TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 1182
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....ry notices u/sec.143(2) and 142(1) of the Act were issued and served on the assessee, in response to which, the Authorised Representative of the Assessee appeared before the Assessing Officer from time to time and filed the requisite details. 2.1. The Assessing Officer during the course of assessment proceedings, noted that at the time of survey statement of the assessee was recorded u/sec.131 in which the assessee has declared additional income of Rs. 3,52,40,780/- for the assessment year 2018-2019 which is over and above the regular income. Out of the total declaration, an amount of Rs. 1,56,95,093/- was declared on account of URD ["Un-Registered Dealer"] purchase. The Assessing Officer asked the assessee to explain as to why the URD purchase found should not be treated as deemed income u/sec.69B of the Act. Rejecting the various explanations given by the assessee, the Assessing Officer invoked the provisions of sec.69B r.w.s.115BBE of the I.T. Act to the above income. 2.2 Similarly, the Assessing Officer noted that the additional income of Rs. 3,52,40,780/- includes an amount of Rs. 63,85,608/- which is on account of Asphalt Transportation, an amount of Rs. 4,56,950/- on a....
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....ther any deduction in relation to confiscated gold is to be given. The relevant assessment year was AY 1984-85 (i.e. prior to introduction of section 115BBE in the Act). The facts disclosed in customs proceedings, which were relied on in the income tax proceedings were that specific information was received by the Customs Department indicating that the taxpayer would bring imported gold in his car and would make delivery thereof. The car was seized and at that time during search gold bars of foreign markings were recovered. A bag containing currency notes was also recovered. The statements which were recorded under section 108 of the Customs Act were considered in the adjudication proceedings. The Hon'ble High Court upheld the decision of Tribunal that the value of gold was liable to be included in the income of the assessee as the source of investment in the gold or of its acquisition was not explained and that the assessee was not entitled to claim that the value of the gold should be allowed as a deduction from his income. The relevant portion of the judgment is as under. 6. Under section 4 of the Act, income-tax is to be charged in accordance with the provisions of....
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....rovisions regarding deductions, etc., applicable to the relevant head of income under which such income falls will automatically be attracted. 6.2. 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, 698 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, 698, 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. Therefore, in these cases, the source not being known, such deemed income will not fall even under the head, 'Income from other sources. Therefore, the corresponding deductions, which are applicable to the incomes under any of these various heads, will not be attracted in case of deemed incomes which are covered under the provisio....
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.... The Hon'ble 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 oil seeds and the excess stock which is found during survey is stock of rice then, it can be said that investment in procurement of such stock of rice is clearly identifiable and related to the regular business stock of the assessee. Therefore, the investment in the excess stock is to be brought to tax under head "business income" and not under the head income from other sources. 5.4.2. In case of Shri Lovish Singhal vs ITO (ITA No 142 to 146/Jodh/2018 for AY 2014-15 dated 25 May 2018), the Jodhpur Tribunal applying the proposition of law laid down by the Hon'ble Rajasthan High Court in the Bajargan Traders (supra), held that the lower authorities were not justified in taxing the surrender made on account of excess stock and excess cash found U/s 69 of the Act and accordingly held that there is no justification for taxing such income U/s 115BBE of the Act. 5.4.3. In case of Oberoi Motors vs ACIT [ITA No. 3512/Del/2018 AY 2012-13 dated 16 July 2021], the taxpayer had declared s....
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...., 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 search or survey is on the assessee and not the other way. In other way, the onus of proving that the income detected is not taxable under sections 68, 69, 69A to 69D read with section 115BBE is on the assessee. 5.7. To sum up, before assessing the surrendered income under sections 68, 69, 69A to 69D and levy of higher rate of tax u/s 115BBE, following factors are required to be considered - * Whether nature of income is clearly explained during the survey or during assessment proceedings. * Whether income can be classified under a particular head of income based on nature so as to demonstrate that it is flowing from one of the specific sources of income of the assessee. * Whether supporting evidences for the above are available because the onus to satisfactorily explain the nature and source is on the assessee. 5.8. The facts of the present case are that a survey action u/s 133A of the IT Act, 1961 was carried ....
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.....2017, a copy of ITR-V along with computation of income, a copy of Form 3CB along with balance sheet, Trading and profit & loss A/c, a copy of statement of survey along with its inventory of books of accounts & documents. The appellant has submitted that aforesaid expenses viz. URD Purchase, Asphalt transportation; Repairs and maintenance & Labour charges; as debited in the Tentative trading accounts are certainly claimed as business expenses, but the Ld A.O had insisted for disallowance of said expenses and obtained declaration. Further, receipt shown in the Tentative Trading account as on 10/08/2017 is not disputed by the Ld A.O, as such sources were definitely available with the appellant. However, in the aforesaid tentative trading accounts as contract receipt was shown at Rs. 8,90,00,000/- up to 10.08.2017 and as per audited books total gross receipt was shown at Rs. 46,00,11,020/- for the entire year under consideration up to 31.03.2018. Thus, the appellant has argued that there were sufficient sources available with the appellant as per said tentative trading accounts and under the circumstances, the aforesaid income declared during the survey action in respect of the afores....
