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TMI Blog2020 (10) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... ness transactions were recorded in the books of account and the assessee either earned commission or profit on all those Real Estate transactions. The income earned from the Real Estate transactions was claimed to be utilized for making the investment in the property. In the present case it is not brought on record to substantiate that the said income was utilized by the assessee elsewhere and not in the investment of the property. Therefore we are of the view that the A.O. was not justified in taxing the aforesaid income of ₹ 1 Crore separately particularly when nothing is brought on record to substantiate that the assessee had made separate investment different from the income earned on real estate transactions recorded in the pocket diary found seized during the course of search. A.O. is directed to tax the entire surrendered income of ₹ 3.64 at the normal rate of tax. Direction given by CIT(A) to the A.O. to bring to tax the amount of ₹ 2.64 Crores u/s 115BBE - HELD THAT:- In the present case the assessee on the basis of the Real Estate transactions recorded in the pocket diary found seized during the course of search surrendered the income amounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts of the case in brief are that the assessee belongs to M/s AP Group of Companies where search and seizure operation had been conducted on 31/08/2016 and certain documents were seized including the valuables like jewellery, cash etc. During the course of search proceedings gold jewellery worth ₹ 77,08,316/- was found out of which jewellery wroth ₹ 31,63,785/- had been seized alongwith cash of ₹ 1,51,600/-, a pocket diary was also found seized which contained the details of certain real estate transactions and profit earned thereon including commission thereof by the Directors of the company i.e; the assessee and his father Shri Ravi Nandan Goyal, the said diary was duly confronted to the assessee. In his statement the assessee surrendered profit earned on real estate transactions amounting to ₹ 3.64 Crore. The assessee furnished the return of income on 05/08/2017 declaring an income of ₹ 4,35,71,070/- which included additional income surrendered under section 132(4) of the Act amounting to ₹ 3.64 Crore. 4.1 During the course of assessment proceedings the A.O. confronted the assessee with the details of certain balance sheets of other c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers. Q.9 Please explain source of Investment made In immovable properties by you and your family members along-with documentary evidence and also state about the manner of earnings. Ans. The source of investments is out of commission income earned from real estate transactions in past. There is no documentary evidence available with me as real estate transactions were entered into by me and family members on the basis of agreements (Biana) which were destroyed after completion of transactions. But the details of the transactions are mentioned in the diary. However, to buy peace of mind and to avoid litigation with the department, I hereby voluntarily offer commission income as well as profit earned on real estate transactions as an additional income of ₹ 2.64 Cr. (₹ 30 lacs as commission Income and 2.34 Cr. as profit earned from real estate transactions) over and above my normal income for the F.Y. 2016-17 relevant to A.Y. 20I7-18 subject to no penal action. It is further emphasized that these transactions were entered by me in my individual capacity and nothing to do with the company I.e. M/s A.P. Refinery Pvt. Ltd. Q.10. I would like to reiterate again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 1 Crore is being added back separately u/s 69 as unaccounted investment as declared by the assessee and it is being charged to tax separately u/s I15BBE @ 60% as mentioned above. Accordingly the A.O. assessed the sum of ₹ 1.00 Crore under section 115BBE @ 60% and the remaining income amounting to ₹ 3,35,71,070/- shown by the assessee was charged to tax separately. 5. Being aggrieved the assessee carried the matter to the Ld. CIT(A) and submitted as under: Sub: - Written submission in the case of Sh. Bhuwan Goyal, Ludhiana for the A.Y. 2017-18. This is with reference to an appeal filed in the case of Sh. Bhuwan Goyal (herein after referred to as the appellant ) against intimation under Section 143(3) of the Income-Tax Act, 1961 for the captioned assessment year. Brief Facts The appellant is an individual and earned income from Salary, Interest from Banks and income from other sources. For the previous year relevant to assessment year 2017-18, the appellant filed his return of income on 05.08.2017 declaring income at ₹ 4,35,71,070/-. The same included a sum of ₹ 3.64 Crores declared as additional income while making stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted which is being reproduced as under :- 1. The assessee, amongst other companies, is a Director in the company M/s A.P Refinery Private Limited, which is a pioneer in the field of Rice Bran Oil (RBO), with over a decade of experience in the industry. Starting operations as a solvent extraction plant for Rice Bran in 1998, the Company has developed capabilities across the edible oil refining value chain. The company set up a refinery in 2008 at Jagraon in the district of Ludhiana, India's highest paddy yielding area. The company also generates employment to large number of workers from various background in Ludhiana/Jagraon. 