TaxTMI 
TaxTMI 
2025 (4) TMI 1977
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....rary and unjustified. 3. That the Ld. Commissioner of Income Tax (Appeals) has further erred in law as well as on facts in upholding the charging of tax @ 60% applying the provisions of Section 115BBE which are not applicable in the facts of the case and as such the order is arbitrary and unjustified. 4. The Ld.CIT(A) has not given any finding on the following additional grounds of appeal raised before him- * The Ld. AO completed the assessment accepting the returned income, notwithstanding the fact that the assessee had inadvertently included all discrepancies found during survey, believing them to constitute his income. * The Ld. AO failed to appreciate that the income included in his ITR by the assessee, under a mistaken belief, was not the legitimate income which ought to have been taxed. * The Ld. AO has erred in not levying the tax lawfully on the income of the assessee comprised in the items of surrender and taking the benefit out of ignorance of the assessee. * The Ld. AO instead of taxing the income to the extent of gross profit comprised therein, in respect of unrecorded debtors which represented unrecorded credit sale....
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....gular books of accounts of the assessee. In his statement recorded during the survey proceedings, the assessee had accepted these discrepancies and offered total undisclosed income of Rs. 1,60,11,143/- under the various head for the A.Y 2019-20. The details of the same are as under:- 1. Unaccounted cash Rs, 8,90,053/- 2. Unaccounted sales Rs. 16,00,000/- 3. Unaccounted cash payments to creditors Rs. 33,71,090/- 4. Unaccounted cash payment to debtors Rs. 61,50,000/- 5. Unaccounted investment in Construction of hostel Rs. 40,00,000/- Total Rs. 1,60,11,143/- The assessee had included this offered income of Rs. 1,60,11,143/- in his total income under the head "Income from Business or Profession" in ITR filed for the relevant year and paid tax at normal rate thereon. As the unaccounted/unexplained investment in cash payment to creditors/debtors & investment made in construction of hostel are covered u/s 69 and unexplained excess cash is covered u/s 69A of the I.T. Act, therefore tax should be charged as per the provision of section 115BBE of I.T. Act 1961. 3.2 During the assessment proceedings, a show cause notice was is....
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....y the order of AO, the assessee preferred appeal before the ld. CIT (A). The ld. CIT (A) after considering the submissions of the assessee, partly allowed the appeal of the assessee and deleted the addition on account of excess cash found for Rs. 8,90,053/-. 4. Aggrieved from the order of the ld. CIT(A), the assessee has preferred this appeal before the us, on the grounds as mentioned in para 2 above. In support of the grounds of appeal, the ld. AR of the assessee has submitted the following written submission:- " Submission on the grounds of appeal Ground No. 1 to 3 being interrelated, have been taken together, which are - That the order of the Ld. CIT (A) is erroneous, arbitrary, opposed to the facts of the case and thus untenable. The Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in treating the income of Rs. 1,35,21,090/- surrendered during the course of survey to be deemed income u/s 69 and 69A of the Act as against business income, which is arbitrary and unjustified. That the Ld. Commissioner of Income Tax (Appeals) has further erred in law as well as on facts in upholding the charging of tax @ 60% applying the provisions o....
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....;ा हूँ कि अघोषित राशि मेरे व मेरे भाई द्वारा व्यावसायिक गतिविधियों से अर्जित की गई है जो कि इस वित्तीय वर्ष से सम्बंधित है। During the course of assessment proceedings, the AO issued a show cause notice dated 30.11.2019 stating that the assessee had included this offered income of Rs. 1,60,11,143/- in his total income under the head "Income from Business or Profession" in ITR filed for the relevant year and paid tax at normal rate thereon. As the unaccounted/unexplained investment in cash payment to creditors/debtors & investment made in construction of hostel are covered u/s 69 and unexplained e....
