9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (10) TMI 747 - AT - Income TaxRevision u/s 263 - non application of Sections 69 and 115BBE by AO - HELD THAT - In the instant case, admittedly assessee has only one source of income and therefore, looking into the instant facts, in our considered view the Assessing Officer has not erred in facts and law in not invoking the provisions of Section 115BBE of the Act. Further, we also observe that in the instant case, the survey was conducted on the assessee on 23.09.2016, whereas the amendment in Section 115BBE came into force on 15.12.2016 and therefore, on this count as well, the AO has not erred in facts and in law invoking provisions of Section 115BBE of the Act which came into force only from 01.04.2017. It would be useful to club the relevant extracts of the case of Samir Shantilal Mehta 2023 (5) TMI 1279 - ITAT SURAT wherein on identical set of facts, the ITAT made as held since the search in the case of the assessee was carried out before the amendment the addition ought to have been made in terms of the prevailing provision and therefore, the addition made by the assessing officer invoking section 115BBE, provision of which came into force only on 01.04.2017 is not sustainable. Thus we are of the considered view that the assessment order is not erroneous in so far as and prejudicial to the interest of the Revenue and accordingly, the appeal of the assessee is allowed.
Issues Involved:
1. Jurisdiction under Section 263 of the Income Tax Act. 2. Erroneous and prejudicial nature of the assessment order. 3. Applicability of Section 115BBE and Section 69 of the Income Tax Act. 4. Set-off of business losses against undisclosed income. Issue-wise Analysis: 1. Jurisdiction under Section 263 of the Income Tax Act: The primary issue was whether the Principal Commissioner of Income Tax (PCIT) rightly assumed jurisdiction under Section 263, which allows revision of an assessment order if it is erroneous and prejudicial to the interests of the Revenue. The Assessee argued that the conditions for invoking Section 263 were not met since the assessment order was neither erroneous nor prejudicial. It was contended that the Assessing Officer (A.O.) had conducted a thorough inquiry during the assessment proceedings and had taken a legally plausible view. The Tribunal concluded that the PCIT erred in assuming jurisdiction under Section 263, as the assessment order was neither erroneous nor prejudicial to the Revenue. 2. Erroneous and Prejudicial Nature of the Assessment Order: The PCIT claimed that the A.O.'s failure to tax the unaccounted income under Section 115BBE and the improper set-off of business losses rendered the assessment order erroneous and prejudicial to the Revenue. However, the Assessee provided evidence that the A.O. had adequately scrutinized the details during the assessment, including the nature of business, sources of income, and the reconciliation of stock. The Tribunal found that the A.O. had conducted necessary inquiries and accepted the Assessee's explanations after proper application of mind. Thus, the assessment order was not erroneous or prejudicial. 3. Applicability of Section 115BBE and Section 69 of the Income Tax Act: The PCIT argued that the undisclosed income should have been taxed under Section 115BBE, which mandates a higher tax rate for certain undisclosed incomes. The Assessee contended that the income disclosed during the survey was business income and not liable to be taxed under Section 69 or 115BBE. The Tribunal agreed with the Assessee, noting that the income was recorded in the books and related to business operations. Furthermore, the amendment to Section 115BBE, which increased the tax rate, was not applicable as it came into force after the survey date. 4. Set-off of Business Losses Against Undisclosed Income: The PCIT challenged the set-off of business losses against the undisclosed income, citing Section 115BBE(2). The Assessee argued that no such set-off occurred, as the final profit exceeded the disclosed amount. The Tribunal found that the Assessee had appropriately recorded the income and losses, and there was no basis for denying the set-off. The Tribunal also noted that the Assessee had only one source of income, which was business income, and thus the provisions of Section 115BBE were not applicable. Conclusion: The Tribunal allowed the Assessee's appeal, concluding that the assessment order was not erroneous or prejudicial to the interests of the Revenue. The PCIT's invocation of Section 263 was deemed unjustified, and the A.O.'s original assessment was upheld. The Tribunal emphasized that the Assessee's income should be treated as business income, and the amendments to Section 115BBE were not applicable due to their prospective nature.
|
