AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 1487
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....e facts of the case in confirming the invocation of provision the of S. 115BBE of the Act considering the additional income admitted during course of survey as unexplained income u/s 69C of the Act and wrongly assessing the same under the head Income from Other Sources, as against legally correct head being Income from Business and Profession by the ld. AO. The consideration of declared additional income as Income from Other Sources so done under the legally wrong head and levy of tax u/s S. 115BBE of the Act being completely contrary to provisions of law and facts, such income be declared as Business Income and invoking of S.115BBE be quashed. 3. The ld. CIT(A) further erred in law as well as on the facts of the case in confirming the imposition of tax, surcharge, cess etc. as per provision of S. 115BBE of the Act by the ld. AO. The invoking of S. 115BBE is contrary to the provisions of law, on facts and without jurisdiction. The appellant totally denies its liability. The tax liability so created, kindly be deleted in full. 4. The ld. AO further erred in law as well as on the facts of the case in charging interest u/s 234B, 234C and 234D of the Act. The appellan....
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....income filed for the relevant year and paid tax at normal rate thereon. Whereas ld. AO noted that as the unaccounted/unexplained cash payment to debtors, investment made in construction of shop, excess cash and excess stock are covered u/s 69, 69A and 69B respectively, therefore tax should be charged as per the provision of section 115BBE of Act. Therefore, a show cause notice was issued to the assessee on 15.09.2021 asking that as to why the tax on the income offered for taxation during survey proceedings should not be charged as per provision of section 115BBE of Act. The assessee submitted his reply on 17.09.2021. In his reply, the assessee has stated that; "The Assessee has disclosed Rs. 32,00,000/- in business income and Rs. 39,00,000/- as income from other sources. In our opinion this is the routine procedure of the business to consider GP rate on estimated basis on the basis of facts for not to possible maintained quantity wise stock, however at the time of physical valuation of stock, it may be how much right or wrong calculation but just for mental satisfaction we have considered excess stock as current year business income. On the other hand during the course ....
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....ctively and accordingly charged to tax as per provision of section 115BBE of the Act. 4. Aggrieved from the order of Assessing Officer, assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below: 4.3 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under- The AO noted that a survey action u/s 133A in the case of the assessee was conducted on 16.01.2019. The case of the assessee was manually selected for compulsory scrutiny as per guidelines issued by the CBDT, New Delhi's F.No. 225/126/2020/ITA-II dated 17/09/2020. Notice u/s 143(2) was issued to the assessee on 23/09/2020 and served to assessee through ITBA Portal. Thereafter, due to centralization of case u/s 127, the case was transferred to this office. The appellant claimed that during the assessment proceedings, the jurisdiction was transferred to DCIT Circle -II Kota vide order u/s 127. ....
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.... the relevant year and paid tax at normal rate thereon. The Assessee has disclosed Rs. 32,00,000/- in business income and Rs. 39,00,000/- as income from other sources. In our opinion this is the routine procedure of the business to consider GP rate on estimated basis on the basis of facts for not to possible maintained quantity wise stock, however at the time of physical valuation of stock, it may be how much right or wrong calculation but just for mental satisfaction we have considered excess stock as current year business income. The AO noted that the assessee had himself admitted in his statement recorded during the survey proceedings that he was unable to submit details/explanation regarding the source of excess stock, excess cash, cash payments to debtors and investment made in construction of shop and offered total undisclosed income of Rs. 70,00,003/- for the F.Y. 2018-19. Further, during the assessment proceedings, the assessee has claimed that this offered income is in relation to business activities and there is direct nexus with business but the assessee has failed to provide any details and documentary evidences to sustain his claim. In absenc....
