-Assessee filed her return of income- Case of assessee was selected for limited scrutiny under CASS-AO issued notice u/s 143(2) thereafter also issued a notice u/s 142(1)-Subsequently AO proposed to disallow claim of deduction u/s 54B-Assessee submitted that assumption of jurisdiction by AO to scrutinize claim of deduction u/s 54B without approval of competent authority to convert case from l....
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....Delhi bench ITAT CBS International Project Pvt Ltd.(order dated 28.02.2019). ii) Jaipur bench ITAT Lt Smt GurbachanKaur (order dated 05.12.2019). iii) Jaipur Bench ITATManju Kaushik (order dated09.12.2019). iv) Lucknow bench ITAT Ravi Prakash KhandeIwal(order dated 08.11.2019). v) Mumbai G Bench ITAT order in case of Su-RajDiamond Dealers Pvt Ltd. (order dated 27.11.2019). vi) Mumbai D bench ITAT order in case of R&HProperty DeveloperPvt Ltd. (order dated 30.07.2019). 4. Further the allegation of the Id. CIT(A) that "as per the documents placed on record by the appellant it is not verifiable or seen that the case was selected for limited scrutiny and what were the grounds of selection of case in scrutiny. Further the notices from the learned AO during assessment proceedings vide which the reasons of scrutiny would have been communicated to the appellant has not been placed on record. And also in case the case was selected for limited scrutiny, no material has been placed on record to show that the case was not converted into full scrutiny." Are absolutely incorrect and wrong because in the assessment order at page 1 it is clearl....
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....cted during the course of survey was held to be taxable as business income :- (i) M/s Silver Wings Life Spaces v/s DCIT Circle-01 Kota in ITA No. 511/Jp/2024 dt. 31.07.2024 ( this is assessee's own group case) (ii) Construction portal Pvt. Ltd V ITO (ITA No. 1607 & 1608/PUN/2014 A.Y. 2005-06, 2006-07 order dated 06-06-2018. (iii) SAB Industries Limited V DCIT (ITA No. 848/CGL/2017) A.Y. 2013-14 order dated 28-03-2018. (iv) Gavrish Steels (P) ltd V ACIT (2017) 82 Taxman Com 337 Chandigarh Tribunal. (v) Shri Ram Swarrop Sighal V ACIT Circle, Shri Ganga Nagar V Income Tax Officer (ITAT Jodhpur) ITA no. 143/Jodh/2018. (vi) Rajasthan High Court in the case of Bajargan Traders in Income Tax Appeal No. 258/2017 dated 12/09/2017 has held that excess stock found during the course of survey and surrender made thereof in taxable under the head of business and profession. (vii) Kindly refer a direct decision on this issue in the case of Sh. Baljinder Kumar v/s DCIT Circle-1 Ludhiana in ITA No.38/Chd/2023 dt. 02.08.2023 where it has been held that "16. In the instant case, we find that through various questions raised d....
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....re not recorded at the time of survey thus qualify as unrecorded transactions satisfying one of the essential conditions, at the same time, the assessee has provided the necessary explanation about the nature and source of such unrecorded transactions, thus, it cannot be said that these are unexplained transactions thus, doesn't satisfy the second condition for invoking the deeming provisions of section 69 of the Act. 17. In light of aforesaid discussions and in the entirety of facts and circumstances of the case and following the decisions referred supra, the income of Rs 15,00,000/- 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 been rightly offered to tax under the head "business income" and as a necessary corollary, in absence of deeming provisions, the question of application of section 115BBE doesn't arise for consideration." (viii) In the case of Montu Shallu Knitwers vs. DCIT In ITA NO. 21/Chd/2023 December 1, 2023 (2023) 69 CCH 0249 Chd Trib It has been held that "22. In the instant case as well, there is no physical distinction between the accounted ....
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....R 593, wherein Calcutta High Court held as under: " 59/61. In the instant case the assessee is a firm formed for the purpose of carrying on business. There is nothing on record to show that the firm had any source of income other than business. Therefore, in our opinion, it is not unreasonable to hold that any amount representing secret income arose out of business of the firm." (ix) Reliance in this regard is placed on the judgment dated 18.02.2021 in the case of Shri Harish Sharma vs. The ITO in ITA No. 327/CHD/2020 wherein it was held that that Section 68 not applies when assessee explained nature & source of Income. Hence, when all the incomes earned by the assessee/ assets in the possession of the assessee are only from the business income of the assessee, there do not arise any question as to application of provisions of section 69B of the Act and hence taxing such income at special rate as per section 115BBE of the Act is invalid. In the case of the assessee also, there has been no other source of income identified, neither during the course of survey action nor during the revision assessment proceedings initiated later on. Hence, the income of the assessee....