2. Prior to entering into refinery business, the family was doing similar businesses. The family was always engaged in business activities and has, over the period of years have acquired acumen and expertise in various business including real estate. Due to having business acumen and the network, the family acquired immense knowledge of certain real estate transactions. Keeping this in mind and looking into the nature of business activities during the year under consideration, the family carried out some real estate business which was received a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purview of Section 69, it would be important to review the said provisions, which are reproduced herein: Unexplained investments. 69. Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books o f account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year. (Emphasis Supplied) 10. From a perusal of the above provisions, it is noted that the said provision is applicable, when the assessee has made an investment, which is not recorded in the books of accounts maintained by him, the rigors of Section 69 may be attracted. 11. In the instant case, a. There is no investment of the assessee arising out of the said transaction b. A perusal of the documents in Annexure A-l, there is no mention of any investment, but only of receipt of money as profit or commission and accordingly income cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of real estate and not towards any unexplained investments. 14. It is also submitted that with respect to the diary/book which is being used to fasten a liability on the assessee, if the amounts are to be believed then the description and nature is also to be believed and if the description/nature is to be disbelieved, the entire amount offered to tax deserves not to be treated as income and accordingly income to be recomputed. 15. It is respectfully further submitted that the provisions of section 69 of the Income Tax Act 1961 would not apply to the income offered under section 132(4) of the Act as the income from real estate business found recorded in the diary/spiral note for the period 01.04.2016 to prior to the date of search i.e. 31.08.2016 which is the current year's business income and under no circumstances could be treated as deemed income. 16. If the proposed invocation of deeming provision(s) and consequently section 115BBE is accepted then, the income declared shall become non-est because- (i) Unexplained income, investment or expenditure alone could be deemed income as a result of invocation of deeming provisions by the Assessing Officer, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded the search was concluded. The assessee has honoured the surrender made of the real estate business and paid the legitimate taxes on this income and now proposal for invoking the provisions of section 69 read with 115BBE of the Income Tax Act, 1961, by not accepting these statements made during the course of search seriously jeopardizes the present business activities of the family and heavy tax liability on account of no fault of the assessee(s) shall cause genuine hardship and irreparable damage. In view of above facts and circumstances of the case it is respectfully prayed that section 69 of the Income Tax Act 1961 read with section 115BBE is not applicable to the facts of the case of the assessee and the impugned notice issued may kindly be filed/dropped. After considering above mentioned reply to the show cause notice, the Ld. Assessing Officer proceeded to treat the amount of ₹ 1.00 Crore as Unexplained Investment and taxed as per the provisions of Section 115BBE. The observation of the Ld. Assessing Officer in this regard was that the appellant could not be able to furnish the relevant details of what actually constituted the transactions in the real e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicable and the additional income declared by the assessee is not liable to tax as per the provisions of section 155BBE of the Act. Further the reliance is also placed on the judgement of the Hon'ble ble Apex Court in the case of CIT Vs M/s Vatika Township Private Limited reported in 367 ITR page 466 wherein it has been held that it is a settled law that any amendment which increases the tax burden of the assessee has to be considered prospective and not retrospective. Also, the legislations which modify accrued rights or which impose obligations or which impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect. It further held in para 39 (c) that If the concerned provision of the taxing statute is ambiguous and vague and is susceptible to two interpretations, the interpretation which favours the subject as against there the revenue, has to be preferred. The appeal may kindly be decided in the light of the submissions made above. 