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2022 (9) TMI 816 - AT - Income TaxRevision u/s 263 by CIT - In view of the CIT , undisclosed cash deposits should have been treated as unexplained investment u/s. 69 instead of 8% of the receipts and taxed @30% as contemplated u/s. 115BBE - HELD THAT - As evident from the records that during the assessment proceedings, the assessee had initially agreed to offer income @8% on the cash deposits - CIT observed that later on, the assessee retracted his statements for three times and changed his version at every stage of appellate proceedings. Pr. CIT further observed that the assessee had claimed expenditure relatable to his professional receipts of the relevant year and arrived at net profit of Rs. 3,18,600/-. Hence, the Ld. Pr. CIT opined that the entire undisclosed cash deposits of Rs. 11,68,000/- should have been treated as unexplained investment u/s. 69 of the Act and taxed @30% as contemplated u/s. 115BBE of the Act instead of 8% of the receipts and treated the order of the AO as erroneous and prejudicial to the interest of the revenue. CIT has directed the AO to recompute the total income by passing a consequential order. Hence no infirmity in the order passed u/s. 263. Grounds raised by the assessee's dismissed.
Issues:
Assessment of undisclosed cash deposits as unexplained investment under section 69 of the Income Tax Act, 1961 - Jurisdiction of the Principal Commissioner of Income Tax (Pr. CIT) under section 263 of the Act - Treatment of cash deposits under section 115BBE of the Act. Analysis: 1. The appeal was filed by the wife and legal heir of the assessee against the order of the Principal Commissioner of Income Tax for the Assessment Year 2014-15. The assessee, engaged in the legal profession, had made cash deposits in his bank account, which were initially claimed to be professional receipts. The Assessing Officer accepted an 8% income on these deposits. However, the Principal Commissioner of Income Tax observed discrepancies in the treatment of these deposits and issued a show cause notice for revision under section 263, directing the AO to treat the cash deposits as unexplained investment under section 69 of the Act. The assessee contested this revision before the Tribunal. 2. The Tribunal considered the arguments presented by both parties. The assessee contended that the order passed under section 263 was erroneous and not in the interest of revenue. The Tribunal noted that the assessee had changed his statements multiple times during the proceedings and had initially agreed to offer income at 8% on the cash deposits. However, subsequent revelations led to doubts regarding the nature of these deposits. The Principal Commissioner of Income Tax directed the AO to treat the entire undisclosed cash deposits as unexplained investment under section 69 and tax them at 30% under section 115BBE. The Tribunal found no fault in this direction and upheld the order passed under section 263. 3. The Tribunal concluded that the assessee's changing statements and the discrepancies in the treatment of cash deposits warranted the revision under section 263. The Tribunal dismissed the appeal of the assessee, affirming the Principal Commissioner's decision to treat the cash deposits as unexplained investment and tax them at the prescribed rate. The order was pronounced on 19th August 2022, upholding the revision under section 263 and the consequent treatment of the cash deposits.
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