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.... except income from business and income from other source. There is no iota of evidence to even suggest that the lower authorities had unearthed any other source of income of the assessee except under the heads of income declared by the assessee in the return of income. Therefore, in absence of any such evidence of any other undisclosed source of income of the assessee having been detected by the tax authorities, we are afraid that the invocation of provisions of section 115BBE will not hold good in the present case as well. The detailed reasons and observations in this regard have already been incorporated in Para 10.17 to 10.23 of this order in the case of M/s Sham Jewellers wherein also we have rejected the action of the Income Tax Authorities in applying the provisions of section 115BBE of the Act. Likewise, on identical facts and on identical reasoning and law, we allow the grounds of the assessee in the present appeal also and hold that the application of provisions of section 115BBE of the Act in the case of M/s Sham Fashion Mall was bad in law and the same cannot be sustained." • Hon'ble Chandigarh Bench of ITAT in the case of Gaurish Steels Pvt. Ltd. as re....
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....e by the Ld. DR, the decision rendered in that case will also apply to the present case, following which we hold that the Ld. CIT(A) had rightly treated the surrendered income as in the nature of business income of the assessee and accordingly, allowed the benefit of set off of losses against the same. The order of the Ld.CIT(A) is accordingly, upheld. The ground raised by the Revenue is dismissed.' . In the case of Prashanti Surya Contruction Co. Pvt. Ltd. in ITA No. 315/CHD/2014, the Hon'ble Chandigarh ITAT Bench has held as under: "Since the facts of the present case are identical to that in Gaurish Steels Pvt. Ltd. (supra), the surrender having been made by the assessee on account of investment made in the BOT project which was the business of the assessee, the decision rendered by the I.T.A.T. in the said case will squarely apply in the present case, following which we hold that the income surrendered by the assessee of Rs. 1.75 crores is assessable under the head 'income from business and profession". • In the case of M/s. Arora Alloys vs. DCIT in ITA No. 1481/CHD/2017 the Hon'ble Chandigarh Bench has held as under: "In ....
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.... income of the assessee, neither the AO has brought on record any adverse material on record. Hence, the business income is the only source of income of the assessee and moreover, in the case of assessee unrecorded sundry debtors has been found during the course of survey which have been related to business of assessee, hence in the first instance, the department itself has accepted that the said sundry debtors was of the business of the assessee and such debtors are not arose in a single day, hence, it means that these sundry debtors are only from the business income of the assessee. And, hence, all the income earned by the assessee is only on account of such business of the assessee and therefore, needs to be taxed under the business head only. Both the lower authorities have not disputed these contentions nor brought on record to disprove the same. 7.2 Further the ld. AO in the assessment order on page 7 para 7 wrongly stated that "vii) The assessee himself admitted in reply filed on 06.11.2019 that unexplained, investment in form of sundry debtors are covered u/s 69 of the IT Act but the disclosed income u/s 69 in the hand the assessee has not disclosed such u....
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....ds which showed that assessee was found to be the owner of any money, bullion, jewellery or any other valuable article which were not recorded in the books of account but which showed that the assessee has incurred any expenditure for which it had offered no explanation about the sources of such expenditure or part thereof. Therefore since no evidence was found to show that declared income represented any undisclosed income, the sources of which had not been disclosed by the assessee so it could not be regarded as deemed income under the provision of Sec.69 of the income Tax Act, 1961. The same was also decided in the case of DCIT vs. Khurana Rolling Mills (P) Ltd (ITAT Chandigarh). 7.5 In the above matter there is only one issue (i) whether the surrender income fall u/s 68,69 or under the head income from other sources or business income, (ii) whether the tax on the surrender income should be charged at the rate of 30% +cess or the rate of 60% and Surcharge @25% +3% cess. 7.6 As from the surrender, it is cleared that the surrender was made on account of sundry debtors. As during the course of statements the assessee in Answer to Question No. 13 has submitted that....