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....e Delhi High court in the case of CIT vs Nalwa Investment Ltd & Ors (ITA 822/2005, 853/2005, 935/2005, 961/2005-dt.7/08/2020, reported in (2020) 108 CCH 0062 Del HC wherein it is held that: "Taxable event is not just a matter of entries made in the account books of the assessee but is essentially one e of substance and of the real nature of what transpired in the transaction." In view of the aforesaid decisions relied upon by the appellant and the copy of tentative trading account as on date of survey as on 10.08.2017, it can be observed that aforesaid expenses viz. URD Purchase; Asphalt transportation; Repairs and maintenance& Labour charges; as debited in the Tentative trading accounts are certainly claimed as business expenses, but only for the reasons that was not fully supported it was offered for taxation. Thus, real nature of the aforesaid declared income is certainly business income and cannot be treated as income from other sources, merely because it was inadvertently/incorrectly shown it in the computation of income under the head Income from other sources. 5.12. Further, the appellant has also stated that the Ld. AO has relied upon the decision of Hon&#....
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....hus, the grounds of appeal filed by the assessee stand allowed. 5. In the result, the appeal filed by the assessee stands allowed. Order pronounced on this 12th day of July, 2023" The Jurisdictional ITAT Pune has held in the case of Rajasthan Stone Industries Jalgaon Vs The Income Tax Officer, Ward-1(3), Jalgaon (I.T.A. No. 811/PUN/2023 A.Y: 2010-2011) dt. 22/08/2023 as under : "3. Being aggrieved by the above addition, the assessee-appellant filed an appeal before the Ld. CIT(A) contending, inter alia, that the excess income declared during the course of survey proceedings represent business income and there is no evidence on record to show that the additional income is not derived from business activity. However, the Ld. placing reliance on the decision of Punjab & Haryana High Court in the case of Kim Pharma Pvt. Ltd. vs. CIT [2013] 216 Taxman 153 (P&H) and Madras High Court in the case of M/s. SVS Oils Mills vs. ACIT [2020] 113 taxmann.com 388 (Mad.), confirmed the action of the Assessing Officer. 4. Being aggrieved, the assessee- appellant filed the present appeal before the Tribunal. The appeal was called earlier on two occasions. However, none appeared for ....
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....icable to the facts of the present case and, therefore, I am of the opinion that the excess income declared during the course of survey proceedings cannot be treated as unexplained income of the assessee-appellant since credited to P & L A/c and cannot be assessed as income from other sources, but, under income from business. 1, therefore, set aside the order of the Ld. CIT(A) and allow the appeal of the assessee. 6. In the result, appeal of the assessee is allowed. Order pronounced in the open Court on 22.08.2023 5.13. For this proposition the appellant has relied upon the following jurisdictional Hon'ble ITAT, Pune's decisions, wherein it is held that the value of excess stock in value generated in regular business carried out by the appellant and is nothing but a "business income", hence it is required to be taxed as business income at normal rate. a) Anil Prabahkar Korgaonkar (HUF), Vs ACIT. Central Circle Kolhapur (No.395/PUN/2023 A.Y.2019-20) dt.30/08/2023. b) Manoj Vishwanath Patil, Prop. of Vishwanath R. Patil Jewellers, Jalgaon vs DCIT, Central Circle-1, Nashik (ITA No.938/PUN/2022 A.Y: 2019-20) dt. 06th July, 2023. c) Ashok K. K....
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....e department as business income at normal rate of tax. The additional income declared by the appellant to be taxed as "Income from business income" instead of "Income from other sources". Accordingly, the provisions of section 155BBE cannot be made applicable to the income of Rs. 3,52,40,780/-. Thus, the ground raised by the appellant is hereby allowed." 4. Aggrieved with such order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal by raising the following grounds : 1. "Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and in facts by deleting the tax calculated on special rates as per provisions of section 69B r.w.s.115BBE of the I.T. Act on declaration made of Rs. 1,56,95,093/- on account of excess stock found and section 69C r.w.s.115BBE of the I.T. Act on declaration made of Rs. 1,95,45,687/- on account of excess expenditure found. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and in facts by not appreciating the facts that the assessee has failed to substantiate the source of excess stock & unrecorded expenditure along with supporting documenta....