TaxTMI 
TaxTMI 
2026 (2) TMI 1246
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....ons of law: "(i) Whether on the facts and circumstances of the case, the tribunal is right in law in perversely upholding taxation of non-existent income of Rs. 1,14,20,100/- merely based on the statement obtained under Section 133A and return of income, without any corroborative evidences or adverse finding against the appellant? (ii) Whether on the facts and circumstances of the case, the Tribunal is justified in refusing to decide the taxability of non-existent income wrongly offered during survey and in return, based on perverse findings?" 4. The facts, in brief, are that the assessee filed its return of income on 20.11.2017 declaring total income of Rs. 1,91,25,040/-. The Assessing Officer issued a notice under Section 143(2) of the Income-tax Act, 1961 (for short, "the I.T. Act") on 11.08.2018, which came to be served on 23.08.2018, calling for scrutiny of the assessment. The assessee is engaged in the business of real estate. The return of income was selected for scrutiny to verify the payment of tax in cash during the demonetization period. 4.1 The assessment order records that a survey under Section 133A of the I.T. Act was conducted on 27.09.2016 a....
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....0/- was concerned, the Tribunal accepted the contention of the assessee and deleted the said addition. 5. Sri K. K. Chythanya, learned Senior Counsel, along with Sri Tata Krishna, learned counsel appearing for the appellant- assessee, submitted that a survey was conducted on 27.09.2016 and that, in the course of the said survey, an admission was obtained on 29.09.2016 offering a sum of Rs. 1,14,20,100/-. It is submitted that the said amount is not exigible to tax and that its inclusion in the return of income was the result of coercion during the course of the survey proceedings. It is further submitted that the Tribunal is empowered to delete even the income admitted in the return, unless it is demonstrated that such income is taxable under the provisions of the I.T. Act. 6. Per contra, Sri Y. V. Raviraj, learned Senior Standing Counsel appearing for the respondent-Revenue, submitted that a survey was conducted on 27.09.2016 and that the assessee, by communication dated 29.09.2016, agreed to offer a sum of Rs. 1,14,20,100/- as income. It is submitted that the return of income was thereafter filed on 20.11.2017, more than fourteen months after the date of the survey, and, the....
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....ng the same to tax at the rate of 60% under Section 115BBE of the I.T. Act, the assessee, in the appeal before CIT(A), challenged only the applicability of Section 115BBE and not the taxability of the additional income itself. For the first time before the Tribunal, the assessee contended that the additional income declared was based solely on a statement recorded during the course of the survey and was unsupported by any evidence. The Tribunal rejected the said contention. 7.4 In this context, it is relevant to refer to the grounds raised by the assessee before the CIT(A), which are as under: "2. GROUNDS OF APPEAL:- Aggrieved by the above order, the appellant preferred an appeal before the Commissioner of Income Tax (Appeal), with the following grounds of appeal: "1. The order of the learned A.O. in so far as it is against the appellant is opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case. 2. The learned A.O, is not justified in adding a sum of Rs. 24,00,000/- as unexplained cash u/s. 68 of the Act, under the facts and in the circumstances of the appellant's case. 2.1 The addition made....
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.... levying tax & surcharge under section 115BBE is void ab initio and bad in law. 4.2. The Learned Commissioner (Appeals) is not justified in upholding the action of the Learned Assessing Officer in levying tax & surcharge under section 115BBE in the appellate proceeding by failing to appreciate that the Learned Assessing Officer never proposed to do the same in any of the notices issued during assessment proceeding. 4.3. The Lower Authorities have erred in applying section 115BBE when the amount surrendered during survey was on account of difference in cash and other deficiencies and not on account of any of the sections in Chapter VI. 4.4. Without prejudice to the above, the Learned Commissioner (Appeals) has erred in upholding the action of the Learned Assessing Officer in levying tax & surcharge under section 115BBE by failing to appreciate that (i) the Learned Assessing Officer never invoked any of the sections 68, 69, 69A, 69B, 69C & 69D of the IT Act and (ii) the Learned Assessing Officer levied tax & surcharge under section 115BBE merely on the basis that the additional income was offered under the head income from other sources....
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....nt twice over. 5.8. The Lower Authorities have unjustly refused to grant the benefit of telescoping. 6. As regards levy of interest of Rs. 2,97,176/-under section 234A of the Act: 6.1. The Learned Assessing Officer is not right in law and on facts in levying interest under section 234A of Rs. 2,97,176/ -. 6.2. The Learned Assessing Officer is not justified in levying the aforesaid interest when the impugned addition is not tenable. For the above Grounds and for such other Grounds which may be allowed by the Honourable Members to be urged at the time of hearing, it is prayed that the aforesaid appeal be allowed." 7.6 The Tribunal has summarized the reasons for rejecting the appeal filed by the assessee, which are as under: "i. Survey in this case took place on 27.09.2016, ii. Assessee himself made disclosure giving various reasons such as omission and commission. Therefore it is right that only assessee was aware what for he is disclosing the sum. iii. ROI was filed on 20-11-2017, In the ROI assessee himself offered this income as Income from other sources. iv. In the computation also assessee did no....
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....ks fit. The power of the Tribunal in dealing with the appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, we do not see any reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of that item. We do not see any reason to restrict the power of the Tribunal under Section 254 only to decide the grounds which arise from the order of the Commissioner of Income Tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. We fail to see why the Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier. 5. In the case of Jute Corpn. of India Ltd. v. CIT [1991 Supp (2) SCC 744 : (1991) 187 ITR 688] this Cour....
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....tion of law arising from the facts already on record in the assessment proceedings, it is competent to examine such a question. 11. In the present case, the assessee did not raise the plea of non-taxability of the additional income either before the Assessing Officer or before the CIT(A). The ground urged before the CIT(A) was confined to the applicability of Section 115BBE of the I.T. Act and not to the taxability of the additional income per se. For the first time before the Tribunal, the assessee sought to contend that the additional income admitted was not taxable. 11.1 In such circumstances, the Tribunal did not have the benefit of foundational facts necessary to examine the said contention. The issue sought to be raised is not a pure question of law but involves mixed questions of fact and law. In the absence of foundational facts on record, the Tribunal could not have adjudicated upon such issues. 11.2 Learned counsel for the Assessee has relied on the following judgments; (i) Commissioner of Income Tax vs. S. Khader Khan Son, [2008] 300 ITR 157 (Madras) (ii) Commissioner of Income Tax, Salem vs. S. Khader Khan Son, [2013] 352 ITR 480 (SC) ....
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....the said issue before the Assessing Officer, which the assessee consciously chose not to do. 14. Further, when the appeal was preferred before the CIT(A), the challenge was confined only to the chargeability of the additional income at the special rate of 60% under Section 115BBE of the Act and not to the taxability of the additional income itself. If the admitted income is permitted to be questioned for the first time at the stage of the Tribunal, it would undermine the finality and sanctity attached to admissions made in the return of income. When a return of income is selected for scrutiny, the scope of scrutiny is ordinarily confined to the verification and disallowance of claims made by the assessee. A scrutiny assessment to examine the correctness of such claims cannot be extended or enlarged to reduce the income voluntarily admitted by the assessee. The Assessing Officer is not vested with the power to reduce the admitted income. If any erroneous admission is made, the statute provides a specific mechanism to correct such an error. The assessee, however, has chosen not to avail the remedies provided under the Act. 15. The reliance placed by learned counsel for the appe....