6. Ld. CIT(A) after considering the submissions of the assessee observed that as per the seized documents assessee had accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to be considered prospectively and not retrospectively, the Ld. CIT(A) observed that the A.O. had invoked the provisions of Section 115BBE of the Act as amended by the Taxation Laws (Second Amendment)Act, 2016 with effect from 01/04/2017. Therefore the amended provisions were applicable for the A.Y. 2017-18 and there was no infirmity in the action of the A.O. in applying the same to the case of the assessee. 6.3. Ld. CIT(A) also directed the A.O. to take necessary action on paying the tax on the income amounting to ₹ 2.64 also, under section 115BBE of the Act by observing as under: Before concluding it is relevant to mention that in the show-cause notice dated 26.12.2018, the AO mentioned that from the statement of the assessee, it was apparent that the assessee did not maintain any details regarding the real estate transactions carried on and accordingly amount of ₹ 3.64 crore has been declared as additional income u/s 132(4) over and above the normal income for A.Y. 2017-18. Thus as per AO the amount declared u/s 132(4) was liable to be assessed u/s 69 of the IT Act and chargeable to tax as per provision of Section 115BBE. It is however noted the AO has char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... below and further submitted that the assessee surrendered an income of ₹ 3.64 Crores during the course of search in his statement recorded under section 132(4) of the Act and disclosed the source of the transactions which was commission income and profit earned from Real Estate transactions recorded in the pocket diary found seized during the course of search. It was emphasized that the Real Estate transactions from which the assessee earned undisclosed income were recorded in the seized pocket diary which has been accepted by the A.O. also who considered the sum of ₹ 2.64 Crores as income earned from commission and profit from Real Estate Business but did not accept the remaining amount of ₹ 1 Crores which was in the form of investment the source of which was the commission and profit earned from Real Estate business and the same was accepted by the Department, as such the provisions of section 115BBE of the Act were not applicable. It was further submitted that the assessee deposited the advance tax on the entire income offered for taxation under section 132(4) of the Act which had been accepted by the department therefore the A.O. was not justified in conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) the amount of income-tax calculated on the income referred to in clause(a) and clause(b), at the rate of sixty per cent; and (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause(i). 2. Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed to the assessee under any provision of this Act in computing his income referred to in clause(a) and clause (b) of sub-section (1). From the aforesaid provisions it would be clear that the provisions of Section 115BBE (1)(a) of the Act are applicable to the income which is referred in section 68, 69, 69A, 69B, 69C or 69D reflected in the return of income furnished under section 139 of the Act. However, in the present case no such income was reflected in the return filed under section 139 of the Act rather the income was declared in the return filed under section 153A of the Act after the search. The assessee declared the income under section 132(4) of the Act and disclosed the same in the return of income filed under section 153A of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t aside and the A.O. is directed to tax the entire surrendered income of ₹ 3.64 at the normal rate of tax. 11. Vide Ground No. 3, the grievance of the assessee relates to the direction given by the Ld. CIT(A) to the A.O. to bring to tax the amount of ₹ 2.64 Crores under section 115BBE of the Act. 12. As regards to this issue Ld. Counsel for the assessee submitted that the Ld. CIT(A) has no power to restore the matter to the A.O. under section 251(1)(a) of the Act and if he was satisfied then he should have brought the aforesaid amount to tax under section 115BBE of the Act himself. It was further submitted that the assessee declared the income from Real Estate business which was recorded in the pocket diary found seized during the course of search and it was not the investment recorded in the books of account, therefore the provisions of section 115BBE of the Act were not applicable on the said income of ₹ 2.64 Crores. 13. In his rival submissions the Ld. Sr. DR supported the impugned order passed by the Ld. CIT(A). 14. We have considered the submissions of both the parties and perused the material available on the record. In the present case the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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