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....ot explained that to whom the sale was made for generating such income. The assessee has not brought on record evidences which answer these questions. Hence, the claim that the income was from business is not found to be acceptable. The admitted (and undisputed facts) are that the only source of income of the appellant is the income from business of wholesale and retail trading of clothes by the proprietor Shirt Hiralal Vijawat in reply to answer to Q9. 12. 13 and 15 and as admitted by the Ld. AO himself at Pr. 1 on Pg. 1 that the appellant firm is engaged in wholesale and retail trading of clothes The assessee was in receipt of the profit on the purchase and sale of fabrics noms. There is no other known or unknown source of income, neither stated by the assessee nor by the department. It is stated that the alleged undisclosed income of Rs 70.00.003, are arising/resulting from the regular business income only le. from trading business and has to be classified u/s 14 rws 28 as business income only and not income from other sources. The claim of the appellant is that there cannot be any undisclosed income if the person is engaged in some business. The appel....
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.... income from other sources and not from business. Without prejudice to the above, the assessee has not furnished any evidence with regard to nature and source of such income which has been invested in the cash, amount given to debtors and amount invested in construction of shop. The appellant has not explained from which person the income is received. How much was the unaccounted sale made by the assessee to earn this much of Income? What was the source of expenditure which was made to effect the sales? The assessee has not brought on record evidences which answer these questions. Hence, the claim that the income was from business is not found to be acceptable. Hence, the deeming provisions are clearly applicable. The appellant stated that It has been held by the Hon'ble Supreme Court in Pullangode Rubber Produce Co. Ltd. vs State of Kerala & Others 91 ITR 18 (SC): "Such admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the assessee who made the admission to show that it is incorrect and the assessee should be given a proper opportunity to show that the books of accounts do not disclose th....
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.... technical task. Acquiescence cannot take away night a party to which he is otherwise entitled to. Therefore, even if the assessee has made some commitment, it cannot work as an estoppol and the assessee, if still feels aggrieved in any manner, can pursue legal remedy. Hence, showing income under a wrong head in the retum of income cannot be taken as an admission. The arguments of the appellant are considered but not found to be acceptable. The assessee may not be technically sound in income tax but he knows his business. The assessee knows his business more than the CA. Hence, the assessee after considering the nature of his business made a statement during survey that the income is undisclosed income then the same is to be treated as undisclosed income of the assessee. Even in the return of income which is furnished after taking technical advice, part of the income is not offered as business income. The CA of the appellant also treated the income as undisclosed income in the reply furnished as admitted in the appellate proceedings also. Moreover, even after survey and during the assessment proceedings or in the appellate proceedings, the appellant failed to furnish evide....
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.... is confirmed but as business income of the assessee. Excess Cash With regard to excess cash, the assessee has relied upon the decision of ITAT Jodhpur in the case of Lovish Singhal & ORS.vs. ITO & ORS (2018) 53 CCH 0250 (Jodhpur) (Trib) (PB60-69). In this case it was held that in respect of excess cash found out of sale of goods in which the assessee was dealing was also found to be taxable as business income. The facts of the case are considered. In the present case, the assessee has not explained that the excess cash found was earned out of sale of goods in which the assessee was dealing. No such evidence is brought on record. The assessee during the survey stated in reply to Q. No. 9 that this surrendered income of excess cash is not recorded in regular books of accounts. It is admitted that there is no clarification with regard to the excess cash. Therefore, the excess cash was admitted to be undisclosed income. This income was surrendered in addition to regular income of the assessee. The assessee has not explained nature and source of such amount in assessment or appellate proceedings by bringing some evidences. Therefore, the decision relied upon ....
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.... of proving the same, the AO was justified in treating these amounts as earned from undisclosed sources as Income from other sources and not from business. Secondly, the source of the investment in the advances is in exclusive knowledge of the assessee. The AO cannot be expected to prove which is in exclusive knowledge of the assessee. In essence, the assessee is arguing that if the assessee is engaged in business activity, all unaccounted assets or income found during search and survey should be considered as earned from business activity. If the argument of the assessee are accepted then there will be no addition u/s 68, 69, 69A or 69C in case the assessee is engaged in some business activity. This is not found to be acceptable as per the provisions of Income Tax Act. There was no such intention of the legislature. There is no provision in the Income Tax which says that the sections of deemed income family are not applicable on the assessee who is engaged in the business activity. Hence, the arguments of the assessee are not found to be acceptable. In view of clear failure on the part of the assessee to explain the nature and source of the advances made by the a....
