2024 (1) TMI 1197 - HC - Income Tax

Revision u/s 263 - Taxability of income disclosed in survey proceedings u/s 133A at Higher Rate of tax u/s 115BBE - While deleting the addition, ITAT found that there was nothing stated in either pre-amended or post-amended provision of Section 115BBE that when the assessee surrendered undisclosed income during the search action for the relevant years, higher tax rate is required to be charged. HELD THAT - In the facts of the case, during the course of assessment proceedings, as the Assessing Officer had made due inquiries and was aware of the fact that the assessee had disclosed the income as business income in his return of income in respect of which it had claimed expenditure in relation to interest and remuneration paid to partners and after making inquiries, Assessing Officer allowed the claim of the assessee by treating undisclosed income found during the survey as assessee s business income and in view such finding of facts arrived at by the Tribunal, we are of the opinion that no substantial question of law arises from the impugned order of the Tribunal. Decided against revenue.

Summary

Issues:
1. Interpretation of provisions under Section 263 of the Income Tax Act regarding treatment of disclosed income as business income.
2. Consideration of judicial precedents and applicability of Section 115BBE in revising assessment orders.

Issue 1:
The appellant revenue challenged the order of the Income Tax Appellate Tribunal (ITA) quashing the order under Section 263 of the Income Tax Act, contending that the disclosed income should have been taxed under Section 115BBE rather than treated as business income, despite provisions from section 68 to 69D r.w.s. 115BBE.

Details:
During the Assessment Year 2015-16, a survey was conducted at the assessee's premises, leading to a disclosure of Rs. 75,15,000. The Principal Commissioner of Income Tax (PCIT) revised the assessment order, directing the Assessing Officer to tax the disclosed amount under Section 115BBE instead of treating it as business income. However, the Tribunal dismissed the appeal, citing judicial precedents and the assessing officer's due inquiries, concluding that the PCIT erred in invoking Section 263 provisions.

Issue 2:
The Tribunal's consideration of judicial precedents and applicability of Section 115BBE in revising assessment orders under Section 263 of the Income Tax Act.

Details:
The Tribunal highlighted various judicial precedents, including cases from different High Courts and Tribunals, to support its decision in dismissing the appeal. It emphasized that the assessing officer had made sufficient inquiries during the assessment proceedings and allowed the claim of the assessee by treating the undisclosed income as business income, in line with relevant provisions and judicial interpretations. The Tribunal found no substantial question of law arising from the impugned order and consequently dismissed the appeal for lack of merit.

This summary encapsulates the key issues, details, and outcomes of the judgment delivered by the Gujarat High Court, addressing the interpretation of relevant provisions and judicial precedents in the context of income tax assessments.