9911796707
TMI Blog2020 (12) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of section 115BBE of the Act in the proceedings u/s 263. This view is supported by the decision of Hon ble jurisdictional High Court in the case of Spectra Shares and Scrips (P) Limited [ 2013 (6) TMI 173 - ANDHRA PRADESH HIGH COURT] held that merely because of difference of opinion, Pr.CIT cannot invoke his powers u/s 263. Also in G.V.R. ASSOCIATES [ 2017 (4) TMI 393 - ITAT VISAKHAPATNAM] held that the estimation of the net profit is one of the permissible methods of assessment of income from business. The Assessing Officer had taken a conscious decision of estimating the net profit from business after considering the nature and complexity of the books of account maintained by the assessee. Once the Assessing Officer had taken a conscious decision and acted in accordance with law and made the assessment, the same could not be branded as erroneous by the Commissioner, simply because according to him, the Assessing Officer should have made further enquiries. - Decided in favour of assessee. - I.T.A.No.140/Viz/2020 - - - Dated:- 23-11-2020 - Shri V. Durga Rao, Judicial Member And Shri D.S. Sunder Singh, Accountant Member For the Appellant : ShriM.V.Prasad.AR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for treating the stock as unexplained investment u/s 69 of the Act and also objected for taking up the case for revision u/s 263 of the Act and relied on the following decisions. i) Malabar Industries Co.Ltd Vs. CIT 243 ITR 83 (SC) ii) CIT Vs. Max India Ltd., 295 ITR 282 (SC) iii) Spectra Shares and Scrips P.Ltd. Vs.CIT 36 Taxmann.com 348 (HC AP) iv) CIT Vs. Srinivasa Hatcheries Pvt. Ltd., 60 Taxmann.com 207 (HC AP) v) CIT Vs. P.D.Abraham 48 taxmann.com 352 (Kerala HC) vi) Bajargan Traders Vs. ACIT ITA No.137/JP/17, dated 17.03.2017 vii) CIT Vs. S.K.Srigiri and Brothers 298 ITR 13 viii) DCIT Vs. V.Ram Narayan Birla ITA No.482/JP/2015 dated 30.09.2016 ix) Chaksi Hiralal Magan Lal Vs. DCIT 45 SOT 349 x) Daulatram Rawatmull Vs. CIT 64 ITR 593 xi) M/s A Star Exports ITA No.4411 Mumbai ITAT xii) M/s Silver Palace, Pune Vs. DCIT ITA No.893/Pun/2016 The Ld.Pr.CIT considered the explanation offered by the assessee and viewed that the objections raised by the assessee are not acceptable and accordingly viewed that the excess stock found during the course of search declared as additional income required to be taxed as undisclosed investment u/s 69 and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in the stock of diamonds is arrived at ₹ 4,76,93,912/- (₹ 4,93,39,000 - ₹ 16,45,088). In view of the foregoing, such excess stock of diamonds amounting to Rs, 4,76,93,912/- clearly partakes the character of unexplained investment and falls well within the scope and ambit of section 69 of the IT Act and, thus, attracting the provisions of section 115BBE of the I.T. Act. The assessing officer by not applying the provisions of sec 115BBE not only erred but also caused prejudice to the revenue. 8.8. That leaves us with the another issue of excess stock of precious stones / gem stones and unaccounted gold jewellery received from goldsmiths amounting to ₹ 13,51,113/- and Rs..68,960/- respectively. These two items have been declared by the assessee himself as unaccounted in the statement of computation attached with the return u/s.153A. There is also no specific explanation offered with regard to these two items during the present proceedings. Therefore, these two items declared unaccounted by the assessee himself are also treated as unaccounted investments which are liable for taxation u/s. 115BBE. The total amount thus works out to ₹ 14,20,073/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 142(1) for which the assessee has filed explanation. Referring to page No.59 to 63 of the paper book, the Ld.AR drawn our attention to the questionnaire issued by the AO specifically to the question No.4, 6 and 7, wherein, it is observed that the AO has called for explanation of the assessee as to why the sum of ₹ 6,12,46,284/- should not be added to the total income u/s 69 and apply the provisions of section 115BBE of the Act. The Ld.AR further submitted that in response to the notice issued u/s 142(1) on 23.10.2018, the assessee filed its explanation vide letter dated 12.11.2018 which was placed at page No.61 to 63 of the paper book. In the reply submitted, the assessee stated that the excess stock in question required to be taxed as business income and accordingly he has admitted the income under the head profits and gains of business. He invited our attention to its explanation in page No.61 to 63, wherein, he relied on various decisions of various High Courts, where, it was held that the stock in question required to be taxed as business income. Thus argued that the excess stock found during the course of search should be taxed as business income and this view was up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e should not be treated as undisclosed investment u/s 69 of the Act, applying the provisions of section 115BBE of the Act. The assessee filed explanation, in response to the notice issued u/s 142(1) claiming that the additional income admitted by the assessee constitute business income, the same cannot be assessed u/s section 69 and there is no case for application of the provisions of section 115BBE of the Act. For the sake of clarity and convenience, we extract relevant part of the explanation offered by the assessee before the AO which is placed at page 61 to 63 of the paper book and the same reads as under : 4. During the course of search operations it is pointed out that huge quantity of gold purchased from and claimed purification loss at 20-21 percentage which is on a higher side. Therefore in the deposition given by one of our director Sri Fazalul Rahaman Khan has accepted and voluntarily offered ₹ 86,66,619 as business income towards excess loss claimed on purification of gold. In the return of income fired we have admitted said income as our business income and claimed set oft of Joss against such income. However, its stated in the notice under section 142 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness of jewellery. In view of our submissions acceptance of excess stocks as undeclared income is to be treated at only business income and provisions of section 69 and I15BBE are not applicable in our case. 6. It is further stated that during the course of search operations on physical verification of stocks at our Visakhapatnam branch; Rajahmundry branch, excess stock of precious stones/ gems of the value ₹ 6,02,881 and ₹ 7,48,232 and excess jewellery ₹ 68.960 were found respectively as compared stock as per stock book maintained by us. In the deposition given by one our director Sri Fazalul Rahaman Khan has explained that the excess stock accumulated is due to unaccounted purchases over years. However, as he could not explain details for such variation in the said stocks accepted ₹ 14,20,073 [₹ 6,.02,881+₹ 7,48,232+₹ 68,960] as undisclosed business income. However, it is stated in the notice under section 142(1) that such unaccounted income is assessable under section 69 and liable for tax under section 115BBE and no set off of losses permitted and asked our objections if any in this regard. in this regard we submit that that the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , when two views are possible on the same issue and the AO has taken one of such views, the Pr.CIT is not permitted to substitute his view to tax the assessee at higher rate by applying the provisions of section 115BBE of the Act in the proceedings u/s 263. This view is supported by the decision of Hon ble jurisdictional High Court in the case of Spectra Shares and Scrips (P) Limited Vs. Commissioner of Income Tax III, Hyderabad (supra), the Hon ble jurisdictional High Curt in the case laws cited supra held that merely because of difference of opinion, Pr.CIT cannot invoke his powers u/s 263 of the Act. For the sake of clarity and convenience, we extract relevant part of the order of the Hon ble Andhra Pradesh High Court in para No.59 which reads as under : 59 . The contention of the Revenue that the Assessing Officer had not applied his mind to the material on record cannot be accepted because the respondent in his order dated 31.03.2011 specifically records a finding at Para 5.1 that there is application of mind by the Assessing Officer. The Revenue cannot raise a plea which is not contained in the order of the respondent and is contrary to it and to the record. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