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....er statute. The machinery provisions must, no doubt, be so construed as would effectuate the object and purpose of the statute and not defeat the same. (Whitney v. Commissioners of Inland Revenue 1926 A C 37, CIT v. Mahaliram Ramjidas [1940] 8 ITR 42 (PC), Indian United Mills Ltd. v. Commissioner of Excess Profits Tax, Bombay, [1995] 27 ITR 20 (SC) and Gursahai Saigal v. CIT, Punjab, [1963] 48 ITR 1 (SC)." The Hon'ble Supreme Court in the case of Gursahai Saigal (supra) held as under:- "Those sections which impose the charge or levy should be strictly construed; but those which deal merely with the machinery of assessment and collection should not be subjected to a rigorous construction but should be construed in a way that makes the machinery workable." The Hon'ble Supreme Court in the case of 'India United Mills Ltd. (supra) applied the principles laid down by the Privy Council in the case of 'Mahaliram Ramjidas (supra)' held as under: "Ordinarily, the charging section which fixes liability is strictly construed but the rule of strict construction is not extended to the machinery provisions which are construed like any other....
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.... preferred the present appeal before this Tribunal on the ground as reproduced herein above. To support the various grounds so raised by the assessee, ld. AR of the assessee, has filed the written submissions which reads as follows : Brief General Facts: The admitted facts as stated by the AO are that the assessee engaged in the business of Wholesale and Retails Trading of Ladies and Gents Dresses items i.e. cloth, Sarees etc. under M/s Vijawat Vastra Laya at Bhawani Mandi. A survey u/s 133A was carried out on dated 16.01.2019 during the course of which statement of the assessee i.e. Shri Hiralal Vijawat were recorded u/s 133A/131 (PB 24-31) wherein he voluntarily admitted business income of Rs. 70,00,003/-- in addition to regular income, which remained to be accounted for. Thereafter, the assessee-firm filed its Return of income u/s 139 (PB 1) on dt. 24.09.2019 declaring total income of Rs.75,87,380/-, which also included such additional income of Rs. 71,00,003/- (i.e. 70 Lakhs plus 1 Lakh additional as cash in hand). Thereafter, the case was selected for complete Scrutiny assessment. The AO completed the impugned assessment u/s 143(3) vide order dated 30.09.2021....
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.....1 The relevant facts are that that initially the jurisdictional AO of the Assessee was ITO Ward Jhalawar (PB 32-35), who had issued the jurisdictional notice u/s 143(2). However thereafter, during the assessment proceedings, the jurisdiction was transferred to DCIT Circle - II Kota vide order u/s 127, who again issued jurisdictional notice u/s 143(2) (PB 36-39). Strangely, the impugned assessment order was passed by another officer being DCIT Central Circle Kota i.e. non jurisdictional AO, instead of the DCIT Circle II Kota. 2. Hence, even considering the order u/s 127 to be valid (i.e without being prejudice to the contention raised herein below), the impugned assessment order having been passed by DCIT Central Circle, Kota, instead of DCIT Circle II Kota (who has been given jurisdiction vide order u/s 127) is bad in law and without jurisdiction. Therefore, the impugned assessment order deserves to be quashed. II. Invalid order u/s 127 3.1 The relevant facts are that initially the jurisdictional AO of the Assessee was ITO Ward Jhalawar (hereinafter referred to as "Transferee AO"); however, during the assessment proceedings, the jurisdiction was transfer....