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....tention at the time of taking the surrender from the assessee firm. As it was the duty of department to explain the same to the assessee. A general persons cannot understand the technicalities of the complex law of the income tax . And it is also the settled legal position of the law the Income tax Authorities cannot take advantage of ignorance of assessee toward of law. It is law principal of law that right income should be taxed in right and right of income. Only for burden of tax on innocent assessee head of income cannot be changed. It is the duty of Income tax authority who know the law to bring the correct facts and correct law and correct head of income before the assessee. In the case of CIT V/s B.G. Shrik Construction Technology (P) Ltd(Bom.) 395 ITR 371: Claim for deduction not made in the return, Tribunal was justified in holding that the assessee was entitled to make a claim which was not made in the return of income originally filed u/s 153A r/w s143(3) before the ld.AO and also before the appellate authorities . In the case of Pr. CIT v/s Ankit Metal & Power Ltd 182 DTR 333(Cal ) 09.07.2019 that Tribunal has the power to entertain the claim ....
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.... gold weighing 6433.812 gms was found amounting to Rs. 1,41,75,568/ -. Mr. Anoop Neema in his statement recorded or oath on 16,12.2016 u/s 132(4} of the Act accepted the value of excess stock as additional business income for financial year 2016-17. So far as, admission of undisclosed income of Rs. 1.41, 75,569/- is concerned there is no dispute at the end of both the parties. The bone of contention is that whether the provision of section 115BBE of the Act are applicable on the surrendered income of Rs. 1,41,75,568/- we find that Ld. CIT(A) on examination of the fact, settled judicial precedence, also appreciating that the alleged income is business income earned by the assessee during Cha normal course of its business and was part of the total business stock available at the business premises and also observing that provisions of section 115BBE of the Act are applicable from 01.04.2017 and are thus not applicable on the case of assessee as the search was carried out on 15,12.2016 observing as follows: • Hon'ble ITAT, Rajkot Bench in the case of Uniroyal Sthapatya v. PCIT vide its order in ITA 71/Rjt/2022 dated 20.12.2022 has held: 6. We have heard the ri....
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....rayan Birla in ITA No. 482/Jp/2015 dt. 30.09.2016, where the Hon'ble Bench at page 4 in para 4.3 held that "Undisputed facts emerged from the record that at the time of survey excess stock was found. It is also not disputed the assessee is engaged in the business of jewellery. During the course of survey excess stock valuing Rs. 77,66,887/- was found in respect of gold and silver jewellery. The coordinate Bench in the case of Chokshi Hiralal Maganlal v/s DCIT 131 TTJ (Ahd)1 has held that in a case where source of investment/ expenditure is clearly identifiable and alleged undisclosed assets has no independent existence of its own or there is no separate physical identity of such investment/ expenditure then first was to be taxed is the undisclosed business receipts invested in unidentifiable unaccounted assets and only on failure it should be considered to be taxed u/s 69 on the premises that such excess investment is not in the books of account and its nature and sources is not identifiable. Once such excess investment is taxed as undeclared business receipts then taxing it further as deemed income u/s 69 would not be necessary. Therefore, the first attempt of the AO should be....
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....rs, if any found during the course of survey was of business or profession only and that too on account of the suppressed profits/income of business/profession over the years. The sundry debtors and excess cash have not been separately identified and the undisclosed income of past years if any was invested in same business in the form of sundry debtors. Under such circumstances, the sundry debtors if any cannot be separated from the total of business/profession either recorded or not recorded in the books of accounts. So, the investment in sundry debtors is part and parcel of business only. Further in the present case the ld. AO nowhere proved nor placed any material evidence on the records from, which it can be inferred that the sundry debtors found was not part of business but the other known sources. The ld. AO has based his case just on assumptions and presumptions without bringing on records any positive evidence or cogent reason in support of his observations as the sundry debtors was not part of business though found at business premises only. It is also the settled legal position that no addition can be the basis of suspicion, assumptions' and presumption. An allegation....