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....ctions 69 & 69A. While assessing the income of the assessee, the Assessing Officer has wrongly applied the sections, as when he was assessing the income, entries in the books of account existed and the assessee has given the proof of the same during assessment proceedings by producing complete books. As regards asking for the source of investment by the Assessing Officer, it has been submitted that the source of investment was purely from the business in which the assessee is engaged. The assessee having disclosed the income and having filed the return including the income offered during survey, there arises no question of undisclosed income. For the above proposition the assessee relies on the decision of the Ahemdabad Tribunal in the case of DCIT vs. Dr Satish B Gupta (2011) 49 DTR 262, order dated 06.08.2010. In this case the assessee declared income in the return of income as offered during the course of survey under section 133A - held section 133A is an action for calling of information, in itself it is not a proceeding. There can be no undisclosed income until there is duty to disclose. The duty to disclose income arises only at the time when the assessee furnishes ....
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....closed income and the reasonability of the explanation so offered by the assessee keeping into account the facts and circumstances of the relevant case. In fact, if we look at the provisions of section 133A, clause (iii) of sub-section (3) provides that an income tax authority acting under this section shall record the statement of any person which may be useful for or relevant to any proceedings under this Act. Therefore, what explanation has been offered by the assessee as part of his statement recorded u/s 133A needs to be analyzed and examined before drawing any conclusions in this regard. Through various questions raised during the survey, the assessee was asked about the nature and source of its income and the various discrepancies found during the survey. In response, vide his statement recorded during the survey, on 11.09.2018, the assessee stated that he is the proprietor of Monica Electricals and his firm deals in electric & electronic goods and that there was no other source of income. He was confronted with the discrepancies found in terms of excess cash, short stock, receivables, payables and investment made in construction of hostel. Rather, the assessee was ....
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....;t mandate the Assessing officer to automatically invoke the deeming provisions and before invoking the deeming provisions, he has to 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. Firstly, how the Ld. AO has arrived at a conclusive finding that the discrepancies found, confronted and accepted by the assessee during the course of survey attract the deeming provisions of section 69 & 69A, is not apparent from the impugned order. Merely stating "As the unaccounted/unexplained investment in cash payment to creditors/debtors & investment made in construction of hostel are covered u/s 69 and unexplained excess cash is covered u/s 69A of the I.T. Act, therefore tax should be charged as per the provision of section 115BBE of I.T. Act 1961" is like an open ended hypothesis which is not supported by any specific finding that the matter shall fall under which of the specific sections and how the conditions stated therein are satisfied before the said provisions are invoked. It is like laying a general rule, which is beyond the mandate of law, that wherever there is a surv....
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....come. These cheques were later returned to the assessee by the department after the due tax had been fully deposited by the assessee. It is further submitted that the additional business income was duly recorded in the Profit & Loss Account which has been duly audited by the Chartered Accountant and on the basis of the same, the business income as per the Profit & Loss Account has been reflected under the head 'Profit & Gains of business and profession' and tax return has, accordingly, been filed. The book results of the assessee have been accepted by the department. It is further submitted that the names of the creditors found noted in the diary to whom payments have been made and those appearing in the regular books are the same. This clearly proves that the income pertains to the Electric/electronic business of the assessee. In terms of applicability of Section 69, it is submitted that these provisions are not attracted in the instant case as the assessee during the course of survey proceedings had disclosed the source of income in relation to the above income and this disclosure forms part of the statement recorded by the authorities during the course of survey....
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.... thus, what is not declared to the department is receipt from business and not any investment as it cannot be co-related with any specific asset and the difference should, thus, be treated as undeclared business income. In the instant case, the surrender on account of advances were relating to the business being carried on by the assessee. The Commissioner (Appeals) has also returned a finding that the advances were admitted as being related to business activity of the assessee. Where the same has been found unrecorded in the books of account, the same has to be brought to tax under the head "business income". The income surrendered during the course of survey cannot be brought to tax under the deeming provisions of sections 69 and 69A and the same has been rightly offered to tax under the head "business income". In absence of deeming provisions, the question of application of section 115BBE doesn't arise for consideration. Famina Knit Fabs vs. ACIT[2019] 176 ITD 246/104 taxmann.com 306 (Chd Trib) In this case, the Hon'ble ITAT held that where during the course of survey, a surrender was made by the assessee on account of debtors/receivables which was based on a di....