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....ch contention is completely a misreading of the basic contention raised that the assessment order was passed by a non-judicial AO and is a nullity and hence deserves to be quashed as held in various cases as held in various decisions in High Court and Tribunal. Therefore, the assessment order may kindly be declared as a nullity and be quashed. G.O.A 2 & 3: Invalid Invocation of Sec 115BBE on Rs.38,00,003/- (wrongly typed as Rs. 70,00,003/-) 1. Section 115BBE wrongly invoked and applied even on assessed business income: 1.1 Legal Position: At the outset, it is submitted that S.115BBE specifically refers to the income which are of the nature as referred in S.68, 69, 69A of the Act being the income from other sources. Therefore, subjected income has essentially to be classified u/s 14 of the Act as income from other sources and that is possible only when the income is not capable of being classified under any other head being income from salary, house property, capital gain, business or profession. 1.2 A combined reading of S. 14 with S. 56 of the Act makes is evidently clear that for the assessment of an income it must have to be classified under f....
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....ed was nothing but additional income only and it cannot be termed as excess/undisclosed/ unaccounted income for the simple reason that survey was carried out on 16.01.2019 i.e. before ending of the relevant previous year ending. Therefore, the books of accounts of the assessee were not complete on the day of survey. Therefore, such transactions, which were not accounted for then, and which were accounted for thereafter, cannot be termed as excess-shortage/undisclosed/unaccounted money, quantity etc. Even the Return of income was not filed by the assessee, on the date of survey, and rather was filed much later on 24.09.2019 (i.e. after 8 months). At the best, it was only additional income stated during survey. Moreover, the assessee admittedly accounted for such income also in regularly maintained books of account and also declared the resultant income in its ROI. Though the AO specifically admitted this fact (at pg. 3 top of his order) yet copy of Computation of Total Income enclosed herewith (PB 53-56) Therefore, once a comparison is made between the income shown in the accounts and those in ROI, there will be no difference. Consequently, it cannot be said that there was ....
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....ropriate to clarify here that the ld. AR of the assessee vide reply dated 16.09.2021 (uploaded on the income tax portal on dt. 21.09.2021) has given a detailed breakup of additional income of Rs. 70 Lakh, however has unintendedly and inadvertently/ accidental used the word undisclosed instead of the word additional. This word 'undisclosed' is only a typographically mistake and was used by mistake in a very causal / routine manner. Yet otherwise and importantly, as per the correct legal position and as per the facts of the case, these are not at all excess/shortage/ unaccounted/undisclosed income of the assessee but was only and simply an additional income. 2.5 It is well settled law that there is no estoppel law under statute. If the parties have wrongly understood or taken a view of certain transactions like in the present case, where the assessee, who is a layman, and the ld. tax consultant even, has mistakenly understood and have shown additional income of Rs. 70 Lacs under two different heads i.e. Rs. 32 lakhs in Income from B&P and Rs. 39 lakhs in Income from Other sources. However, showing Rs. 39 Lakhs as undisclosed/unaccounted income under the head 'Income from....
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....y of the funds under different headings of the asset/expenditure, etc. and their nature also suggest that the additional income was related to/arose during the course of the trading business only. Cash and debtor were nothing but the result of the business only. 2.9 Further, there is no whisper in the entire statement of proprietor Shri Hiralal Vijawat nor any finding recorded in the impugned assessment order u/s 143(3) for A.Y. 2019-20 in case of the appellants that the additional income was something other than the Income from business or that there was some other source of income giving rise to such alleged undisclosed Income. In these circumstances, the only inescapable conclusion is that the such income was nothing but a business income from the fabric business. The very source of alleged undisclosed income emanated from, was well connected with and related to the fabric business transactions alone and not from any other activities or from any other source of income. 3. Accounting: It is submitted that income so surrendered in shape of the unrecorded income were entered in the regular books of accounts. These accounting entries were certainly before the AO wh....