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....ras Cotton Company vs. CIT (2003) 30 TW 168 (JD)., CIT v/s Lunard Dimond Ltd. 281 ITR 1 (Del). Recently in CIT v/s Bhawani Oil Mills (P) Ltd 239 CTR 445/49 DTR 212(Raj.)- It has been held that contents of affidavit could not be treated as of a lesser importance than the statement given by the creditor before the AO. Recently this Honble ITAT in the case of Narayani Bai Dangi v/s ITO Ward 2(1), Udaipur in ITA No.22/Jodh/2022 dt.13.10.2023 it has been held that we respectfully relied on the order Mehta Parikh & Co, (supra). The revenue has not acted in proper manner to verify the nature of land and had not confronted the affidavit filed by assessee. The ld. DR was unable to submit any contrary judgment against the submission of the assessee. In our considered view, the revenue has not taken any pain to complete the verification or has not confronted the affidavit of the assessee during the appeal stages. So, the ground of the assessee is accepted by the bench. We set aside the appeal order and the addition amount to Rs. 15,53,112/- is quashed 9. Observations and finding of the ld. CIT(A) is far from the assessment order and issues: On perusal of the order of the ld.....
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....e in dark by taking misinterpretation of the Second amendment of Sec. 115BBE. While if we look in Section 294 of the I.T. Act as above it is the invalid illegal action of the ld. AO. It is was the duty of the revenue to inform to the assessee just immediately the amendment in December 2016 by stating that you (assessee) had given the advance tax cheques and made the surrender at the rate of 30 tax + SC but now the law has changed and you (assessee) should give the more cheque of advances tax cheque or return should be filed at the tax rate as per new law. When a party is departing from his contract by one and other reasons then it was the onerous duty of him to give the notice before taking any action by them. As the assessee as per his/it promise has declared the surrender income in the return in the return filled on dt. 06.11.2017, while the amendment act has come in December 2016, if the Revenue had given the notice to the assessee before filling the return of income, the assessee could have not shown this income and he could have also claimed the unrecorded expenses against this unrecorded income and the tax can be charged on the net income. Hence a poor assessee should not hav....
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....n case of Karimtharuvi Tea Estate Ltd. VS. State of Kerala[1966]60ITR262(SC). Also refer CIT v/s Scindia Steam Navigation Co. Ltd. 42 ITR 589(SC). 10.4 The same was also decided in favour of assessee in following High Courts and Supreme Court decision. (i) The Assessing Officer has failed to appreciate and Consider that it is a settled proposition of law that legislations which modify accrued rights or which impose obligations or imposed new duties or attach a new disability have to be treated as prospective. This is so held by the Hon'ble Supreme Court in case of CIT v. Vatika Township Private Limited (2014) 109 DTR 33 where the Hon'ble Court has given the following finding for deciding whether a provision has prospective operation or retrospective operation: "39(e) There is yet another very interesting piece of evidence that clarifies the provision beyond any pale of doubt, viz. understanding of CBDT itself regarding this provision. It is contained in CBDT circular No.8 of 2002 dated 27th August, 2002, with the subject "Finance Act, 2002 - Explanatory Notes on provision relating to Direct Taxes'. This circular has been issued after the passi....
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....nor is there any material to suggest that it was intended by Parliament. Furthermore, an amendment made to a taxing statute can be said to be intended to remove 'hardships' only of the assesee, not of the Department. On the contrary, imposing a retrospective levy on the assesses would have caused undue hardship and for that reason Parliament specifically chose to make the proviso effective from 1.6.2002. 40. The aforesaid discursive of ours also makes it obvious that the conclusion of the Division Bench In Suresh N. Gupta treating the proviso as clarificatory and giving it retrospective effect is not a correct conclusion. Said judgment is accordingly overruled." (ii) Ansal Housing and Construction Ltd. vsACIT (2016) 389 ITR 373, Delhi HC. (iii) Vodafone International Holdings v. UOI (2012) 6 SCC 613 (SC) (iv) Sony Ericsson Mobile Communication India Pvt. Ltd. CIT (2015) 374 ITR 118 (Delhi) (v) CIT v. Alom Extrusions Ltd. [2009] 319 ITR 306 (SC) vi) (vi) CIT v. Ansal Land Mark Township (P) Ltd. (ITA 160/2015 dated 28.05.2015 Delhi High Court) (vii) CIT v. NGC Network India Pvt. Ltd. (ITA No. 397/2015 dated 29th J....
