2024 (7) TMI 1649
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.... course of survey and hence, addition was rightly made u/s 69C r. w.s. 115BBE of the Act. 3] The learned CIT(A), erred in holding that the assessee firm had not substantiated that the cash expenditure of Rs.1,00,05,000/- was incurred out of the business income and hence, the addition was rightly made u/s 69C r.w.s. 115BBE of the Act. 4] The learned CIT(A) failed to appreciate that the expenses noted on the diaries impounded during the course of survey were incurred out of the business income of the assessee firm and hence, there was no reason to made the addition u/s. 69C r.w.s. 115BBE of the Act. 5] The learned CIT(A) overlooked the fundamental procedural aspect that no specific inquiry was raised during the survey proceedings regarding the source of the expenses noted in the impounded diaries and hence, consequently, the assessee firm was unjustly deprived of the opportunity to present its case. Therefore, the addition of Rs.1,00,05,000/- under section 69C read with section 115BBE of the Income Tax Act is bereft of legal merit and the same may kindly be deleted. 6] The learned CIT(A) erred in not appreciating that the assessee firm was engaged in only contracting busi....
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....The issue involved in this appeal is that when there is a surveyor search action wherein certain undisclosed income is found, under which head it can -be brought to tax and at what rate, the tax should be charged. This issue has been discussed by various High Courts and Tribunals from time to time and depending on the facts of the case, it was decided as to whether such income was taxable as 'business income' or 'deemed income assessable u/s 68, 69 or 69A to 69D of the Act. Some of these decisions are discussed as under: Decisions where it was held that the surrendered income is taxable under the provisions of section 68, 68, 69, 69A to 69D of the Act. 4.4 The Hon'ble Gujarat High Court in case of Fakir Mohmed Haji Hasan vs. CIT 120 TAXMAN 11 (Gujarat) had to decide question whether value of gold found during search is to be included in income where no explanation about source of investment made is provided. The Hon‟ble High Court was also concerned with the question whether any deduction in relation to confiscated gold is to be give. The relevant assessment year was AY 1984-85 (i.e. prior to introduction of section 115BBE in the Act). The fact disclosed....
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....s that the moment a satisfactory explanation is given about such nature and source by the assessee, then the source would stand disclosed and will, therefore, be known and the income would be treated under the appropriate head of income for assessment as per the provisions of the Act. However, when these provisions apply because no source is disclosed at all on the basis of which the income can be classified under one of the heads of income under section 14 of the Act, it would not be possible to classify such deemed income under any of these heads including "Income from other sources" which have to be sources known or explained. When the income cannot be so classified under anyone of the heads of income under section 14, it follows that the question of giving any deductions under the provisions which correspond to such heads of income will not arise. If it is possible to peg the income under anyone of those heads by virtue of a satisfactory explanation being given, then these provisions of sections 69, 69A, 698 and 69C will not apply, in which event the provisions regarding deductions, etc., applicable to the relevant head of income under which such income falls will automatically....
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....nt and no source of income from where it was derived declared by the taxpayer then it was assessable as deemed income of the assessee u/s 69A of the Act and not as business income. 4.6 The Hon'ble Madras HC in case of MIs. SVS Oils Mills vs. ACIT [2020J 113 taxmann.com 388 (Madras), has held, that where there was a clear admission by assessee firm that excess stock found during survey was added in its stock register but no corresponding entry was passed in books of account, it could be considered that investment in such stock was made out of undisclosed source. Thus, addition was to be made under section 69B in respect of such excess stock. Decisions where it was held that sections 68, 69, 69A to 690 are not applicable: 4.7. On the other hand, in following decisions, it was held that source of surrendered/undisclosed income are explained, deemed income provisions under sections 68, 69, 69A to 69D are not applicable and consequently, tax rate u/s 115BBE is also not applicable. 4.8 The Hon‟be Rajasthan High Court in case of CIT vs Bajargan Traders [2017] 86 taxmann.com 295 (Rajasthan) has held that when the assessee is dealing in sale of food grains, rice and oi....
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....see has been able to satisfactorily explain the source of such undisclosed income or not. If, a satisfactory explanation is provided about the nature and the source in that case the source would stand explained and therefore, the income would be computed under the appropriate head of income as per the provisions of the Act. However, when no source is explained based on which the income can be classified under any of the heads of income specified under section 14, then it would be classified as deemed income and shall be taxed as per the rates provided under section 115BBE of the Act. 4.13 It is also important to mention here that the Hon‟ble Supreme Court in case of Kale Khan Mohammad Hanif vs CIT [1963J 50 ITR 1 (SC) held that onus of proving the source of a sum of money found to have been received by the assessee is on him. However, if the taxpayer disputes the levy of tax on the same then it is up to him to show either the receipt is not income, or it is exempt from taxation under the provisions of the Act. In the absence of proof, the tax officer is entitled to treat the same as taxable income. Thus, the onus of explaining the source of undisclosed income found during ....
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....n to labour payments, material purchase and other site expenses against the various work orders. These site expenses will reflect in WIP/receivables against the work orders. As I Have myself stated in the answers given to the question No. 12 and question No. 13 that the cash amonts mentioned in the notebook are out of the books of account of the Firm - M/S Yash Constructions Company, I, in the capacity of the partner of the firm voluntarily declare the amount of Rs. 1,00,05,0001- for the F. Y. 2016-17relevant to the A. Y. 2017-18 as the additional income, over and above the regular income. Similarly, I in the capacity of the partner of the firm voluntarily declare the amount of Rs. 4,00,87,0001- for the FY 2017-18 relevant to the year 2018-19 ast the additional income, over and above the regular income15 Yes, I once again state the in the capacity of the partner of the firm MIS Yash Constructions Company. I voluntarily declare the following amounts as the additional income, over and above the regular income. Q 15 Do you want to say anything on your own? A. 15 Yes, I once again state the in the capacity of the partner of the firm M/S Yas Constructions Company. I voluntarily de....
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....ve herein that the learned departmental authorities had carried out a survey action at assessee's business premises. It's authorized person duly declared additional income of Rs.1,00,05,000/- is correct thereof and claimed the same as regular business income in its return filed on 22.09.2016. The Revenue's case as per the assessment findings as upheld in the lower appellate discussion, is that once the assessee's authorized person could not explain the source of its out of books expenditure treated as the work-in-progress, the said amount attracts higher rate of taxation u/s. 115BBE of the Act only. 6. Learned counsel on the other hand submits that not only the impugned sum(s) stand treated under the head "business" income for the purpose of closing stock of the relevant preceding year followed by the opening stock of the succeeding assessment year but also it assessee's work-in-progress only which not shown in the regular books since the same has not been finalized on the date of survey falling on 10.08.2017. Mr. Pathak next states that the assessee's books treatment of the impugned sum(s) claiming it to be under the regular head of business expenditure has nowhere been rejected.....