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....ng or wrong understanding of law by the assessee or because of his admission or on his misapprehension. If in law an item is not taxable, no amount of admission or misapprehension can make it taxable. The taxability or the authority to impose tax is independent of admission. Neither there can be any waiver of the right by the assessee. The Department cannot rely upon any such admission or misapprehension if it is not otherwise taxable." (Para 11) 4.3 Surrendered income wrongly considered u/s 68 and/or 69A as income of other sources: If the totality of the facts and circumstances and the judicial guideline is considered, the additional income could not be considered of the nature described in the above provisions. Otherwise also on merits once such additional income has already been accounted for before/ at the close of the year nothing remained undisclosed/ unexplained. 4.4 CIT(A) did not apply ration of Rajasthan High Court in Bajranga (Supra) 5. Judicial Guideline: The Hon'ble Rajasthan High Court, ITAT Jaipur and various other courts have held that where the additional income/ undisclosed income declared during the course of survey is relatable to some....
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.... 76 lakhs which comprised of the debtors Rs. 45.50 lakhs, excess cash found Rs.95.50 lakhs and construction expenses Rs. 21 lakhs. shop construction expenses, which was duly included in the ITR and normal tax was paid accordingly. Even the assessment was completed u/s 143(3) but the same was revised by the CIT(A) by vide order u/s 263, directing the AO to invoke S.115BBE. The Hon'ble ITAT however decided the issue in favour of the assessee vide its order dated 13.12.2024 in ITA No. 605/JPR/2024 (DC 45-52). Thus, the applicability of S.115 BBE on the additional income in Vijawat group (same group) was denied and hence the same is directly applicable in the case of the present assessee also. 5.5 It is further submitted that on identical facts and circumstances, the Hon'ble ITAT, Jaipur Bench, has already taken a favorable view in the case of Parshavnath Buildestate Private Limited vs. ACIT/DCIT, Central Circle, Kota in ITA No. 1357/JPR/2024 (DC 26-33). The Hon'ble Tribunal, after duly appreciating the factual matrix and legal contentions, held in favour of the assessee by deleting the addition made by the AO. The facts in the present case are pari- materia with the facts in ....
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.... (JP) 761 (relevant extract only) 1-8 2. CIT vs Bajargan Traders [2017] 86 taxmann.com 295 (Rajasthan) HC 9-11 3. Nikhaar Fashions v. ACIT (ITA No. 1020/JPR/2024) 12-25 4. Parshavnath Buildestate Private Limited v. ACIT ITA. No. 1357 /JPR/2024 (relevant extract only) 26-33 5. Bharat Associates v. Acit [ITA No. 1293/JPR/2024] 34-44 6. Alok Vijawat v. PCIT (Udaipur) [ITA No. 605/JP/2024] (relevant extract only) 45-52 7. The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that the ld. CIT(A) granted part relief but on the same logic the assessee is supposed to get full relief as the source being same there cannot be contradictory finding by the ld. CIT(A). 8. Ld. DR heavily supported the orders of the lower authority. He raised the various contention which were also submitted in the written submission filed which reads as under : 1. Facts of the Case 1.1 During the course of survey conducted u/s 133A of the Income Tax Act, 1961 (hereinafter referred to as "Act") on 16.01.2019, the statement of Shri Hiralal Vijawat was recorded u/s 131 of the Act. Subsequently, the case....
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....ated 31.03.2025 is also relevant in this regard wherein the ground no. 1 raised before the Ld. CIT(A) was dismissed. As mentioned in Para 3 of the AO's report that as the income of the assessee was above the monetary limit mentioned therein so the case of the assessee was transferred to DCIT, Circle-2, Kota. Hence, it is evident that when the assessee has disclosed the income of relevant A.Y. more than Rs. 15 Lacs, the case was transferred to the Officer as per the monetary limit. Thereafter when the case of the assessee was transferred from the DCIT, Circle-2, Kota to DCIT, Central Circle-Kota, the said transfer took place within the same city and the provisions of section 127(3) of the Act are relevant in this regard and the same is reproduced as under:- "Power to transfer cases. 127. (1)... (2)... (3) Nothing in sub-section (1) or sub-section (2) shall be deemed to require any such opportunity to be given where the transfer is from any Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) and t....