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.... Trib.) In this case the assessee surrendered an amount of Rs. 70 lacs as additional income during the course of survey conducted at its premises on account of following heads: I. Discrepancy on account of cash found II. Discrepancy on cost of construction of building III. Discrepancy in stock IV. Discrepancy in advances and receivable The issue before the Hon'ble ITAT was whether the income of Rs. 70 lacs surrendered is to be taxable as business income or income from other sources or as deemed income under sections 69A, 69B and 69C of the Act as held by the A.O. It was held that Nowhere in his order the A.O. has been able to bring on record the fact that the income surrendered during the course of survey was not out of the business of the assessee. Also nowhere he has objected to the heads under which the assessee had surrendered these amounts, i.e. cash, construction of building, discrepancy in stock and discrepancy in advances and receivable. Further, even the survey team has not found any source of income except the business income. Now, following the judgment of Jurisdictional High Court, in the background of the facts of the pr....
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....hich were not recorded in the regular books of accounts. When these entries were confronted to the appellant while recording of the statement on 11.09.2018, it was stated: "that these entries are sundry receivables which has not been accounted for in the books of accounts, these cash receipts is surrendered as income under the head business for F.Y.2018-19 Clearly, it is evident from the above that the surrender was on account of debtors/receivables relating to the business of the assessee only. The Revenue has accepted the surrender as such, as being on account of receivables. It follows that the debtors were generated from the sales made by the assessee during the course of carrying on the business of the assessee, which was not recorded in the books of the assessee. Though the said income was not recorded in the books of the assessee but the source of the same stood duly explained by the assessee as being from the business of the assessee. Even otherwise no other source of income of the assessee is there on record either disclosed by the assessee or unearthed by the Revenue. Similar is the position with creditors found recorded in this diary at Page 3 to 6. The assessee had stat....
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....ciding the issue has held- The cash advances given to the various persons of Rs. 61,50,000/-, cash payments to creditors of Rs. 33,71,090/- and investment made in construction of hostel of Rs. 40,00,000/- are nowhere related to business activity(Page-14) It may be mentioned that the assessee never gave cash advances to anybody. The Ld.CIT(A) has completely misjudged the issue. The impugned amount of Rs. 61,50,000/- were his debtors on account of goods sold to them. This can be very well inferred from the fact that all the names mentioned in the list of creditors in impounded diary are the same as appearing as Creditors in his regular books. He has finally held - The argument of the appellant are not found to be acceptable. The decisions relied upon by the appellant is not found to be applicable on the facts of the case(Page-16) He has failed to distinguish a single case out of the 10 odd cases relied upon by the assessee. The order of Ld.CIT(A) is erroneous, arbitrary and perverse. The assessee finally relies on the latest judgement rendered by the jurisdictional Jaipur Bench on 01.08.2024, in the case of Mukesh Kumar Saini vs. PCIT(Central), in ITA No. 477/JP/2024. In vie....
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....e course of survey, in reply to Q.No. 19 the assessee stated that during the year, he had paid off certain creditors in cash. He further deposed that he has paid this amount out of his undisclosed income. Thereafter, in reply to Q.No. 20, he deposed that he had to receive certain amounts from these debtors. He has further deposed that he is including these cash receipts(from debtors) in his undisclosed income. In reply to Q.No. 21, the assessee deposed that he had made advance payment towards labour and material for construction of hostel, which has been earned from business activities. Finally, after the conclusion of his statements, he again clarified that the income surrendered during survey has been earned from his business activity during the year. Tax can only be levied on the legitimate income of the assessee Your Honors, the Revenue can not be allowed to take advantage of the mistake of the assessee. Tax can only be levied on the actual and legitimate income of the assessee. It is not that income and expenditure out of that income, can be taxed simultaneously. There is a marked difference between income and application of income. The assessee, in the instant case h....
