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2023 (11) TMI 792 - AT - Income TaxRevision u/s 263 - Taxability of surrendered income - addition u/s 68 r.w.s. 115BBE - as per CIT surrendered income was in the nature of unexplained cash and unexplained stock and the same was liable to be added as income from other sources and tax was liable to be paid @ 60% u/s 115BBE of the Act which the Ld. AO failed to do - HELD THAT - We respectfully follow the decision of the Tribunal in the case of Shri Bharat Malhotra 2022 (11) TMI 1427 - ITAT DELHI - We do not agree with the contention of the Ld. CIT-DR that the Ld. AO had not made any enquiry. We have observed that the Ld. AO had issued questionnaire along with statutory notice(s) sent to the assessee in response to which the assessee had filed written reply along with necessary documents and evidence. He perused and considered them. Not only this, the Ld. AO called for books of account which he verified. In our considered view it is not a case of no enquiry. Thus we vacate the order of the Ld. PCIT and restore the assessment order passed by the Ld. AO under section 143(3) of the Act. Decided in favour of assessee.
Issues Involved:
1. Legality of the Principal Commissioner of Income Tax's (PCIT) jurisdiction under section 263 of the Income Tax Act, 1961. 2. Validity of the assessment order passed by the Assessing Officer (AO) under section 143(3). 3. Applicability of section 115BBE of the Income Tax Act, 1961 to the surrendered income. 4. Adequacy of the AO's inquiry during the assessment proceedings. Summary: 1. Legality of PCIT's Jurisdiction under Section 263: The assessee challenged the order passed by the PCIT under section 263 of the Income Tax Act, 1961, arguing that the PCIT's action in assuming jurisdiction was illegal, bad in law, and without jurisdiction. The assessee contended that the prerequisite twin conditions under section 263'namely, the assessment order being erroneous and prejudicial to the interest of revenue'were not satisfied. 2. Validity of the Assessment Order Passed by AO: The PCIT directed the AO to make a fresh assessment, claiming the AO failed to invoke provisions of sections 68/69/69A/69B/69C/69D on the income of Rs. 90,63,000/- surrendered by the assessee. The PCIT also stated that the AO failed to inquire why the assessee paid taxes at the normal tax rate instead of the maximum marginal rate as per section 115BBE. 3. Applicability of Section 115BBE to the Surrendered Income: The PCIT argued that the surrendered income was in the nature of unexplained stock and cash, which should be taxed under section 115BBE at 60%. The assessee contended that section 115BBE could only be invoked if the income was reflected under sections 68, 69, 69A, 69B, 69C, or 69D, which was not the case here. The assessee also argued that the amendment to section 115BBE came into effect after the survey date, making its applicability debatable. 4. Adequacy of AO's Inquiry: The Tribunal noted that the AO had issued statutory notices and questionnaires, received written replies and documents from the assessee, and verified the books of account. Therefore, it was not a case of no inquiry. The Tribunal found that the AO had conducted adequate inquiries during the assessment proceedings. Tribunal's Decision: The Tribunal followed its earlier decision in a similar case (Shri Bharat Malhotra) and held that the applicability of the amended provisions of section 115BBE was a debatable issue. The Tribunal concluded that the PCIT had wrongly assumed jurisdiction under section 263. The Tribunal vacated the order of the PCIT and restored the assessment order passed by the AO under section 143(3). The appeal of the assessee was allowed. Order Pronounced: The order was pronounced in the open court on 11th September 2023.
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