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.... of wholesale and retail trading of clothes by proprietor Shri Hiralal Vijawat. D. The Ld. AR of the assessee has also stated in the written submission that there is no estoppel law under the statute (in support of this argument the Ld. AR has relied upon the case laws cited in the written submission) to support the contention that it was Ld. tax consultant's mistake to segregate the Rs. 70 lakhs under two different heads i.e Rs. 32 lakhs in income from B&P and Rs. 39 lakhs in the income from other sources. Rebuttal of above contention: The contention of the Ld. AR that on date of survey the books of accounts were not complete. It is possible that this scenario might be encountered during the course of survey proceedings as one cannot expect that the books of accounts to remain updated on every day. However, it is also logical to infer that in such a scenario, there would always be presence of basic documents that would prove that the transactions, that assessee wants to rely upon for making a claim that the unrecorded/unaccounted transactions are actually the business transactions, are genuine business transactions. In such a situation the argument o....
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....and second floor of the building. Though the assessee has claimed it to be from business income but the assessee has not submitted any documentary evidence to substantiate this fact. In absence of any conclusive documentary proofs that establish the fact that the proceeds of sales of business have been used for the giving borrowings and for construction purpose the onus to explain the nature and source of the income does not stands discharged on the part of assessee. Therefore, it evident from the above that in the case of assessee, mere recording the investments subsequently after search/survey but without explaining any source or proved by other evidences about its source (which is the primary condition), would not fulfil the conditions for purposes of getting out of the sweep of section 69/69A. If the recording of transactions/investment/receipts from unexplained sources without corroborating evidence subsequent to search/survey date were to be considered as meeting the requirement of condition u/s 69/69A of being recorded in books of accounts, then there would be no case where 69/69A could be applied. In this regard, the reliance is also placed on the decision....
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....sessing officer was erroneous and prejudicial to the interests of the Revenue. In both the above case laws relied upon, the adjudicating authorities were aware of the fact that the appeal, which had travelled to their respective floor, were arising out of the survey action only. However, it is pertinent to note that the Act nowhere states that if a survey is conducted then just because the premises where the survey is conducted happen to be always a business premises or a place where books of accounts are kept, the section 68, 69, 69A and 69B become inoperative. Whenever certain transaction/cash are found during the course of survey proceedings and the assessee is unable to give a satisfactory explanation in respect to the nature and source alongwith relevant documentary evidences then the AO is authorized to invoke the deeming provisions provided in the Act to handle such scenarios and tax the receipt as per the nature of unexplained transaction/cash. Further, it is evident from the above mentioned two case laws that even if the undisclosed income is disclosed in the return of income under the head "profit and gain of business or profession or under the head "inc....
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....ing any deductions under the provisions which correspond to such heads of income will not arise. If it is possible to peg the income under any one of those heads by virtue of a satisfactory explanation being given, then these provisions of ss. 69, 69A, 69B 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 be attracted. The opening words of s. 14 'save as otherwise provided by this Act' clearly leave scope for 'deemed income' of the nature covered under the scheme of ss. 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 ss. 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. Therefore, in these cases, the source not being k....
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....03/-, unaccounted cash given to debtors amounting to Rs. 15,50,000/- and unaccounted investment in construction of shop amounting to Rs. 14,00,000/- correctly as per section 115BBE as the transactions pertaining to the said amount remained unexplained in absence of necessary evidences to support such transactions. E. The Ld. AR of the assessee has also submitted that the Ld. CIT(A) has not applied the ratio of decision pronounced by the Hon'ble High Court of Rajasthan in the case of Principal Commissioner of Income-tax v Bajargan Traders [2017] 86 taxmann.com 295. Rebuttal of above contention The contention of the assessee is not tenable in the light of relief provided by the Ld. CIT(A) in respect of the excess stock amounting to Rs. 32,00,000/- on page no. 19 of the appellate order dated 31.03.2025. While giving the relief, the Ld. CIT(A) has relied upon the decision of the Hon'ble High Court of Rajasthan in the case of Bajargan Traders (supra). It is also pertinent to note that facts of the case of Bajargan Traders (supra) were not the same in respect of the relief sought in respect of unaccounted cash amounting to Rs. 8,50,003/-, unacc....