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.... But then, assessed income can be lower than returned income as has been held by Hon'ble Gujarat High Court in the case of CIT vs. Milton Laminates Ltd. in Appeal No.1022 of 2010. Reference in this regard is further made to the decision of Gujarat High Court in case of Gujarat Gas Ltd vs. JCIT (2000) 245 ITR 84 which has considered the CBDT circular no. 549 dated 31 October 1989 providing that the assessed income shall not be less than the returned income and directed the AO to make the assessment without keeping in mind the said Circular. It is prayed that necessary relief may kindly be provided by ordering the AO to charge the legitimate tax. " 4.1 To support the various contentions so raised by the ld. AR of the assessee in the written submission, he also relied upon the following evidences:- S. No. Particulars Page No. 1. Copy of ITR and Computation 1-3 2. Copy of P & L Account 4 3. Copy of diary found during survey 5-14 4. Copy of relevant extracts of statement recorded during survey 15-18 5. On the other hand, the ld. DR supported the orders of the lower authorities. 6. We have heard the rival submissions, perused....
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....75090/- 4. देनदार रू.6150000/- और हॉस्टल निर्माण हेतु अग्रिम मुकेश आहूजा 40 लाख, राजेश आहूजा 40 लाख मैं पुनः इस सम्बन्ध में स्पष्ट कर रहा हूँ कि अघोषित राशि मेरे व मेरे भाई द्वारा व्यावसायिक गतिविधियों से अर्जित की गई है जो कि इस....
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.... the assessee which is why it is requested not to deem the same as taxable under section 115BBE" The contention of the assessee that after the survey, the entries in the books of account has been passed and the books have been accordingly updated. Cash has been increased in the books of account, amount of debtors has been entered in the books of account as due from parties, the creditors have been reduced, the value of construction made has been increased and entry relating to the stock has also been passed in the books of account. So, once all the entries have been incorporated in the books of account, the same will be out of the preview/purview of sections 69 and 69A. Thus, while assessing the income of the assessee, the AO wrongly applied the sections, as the entries in the books of account existed and the assessee has given the proof of the same during assessment proceedings by producing complete books. As regards asking for source of investment, the assessee explained that the investment was made from his business wherein he is engaged. The assessee having disclosed the income and having filed the return including the income offered during survey, there arises no question o....
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....sclosed asset which existed independently and thus, what is not declared to the department is receipt from business and not any investment as it cannot be co-related with any specific asset and the difference should, thus, be treated as undeclared business income. In the instant case, the surrender on account of advances were relating to the business being carried on by the assessee. The Commissioner (Appeals) has also returned a finding that the advances were admitted as being related to business activity of the assessee. Where the same has been found unrecorded in the books of account, the same has to be brought to tax under the head "business income". The income surrendered during the course of survey cannot be brought to tax under the deeming provisions of sections 69 and 69A and the same has been rightly offered to tax under the head "business income". In absence of deeming provisions, the question of application of section 115BBE doesn't arise for consideration. Famina Knit Fabs vs. ACIT[2019] 176 ITD 246/104 taxmann.com 306 (Chd -Trib) In this case, the Hon'ble ITAT held that where during the course of survey, a surrender was made by the assessee on account ....
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.... Ltd. v. ACIT[2017] 82 taxmann.com 337 (Chd. - Trib.) In this case the assessee surrendered an amount of Rs. 70 lacs as additional income during the course of survey conducted at its premises on account of following heads: I. Discrepancy on account of cash found II. Discrepancy on cost of construction of building III. Discrepancy in stock IV. Discrepancy in advances and receivable The issue before the Hon'ble ITAT was whether the income of Rs. 70 lacs surrendered is to be taxable as business income or income from other sources or as deemed income under sections 69A, 69B and 69C of the Act as held by the A.O. It was held that Nowhere in his order the A.O. has been able to bring on record the fact that the income surrendered during the course of survey was not out of the business of the assessee. Also nowhere he has objected to the heads under which the assessee had surrendered these amounts, i.e. cash, construction of building, discrepancy in stock and discrepancy in advances and receivable. Further, even the survey team has not found any source of income except the business income. Now, following the judgment of Jurisdictional High C....