TaxTMI 
TaxTMI 
2024 (11) TMI 1531
X X X X Extracts X X X X
X X X X Extracts X X X X
....king various incorrect observations. 2. The Ld. CIT (A) has erred on facts and in law in taxing the alleged undisclosed investment u/s. 115BBE of the Act @ 60% by ignoring that the substituted section 115BBE introduced by Taxation Laws (Second Amendment Act), 2016 received the assent of President on 15.12.2016 and thus any investment prior to this date is taxable @ 30% and not @ 60%. 3. The appellant craves to alter, amend and modify any ground of appeal. 4. Necessary cost be awarded to the assessee. 2. The brief facts of the case are that the assessee partnership firm is engaged in the retail trading of designer sarees, suits and lehanga chunni etc. A survey action was there on the business premises of the assessee u/s. 133A of the Act on 09-08-2016, i.e. during the F.Y. 2016-17 relevant to A.Y. 2017-18. During the survey operations stock of the assessee was determined physically at a value of Rs. 3, 14,26,776/- against the value of book stock arrived at Rs. 2,14,15,861/- resulting into excess stock of Rs. 1,00,10,915/-. 3. The return of income was filed u/s. 139(1) of the Act on 29.10.2017 declaring total income at Rs. 1,20,08,....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... case no books of accounts, documents were impounded by the income tax authority during survey. As per sec. 133(A)(3)(1a) of the Act if any books of accounts or documents is required to be impounded then there must be a recording of reason for doing so. Since, no books of accounts or documents were impounded there is no such recording of reasons is provided to the appellant. Before amendment in finance act 2002 of section 133A of the Income-tax Act, the powers of an income-tax authority conducting a survey are limited to the inspection of books of account and other documents available at the place of business or profession of the assessee, placing of marks of identification thereon, taking copies or extracts therefrom, making an inventory of any cash, stock or valuable article or thing checked or verified by him and recording the statement of any person which may be useful for, or relevant to any proceedings under the Act. ● With a view to prevent the destruction or misappropriation of any evidence found during survey, it is proposed to empower the income tax authority to impound and retain in his custody books of account or other documents inspected by him during su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....alidity of assuming jurisdiction, we are not adjudicating the matter on the same, but as this legal issue is also involved and the authorities below are supposed to be careful and vigilant enough in terms of the CBDT Circular/Notification and Guidelines etc. as the same are binding in nature on them and has to be applied word by word. This issue is discussed as a guideline to the authorities below and representatives of the assessee for future reference. 7. There was no material/documentation on record which even remotely demonstrated that assessee had expended any sum of money on excess stock found over and above amount which had been recorded in its books of accounts. The only source of income of the appellant is its income from trading in designer sarees etc. The revenue was not able to advance any evidence during assessment proceeding that the said income is not connected with the business income of the assessee, hence all the income earned by the assessee relate to business income only. 8. Further, 5 heads of income are in a sense exclusive of one another, and income which falls within one head cannot be assigned to, or taxed under, another head. We take strength by the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... considered by the revenue cannot be ignored. The mere fact that survey/search proceedings have been initiated at the business premises of the assessee doesn't mandate the Assessing officer to automatically invoke the deeming provisions and before invoking the deeming provisions, he must call for the explanation of the assessee and only where the explanation so offered is not found satisfactory, he can proceed and invoke the deeming provisions. 10. There are several judicial pronouncements wherein it was held that " Where miscellaneous business income of certain amount surrendered by assessee was taken as income from undisclosed source under section 69B of the Act and tax was calculated on it under section 115BBE of the Act, since revenue was not able to submit any evidence to effect that said income was not connected with business income of assessee or was accumulated from non-recognising source, entire addition was certainly without forming proper basis and thus impugned application of section 69B of the Act upon income disclosed by assessee and taxing same at special rate as per section 115BBE of the Act was improper". ● [2023] 155 taxmann.com 293 (Amritsar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....NCOME TAX : Where assessee had admitted certain sum towards excess stock found during course of survey, since excess stock found during course of survey did not have any independent identity as asset was a mixed part of overall stock found in business premises of assessee, which represented business income and moreover, assessee had explained source for excess stock i.e., out of income earned from current year business, Assessing Officer was not justified in treating additional income admitted towards excess stock as unexplained investment under section 69B of the Act and levying tax as per section 115BBE of the Act. ● 2024] 161 taxmann.com 44 (Madhya Pradesh) [19-03-2024] Where undisclosed income surrendered during search and seizure proceedings is derived from regular business activities, it is liable to be taxed at normal rate instead of tax rate stipulated under section 115BBE of the Act. ● 2023] 157 taxmann.com 5148 (Rajkot - Trib.) [30-11-2023] Where assessee, a medical practitioner, voluntarily surrendered certain amount during survey as his unaccounted professional receipts and taxed said receipts at normal rate, since assessee had no ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of his cash or stock or other valuable article or thing relating to his business or profession are or is kept. Based on above, the primary objects of the survey may be categorized as under: Broaden the country's tax base by discovering new taxpayers. Gather information for checking whether the existing taxpayers are discharging their tax obligations correctly and truthfully and to get information for detecting evasion of tax by the existing taxpayers. To do spot checking to find out whether the books of account and records are being maintained on day-to-day basis and not manipulated later. To check the correctness of the cash and stocks shown in the books of account maintained in the ordinary course of business /trading. 14. In, nutshell, the proceedings u/s. 133A of the Act introduced in the statute to have a check and balance on the business/ professional behaviour of the assessee. The survey conducted u/s. 133A of the Act is there in the statute just to verify the business affairs of the assessee. If found correct, no consequences. If something is missing out of business affairs, alarm the assessee to incorporate the same in his books o....