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....pre-amended or post-amended provisions of section 115BBE that where the assessee surrenders undisclosed income during the search action for the relevant year, the tax rate has to be charged as per provision of section 115BBE of the Act. Reliance is also placed on the Judgment of the Hon'ble Income Tax Appellate Tribunal, Jaipur Bench in the case of The Assistant Commissioner of Income Tax, Central Circle-2, Jaipur Vs M/s Sanjay Bairathi Gems Limited in ITA No. 157/JP/2017 wherein their Lordships have held that the excess stock found during the course of survey is a part of the business income and the case laws relied upon by the AO is not applicable and the additional income declared by the assessee is not liable to tax as per the provisions of section 115BBE of the Act. Further the reliance is also placed on the judgment of the Hon'ble'ble Apex Court in the case of CIT Vs M/s Vatika Township Private Limited reported in 367 ITR page 466 wherein it has been held that it is a settled law that any amendment which increases the tax burden of the assessee has to be considered prospective and not retrospective. Also, the legislations which modify accrued rights or wh....
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....ean as income "arising or accruing in India". The amendment to the section by way of an Explanation in 1983 effected a change in the scope of that judicial definition so as to include with effect from 1979, "income payable for service rendered in India". When the Explanation seeks to give an artificial meaning to "earned in India" and brings about a change effectively in the existing law and in addition is stated to come into force with effect from a future date, there is no principle of interpretation which would justify reading the Explanation as operating retrospectively. This being the case, Explanation 3C is clarificatory - it explains Section 43B(d) as it originally stood and does not purport to add a new condition retrospectively, as has wrongly been held by the High Court. Third, any ambiguity in the language of Explanation 3C shall be resolved in favour of the assessee as per Cape Brandy Syndicate v. Inland Revenue Commissioner (supra) as followed by judgments of this Court - See Vodafone International Holdings BV v. Union of India, (2012) 6 SCC 613 at paras 60 to 70 per Kapadia, C.J. and para 333, 334 per Radhakrishnan, J. The High Cour....
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....under the Income Tax Act. But that is not the case here. Under the new provision, i.e. Section 64(1}(iii) a new liability has been prescribed and not the rate for ascertaining the liability. Such new liability under the Income Tax Act cannot be given a retrospective effect. Such liability can only be fastened on an individual If the same was existing at the time of accrual and not at the time of assessment. The observations of the Apex Court in paragraph 33 of the judgment in the case of Keshoram Industries and cotton mills (supra), clarifies this position. 18. In view of the judgments of the Apex Court in the case of Keshoram Industries (supra) as well as Karimtharuvi Tea Estate Ltd (supra) this Court would have no hesitation in holding that for deciding the Iiability of a particular provision of the Income Tax Act, the date of accrual of income would be relevant. If the provision comes into force in a particular financial year, it would apply to the assessment for that year but cannot be made applicable in respect of assessment for a previous year. 11. The Assessing Officer has failed to appreciate and consider that Taxation Laws (Second Amendment Act), 2016 als....
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....f business income which is taxed under section 28 to 44 of the Income Tax Act. The assessing officer also failed to bring on records any other source of income of the appellant apart from the one that is show^i in return of income. In view of above facts and circumstances of the case it is respectfully prayed that section 69 of the Income Tax Act 1961 read with section 115BBE is not applicable to the facts of the case of the assessee and the disserve to be delete. • Hon'ble Jodhpur bench of ITAT in the case of Lovish Singhal & Others vs ITO (Appeal No 143/ Jodh/ 2018); • Hon'ble Jeipur bench of ITAT in the case of DCIT vs Ramnarayan Borla [Appeal No 482/ JP/ 2015 dt 30-09-2016), • Hon'ble Supreme Court in the case of Lakhmichand Baijnath Vs CIT as reported in 35 ITR 416; • Hon'bte Apex Court in the case of Nalini Kant Ambalal Mody vs SAL Narayan Row as reported in 61 ITR 428. Prayer: In view of the above facts, circumstances of the case and legal position of law the higher rate of tax so charged i.e the excess demand so raised may kindly be deleted, the provisions of sec. 115BBE may kindly be held....
