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2023 (10) TMI 552 - AT - Income TaxRevision u/s 263 by CIT - income surrendered by the appellant during the survey proceedings - As per CIT AO has not made any addition either u/s 68 or u/s 69 and failed to apply the provision of Section 115BBE - HELD THAT - AO has not made any addition either u/s 68 of the Act or Section 69 of the Act as the surrendered amount was already included by the assessee in his return of income. From the findings of learned PCIT in the impugned order, it is clear that the learned PCIT has also not specified any specific charging section under which charging section the AO should have treated the surrendered amount. nothing has been stated either in the pre-amended or in the post-amended provisions of section 115BBE of the Act that where the assessee surrendered undisclosed income during search action for the relevant year, the tax rate has to be charged as per provisions of Section 115BBE of the Act. Therefore, the applicability of the amended provision of section 115BBE of the Act, which prompted the PCIT to assume jurisdiction u/s 263 of the Act is highly debatable issue, and therefore wrongly assumed jurisdiction u/s 263. Assessment order cannot be alleged as erroneous and prejudicial to the interest of the Revenue by way of picking up the debatable issue. Assessee appeal allowed.
Issues Involved:
1. Invocation of revisionary provision of Section 263 of the Income Tax Act, 1961. 2. Taxation of income surrendered during survey proceedings under special provisions. 3. Applicability of Section 115BBE to the surrendered income. 4. Principle that when two views are possible, the one beneficial to the assessee should be taken. Summary: Issue 1: Invocation of Section 263 The assessee challenged the invocation of Section 263 by the Pr. Commissioner of Income Tax (PCIT), arguing that the PCIT erred in law. The tribunal noted that the identical issue was previously adjudicated in favor of the assessee in the cases of Balvinder Singh vs. PCIT and Yogesh Kumar vs. PCIT, where the revisionary order under Section 263 was quashed. The tribunal held that the PCIT wrongly assumed jurisdiction under Section 263 as the issue was debatable and the assessment order was neither erroneous nor prejudicial to the interest of the Revenue. Issue 2: Taxation of Surrendered Income The tribunal observed that the assessee voluntarily surrendered Rs. 30,00,000 during the survey proceedings on 17.08.2016 and included the same in the return of income for A.Y. 2017-18. The assessee argued that the surrendered income should be considered normal business income. The tribunal agreed, noting that the surrendered amount was included in the return of income and taxes were paid thereon. Issue 3: Applicability of Section 115BBE The PCIT applied Section 115BBE, which charges a higher tax rate, to the surrendered income. The tribunal found that the provision was introduced by the Taxation Laws (Second Amendment) Act, 2016, effective from 01.04.2017, after the date of the survey. The tribunal held that the amendment was prospective and not applicable to the surrendered income from the survey conducted on 17.08.2016. Therefore, the PCIT's application of Section 115BBE was incorrect. Issue 4: Principle of Beneficial View The tribunal reiterated the settled jurisprudence that when two views are possible, the one beneficial to the assessee should be taken. It cited the Hon'ble Supreme Court's decision in Malabar Industrial Co. Ltd. and the Hon'ble Bombay High Court's decision in Gabriel India Ltd., emphasizing that an assessment order cannot be termed erroneous if it is in accordance with the law, even if the Commissioner holds a different view. Conclusion: The tribunal set aside the PCIT's revisionary order and restored the assessment order dated 16.12.2019 for A.Y. 2017-18, holding that the invocation of Section 263 was not justified. The appeal of the assessee was allowed.
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