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....ions of section 69A, 69B is that the asset should be separately identifiable and it should have independent physical existence of its own. Since excess stock is a result of suppression of profit from business other the years and has not been kept identifiable separately but is the part of overall physical stock found, the investment in the excess stock has to be treated as business income as per detailed reasons given in the case of Fashion World (supra). Once excess stock is treated as business income then assessee is entitled for higher remuneration to the partners as per section 40(b). As a result, this ground of assessee is allowed..." Hence, it is evident from the above that the issue under consideration, interalia, in the said case was that whether the excess stock found shall be treated as business income or not and whether the assessee is entitled to giving higher remuneration to the partners u/s 40(b) or not. • In the case of assessee, the Ld. CIT(A) has already given relief to the assessee with respect to the excess stock and in light of the said fact, the facts of the case law relied upon by the Ld. AR is not applicable in the case of assessee as th....
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....; The discussion in preceding paragraph makes it evident that nor the assessee was able to explain the source of cash neither the assessee was able to establish the link of such excess cash found during the course of survey proceedings with his business. The assessee, being aware of this fact, therefore, filed the return of income for the relevant assessment year and disclosed this amount as "income from other sources". Moreover, even during the course of assessment proceedings, the assessee was unable to establish the business link of the excess cash found during the survey. In view of the above, the case law relied upon by the Ld. AR is of no help to the assessee H. The Ld. AR, on page no. 10 of written submission, has mentioned submitted an argument under the head Accounting. It has also mentioned in the said para that These accounting entries were certainly before the AO who duly examined, which furnished a strong ground to him to take a decision that it was a business income only and S. 115BBE was not applicable. Remarks on above contention The assessing officer has categorically stated in the assessment order that the assessee was ....
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....sed by the AO. Every loss of Revenue as a consequence of the order of the AO cannot be treated as prejudicial to the interest of 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 view are possible and AO has taken one view with which the Id. PCIT does not agree, it cannot be treated as as an erroneous order prejudicial to the interest of the Revenue, unless the view taken by the AO is totally unsustainable in law. Thus, it is evident from the above that the Hon'ble ITAT did not decide on the merits of the amounts surrendered during the survey in the sense that whether this should be categorised as business income or should be categorised under the deeming provisions of the Act. The issue that was adjudicated was that once the proper enquiry has been undertaken by the AO during the course of assessment proceedings and the AO has reached at a conclusion vis-a-via taxability of the amount surrendered during the course of survey proceedings then the PCIT cannot impose her view. In light of this observation, the Hon'ble ITAT held that the order passed by the AO was not erron....
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....the oral evidence submitted by the assessee in a statement cannot be ignored and in fact the same have been accepted by the revenue. Considering the discussion so recorded and the facts which are not disputed that income of Rs. 2,01,00,000 from business already been taxed the subsequent expenditure from that income cannot be considered as unexplained expenditure. Therefore, it is evident from the above that in the case law relied upon by the Ld. AR it was held by the Hon'ble ITAT that when the surrendered income has been accepted as business income then the expenditure whose sources is rooted in the said business income cannot be held as unexplained expenditure. This is not the fact of the case of assessee. In the assessee's case, though the assessee has made an attempt to categorise the surrendered income as business income by relying on various case laws but neither at the time of survey proceedings nor at the time of assessment proceedings has been able to prove through documentary evidences that the surrendered income was the business income of the relevant assessment year. Hence, the case law relied upon by the Ld. AR is of no help to the assessee. K.....