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....uld not file the details of the nature of income and source of income he merely disclosed amount as debtor and therefore, ld. DR relied upon the finding recorded in the orders of the lower authority. 9. In the rejoinder to the contention of the ld. DR, AR of the assessee stated that the revenue in the survey proceeding did not ask a single question as to the source and nature of income and the assessee had income that income as surrender in the statement. Once the income is accepted by the revenue in the statement no new case can be developed by the revenue. The ITR was already filed and that income so disclosed already accepted. Further at the time of the declaration of income there was no amendment to section 115BBE of the Act and therefore, the assessee cannot be made liable to pay tax at a higher rate. 10. We have considered the rival contentions and perused the material on record. Ground no. 2.1, 3.1 and 3.2 raised by the assessee raised by the assessee challenges the finding of lower authority as to the income disclosed during the survey falls within the meaning of section 69 & 69A of the Act or not, and as to whether the same is to be charged to tax at normal rate or t....
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...., claimed that the income so disclosed was of the project, which had just started during the year under consideration and further that the amounts shown to have been received from the various parties as booking money. The facts so presented by the assessee were not further enquired by the ld. AO. Ld.AO neither examined the list nor raised a single question about the explanation furnished by the assessee as to the details of the source and nature of income earned. Ld. AO did not dispute the source of such income while also verifying the source of amount deposited into the bank account. So, once the Revenue accepted the income disclosed in the ITR filed source of which was collection from the sundry debtors of the business of assessee firm and said income stands already taxed accepting the source as income arising out of the project, same could not be considered as unexplained investment. Section 69 of the Act reads as follows: "Unexplained investments. 69. Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any....
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....ysed and examined to draw necessary conclusions in this regard. 20. For the purposes, we refer to the statement so recorded of the one of the partners of the assessee firm during the course of survey on 29/08/2018. In Question no. 35, it was stated that during the course of survey proceedings u/s 133A, physical verification of stock lying in the business premises was done with the help of person deputed by the assessee and after physical verification, it comes to Rs 1,94,48,494/- whereas as per provisional trading account submitted by your accountant, the stock as on today is Rs 1,34,48,922/- so there is a difference of Rs 59,99,572/- in the stock and the assessee was asked about the difference in stock found and recorded in the books of accounts. In response, the assessee submitted that purchase bills amounting to Rs 10,04,572/- are yet to be entered in the system against which goods have already been received and for the remaining difference, he sought time to explain after consulting with the accountant. We find that the stock physically found has been valued and then, compared with the value of stock so recorded in the books of accounts and the difference in the value ....
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....as under: "11. But this does not mean that loss computed under any of the five heads mentioned in section 14 - (i) 'salary', (ii) 'income from house property', (iii) 'profits and gains from business or profession', (iv) 'capital gains' and (v) 'income from other sources' - cannot at all be adjusted against unexplained investment or expenditure. What is necessary as per Hon. Gujarat High Court is that source of acquisition of asset or expenditure should be clearly identifiable. In the case before Hon. Gujarat High Court the source of gold confiscated was not identifiable and hence adjustment was not permitted. 12. Thus the important aspect that emerges from the entire discussion is that for invoking deeming provisions under sections 69, 69A, 69B & 69C there should be clearly identifiable asset or expenditure. In the present case we find that entire physical stock of Rs. 25,14,306/- was part of the same business. Both kind of stock i.e. what is recorded in the books and what was found over and above the stock recorded in the books, were held and dealt uniformly by the assessee. There was no physical distinction between the acc....
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....o explain satisfactorily the source of such investment then it should be taxed under section 69, 69A, 69B & 69C as the case may be. It should not be done at the first instance without giving opportunity to the assessee to establish nexus. Therefore, there is no conflict with the decision of Hon. Gujarat High Court in the case of Fakir Mohmed Haji Hasan (supra) where investment in an asset or expenditure is not identifiable and no nexus was established then with any head of income and thus was not available for set off against any loss under any other head. Therefore, we hold that where asset in which undeclared investment is sought to be taxed is not clearly identifiable or does not have independent identity but is integral and inseparable (mixed) part of declared asset, falling under a particular head, then the difference should be treated as undeclared business income explaining the investment. 14. To conclude sum of Rs. 8,10,011/- being difference in stock is represented by undeclared business income. It does not have a separate physical identity. It is to be only taxed under the head 'business'. Other assets have separate physical identity being furniture and f....