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2019 (5) TMI 857 - AT - Income TaxRectification u/s 154 - surrendered amount of the assessee was subjected to tax @ normal rate OR rate as per the provisions of section 115BBE - debatable issue - HELD THAT - SHRI LOVISH SINGHAL, SHRI VASU SINGHAL, SHRI PRAMOD KUMAR SINGHAL AND SHRI VINOD KUMAR SINGHAL VERSUS INCOME TAX OFFICER, WARD-2 AND A.C.I.T., CIRCLE- SRIGANGANAGAR 2018 (5) TMI 1646 - ITAT JODHPUR held that the provisions of section 115BBE were not applicable if the surrender was made on account of excess stock found during the course of survey. So, the issue was a debatable, therefore, the CIT(A) was not justified in confirming the action of the AO for making the rectification u/s 154. Accordingly, the impugned order is set aside and it is held that the provisions of section 154 of the Act were not applicable in the present case and the AO was not justified in making the rectifications u/s 154. - Appeals of the assessee are allowed.
Issues:
1. Application of section 115BBE in surrendered income during a survey. 2. Calculation of tax at the maximum marginal rate of 30% under section 115BBE. 3. Interpretation of provisions of section 69 and 115BBE. 4. Applicability of section 154 for rectification of tax calculation. Detailed Analysis: Issue 1: The main issue revolved around the application of section 115BBE to surrendered income during a survey. The Assessing Officer invoked this provision, stating that the surrendered amount attracted tax at a rate of 30% under section 115BBE. The assessee contended that section 69 was not applicable as the unrecorded stock was later accounted for before filing the tax return. The CIT(A) upheld the AO's decision, stating that the surrendered income fell within the purview of section 69 and was deemed income until discovered during the survey. The ITAT Jodhpur SMC Bench had a similar case where it held that section 115BBE did not apply to excess stock surrendered during a survey, making the issue debatable. Issue 2: The second issue was the calculation of tax at the maximum marginal rate of 30% under section 115BBE. The assessee argued that the surrendered income was related to excess stock found during the survey and should not be taxed at the special rate under section 115BBE. The ITAT Jodhpur SMC Bench's decision supported this argument, stating that excess stock surrender should not be taxed under section 115BBE. Issue 3: Interpretation of provisions of section 69 and 115BBE was crucial in determining the tax treatment of the surrendered income. The CIT(A) considered the surrendered income falling under section 69 and deemed it taxable under section 115BBE. However, the ITAT Jodhpur SMC Bench had a different interpretation, suggesting that excess stock surrender should not be taxed under section 115BBE, making the issue debatable. Issue 4: The applicability of section 154 for rectification of tax calculation was also raised. The ITAT held that the provisions of section 154 were not applicable in this case as the issue of tax calculation at the special rate under section 115BBE was debatable. The ITAT set aside the CIT(A)'s decision and ruled in favor of the assessee, allowing the appeals of all the assessees involved in similar cases. In conclusion, the judgment highlighted the debate surrounding the application of section 115BBE to surrendered income during a survey, emphasizing the need for a thorough analysis of the provisions of section 69 and 115BBE to determine the correct tax treatment. The decision also underscored the importance of considering the debatable nature of an issue before invoking section 154 for tax rectification.
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