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.... assessee. L. It is also pertinent to note that the Hon'ble ITAT, Jaipur Bench, Jaipur vide Order pronounced on 29.08.2024 in the case of Rajeev Jain Vs. PCIT (Central), Jaipur in ITA No. 644/JP/2024 made a relevant observation which is applicable in the case of assessee as well. The relevant facts are discussed as under. • In the said case, the survey action u/s 133A of the Act was carried out on 11.10.2017 at the business premise of assessee firm Sandeep Micron. • During the course of survey proceedings the stock of Rs. 22,60,188/-was found on physical verification, whereas as per the books of account the available stock was Rs. 7,39,012/-. The assessee was not able to give satisfactory explanation in respect of the said discrepancy and surrendered the difference of amount of Rs. 15,21,176/- (Rs. 22,60,188/-less Rs. 7,39,012/-) as the income of the year under consideration. The assessee declared the said amount of Rs. 15,21,176/- in the Return of Income filed for the year under consideration and paid due taxes thereon. The Ld. PCIT invoked the provisions of section 263 of the Act on the ground that the amount of Rs. 15,21,176/- was required ....
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.... on the different set of facts not applicable to the present facts of the case. Accordingly, the Id. DR relied upon the detailed finding as recorded in the order of Id. PCIT." > Thereafter, the observation made by the Hon'ble ITAT while adjudicating the case in the favor of Department is also relevant and the same is reproduced as under- "... As is evident from the above profit and loss account that the assessee has separately offered income to the extent investments made in the excess stock as other income. Thus, that Income is not disclosed as excess stock in the trading account. Since it is separate income earned and invested in the excess stock it has not been demonstrated that the income so disclosed is the same as of the business carried out by the assessee. The contentions raised by the Id. AR of the assessee is different and the case laws relied upon the Id. AR of the assessee is different in the set of facts same are not applicable to the present facts of the case. Thus, when the assessee has disclosed the income for which there is no explanation about its source the said income is subjected to tax as per provision of section 68 of the Act and the acc....
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...." does not allow the assessee to escape from offering the explanation in respect of the nature and the source of income as rightly held by the Hon'ble ITAT, Jaipur Bench in the case of Sh. Rajeev Jain (supra). Hence, the Ld. AR's contention that the above mentioned three amounts (unaccounted cash amounting to Rs. 8,50,003/-, unaccounted cash given to debtors amounting to Rs. 15,50,000/- and unaccounted investment in construction of shop amounting to Rs. 14,00,000/-) should be treated as Business Income is not an acceptable argument. Ld. DR also relied upon following the judicial precedent in support of the contentions raised; • Kim Pharma (P.) Ltd. v. CIT [2013] 35 taxmann.com 456 (Punjab & Haryana) • Shiv Shakti Enterprise vs. PCIT [2023] 157 taxmann.com 492 (Ahmedabad-Trib.) • Fakir Mohmed Haji Hasan vs. CIT [2002] 120 taxman 11 (Gujarat High Court) • Rajeev Jain vs. PCIT(Central), Jaipur in ITA No. 644/JP/2024 dated 29/08/2024 (Jaipur Trib.) • Svetlana Gorodinskaia vs. ACIT in ITA No. 202/Chd/2023 dated 24/05/2024 (Chandigarh Trib.) • Shri Rajesh Kumar Bajaj vs. ACIT in ITA No. 16/Ind/2019 d....
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....xtent of cash given to debtors of Rs. 15,50,000/-, investment in construction of shop of Rs. 14,00,000/- and excess cash of Rs. 8,50,003/- were considered to be charged as per provision of section 69A and 69B of the Act and accordingly ordered to tax as per provision of section 115BBE of the Act. The bench noted the excess stock investment was considered by the ld. CIT(A) considering the decision of our Rajasthan High Court in the case of M/s. Bajarang Traders. The bench noted that the assessee has offered the income at Rs. 77,59,130/- in the return of income filed u/s. 139 of the Act. There is no adjustment of the head of income as declared by the assessee and thereby without doing so how the income which is already supported by a statement that the same is out of the business income be considered as income as per provision of section 68/69A,B & C of the Act. Had it be the intention of the ld. AO then the ld. AO should have discussed how the income is offered and how intend to tax the same should have been bifurcated under the various head income so as to tax that income at special rate. The bench noted that on the same set of facts the ld. CIT(A) granted relief to the asses....