9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (12) TMI 16 - AT - Income TaxRevision u/s 263 - As per CIT taxing the income @30% on the additional income representing the unexplained investment in stock required to be brought to tax u/s 115BBE and to be levied @60% instead of 30% - search u/s 132 was conducted and excess stock was found which was admitted by the assessee as additional income - Pr.CIT viewed that the assessment order passed by the AO, taxing the income @30% instead of 60% is erroneous and prejudicial to the interest of the revenue - HELD THAT - AO caused necessary enquiries after satisfying himself that the income representing the excess stock required to be brought to tax as business income, but not u/s 69 completed the assessment proceedings. The Ld.Pr.CIT taken a different view and held that the excess stock required to be brought to tax u/s 69 thus, on the same issue, on which the AO located the excess stock represents business income, the Ld.Pr.CIT has taken a different view and made revision u/s 263 of the Act. It is settled issue that on difference of opinion, the CIT is not permitted to make revision 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 . As decided in G.V.R. ASSOCIATES VERSUS INCOME-TAX OFFICER 2017 (4) TMI 393 - ITAT VISAKHAPATNAM estimation of the net profit is one of the permissible methods of assessment of income from business. AO 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 AO 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.
Issues Involved:
1. Application of Section 115BBE of the Income Tax Act, 1961. 2. Classification of excess stock as business income or unexplained investment. 3. Validity of revision order under Section 263 of the Income Tax Act, 1961. Detailed Analysis: 1. Application of Section 115BBE of the Income Tax Act, 1961: The Principal Commissioner of Income Tax (Pr.CIT) revised the assessment order under Section 263, arguing that the Assessing Officer (AO) should have taxed the excess stock found during the search at 60% under Section 115BBE, instead of the normal rate of 30%. The Pr.CIT viewed the assessment order as erroneous and prejudicial to the interest of the revenue because the AO did not apply Section 115BBE, which mandates a higher tax rate for unexplained investments. 2. Classification of Excess Stock as Business Income or Unexplained Investment: The assessee argued that the excess stock found during the search was part of the business stock and should be taxed as business income at the normal rate of 30%. The assessee contended that the stock was mixed and not separately identifiable, thus should not be classified as unexplained investment under Section 69. The AO accepted this explanation during the assessment proceedings and taxed the income as business income. The assessee supported its argument with various case laws, including decisions from the ITAT Jaipur Bench and other High Courts, which held that excess stock found during searches should be treated as business income. 3. Validity of Revision Order under Section 263 of the Income Tax Act, 1961: The Tribunal examined whether the Pr.CIT was justified in revising the AO’s order under Section 263. The Tribunal noted that the AO had conducted detailed enquiries and consciously decided to treat the excess stock as business income. The Pr.CIT’s revision was based on a different opinion regarding the classification of the excess stock. The Tribunal cited the jurisdictional High Court's decision in Spectra Shares and Scrips (P) Limited v. Commissioner of Income Tax, which held that a difference of opinion does not justify revision under Section 263. The Tribunal also referred to its own decision in G.V.R. Associates v. Income Tax Officer, which supported the AO’s discretion in estimating business income. Conclusion: The Tribunal concluded that the AO had made a conscious decision after due enquiry to classify the excess stock as business income. The Pr.CIT's revision under Section 263 was based merely on a difference of opinion, which is not permissible. Therefore, the Tribunal set aside the Pr.CIT’s order and allowed the appeal of the assessee, confirming that the excess stock should be taxed as business income at the normal rate of 30%. Order: The appeal of the assessee is allowed, and the order of the Pr.CIT passed under Section 263 is set aside. The Tribunal pronounced the order in the open court on 23rd November 2020.
|
