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TMI Blog2021 (4) TMI 1141X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, if we reduce the business income then we shall arrive at loss In that case the amount of ₹ 50,00,000/- will become taxable under the head income from other sources . But a set off of business loss of ₹ 49,70,470/- shall become allowable since the provision to deny set off of loss is introduced w.e.f. 01.04.2017 in section 115BBE of the Act. Even under these circumstances also, the assessee will derive the gross total income of ₹ 29,530/- . Since the case of the assessee is pertained to assessment year 2015-16, therefore, in the light of the above facts and findings, the appeal of the assessee is allowed. - ITA No. 2341/Ahd/2018 - - - Dated:- 15-2-2021 - Shri Mahavir Prasad, Judicial Member And Shri Amarjit Singh, Accountant Member For the Assessee : Shri S.N. Divatia, A.R. For the Revenue : Shri L.P. Jain, Sr. D.R. ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- This assessee s appeal for A.Y. 2015-16, arises from order of the CIT(A), Ahmedabad-5 dated 07-09-2018, in proceedings under section 143(3) of the Income Tax Act, 1961; in short the Act . 2. The assessee has raised following grounds of appeal:- 1.1 The order pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,60,66,165/- Total 1,75,28,656/- 17,86,847/- 1,57,41,811/- During the course of survey, assessee has also disclosed income of ₹ 50 lacs. During the course of assessment on verification of the return of income for the year under consideration, the Assessing Officer observed that assessee has not shown the income declared during the course of survey action. Therefore, show cause notice was issued to the assessee to explain why the undisclosed income of ₹ 50 lacs not be added to the total income. The assessee explained that the survey action was conducted on 18th December, 2014 which was not the last day of financial year and entry for stock laying with marketing team was not made in the books. The reply of the assessee discussed by the Assessing Officer in the assessment order is reproduced as under:- 2. Regarding discrepancy in stock position, it is submitted that the partner of the assessee firm had told the survey team that the stock worth about ₹ 1,60,00,000/- was with the marketing team of the assessee who were on tour for selling out-side Ahmedabad. When they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the explanation offered by him is not found satisfactory by the Assessing Officer then the value of such investment under section 69, asset, (section 69A), value of excess investment or asset section (69B) or expenditure (section 69C) may be deemed to be income of the assessee for the relevant financial year and any deduction relevant to business income is not available on such deemed income. 6. During the course of appellate proceedings before us, the ld. counsel submitted paper book comprising detail and submission made before the lower authorities during the course of assessment and appellate proceedings. The ld. counsel submitted that ld. CIT(A) has incorrectly sustained the addition after placing reliance on the decision of Hon ble Gujarat High Court in the case of Fakir Mohammad Hazi Hasan (2047 ITR 290) as in the case of the assessee declaration was made on account of discrepancies in stock which was incorrectly taken as deemed income. The ld. counsel has referred page no. 43 of the paper book explaining that income disclosed during survey of ₹ 50 lacs was duly shown in the Profit and Loss Account for the period ending on 31st March, 2015 under the head other in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f annual account of the assessee firm during the course of assessment and at the appellate stage. On perusal of the material on record, it is noticed that the lower authorities has not disproved the genuineness of the claim of incurring bank interest/bank charges expenditure during the year by the assessee firm to the amount of ₹ 74,63,173/-. During the course of appellate proceedings, the assessee has also placed reliance on the decision of following judicial pronouncements M/s. Fashion World Vs. ACIT Vide ITA 1634/Ahd/2016 dated 12.02.2010 , DCIT vs. M/s. Shah Khodi Das vide ITA No. 531/Ahd/2008 dated 25.03.2011 and CIT-II vs. Shilpa Dyeing Printing Mills P. Ltd. vide Tax Appeal No. 290 of 2013 dated 4th April, 2013 (Gujarat High Court). We have gone through the judicial pronouncements referred by the ld. counsel and noticed that the Co-ordinate Benches of the ITAT has held that where asset in which undeclared investment is sought to be taxed is not clearly identifiable or does not have independent identity but is integral and inseparable part of declared asset falling under a particular head then the difference should be treated as undeclared business income explaining t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een inserted by the Finance Act 2016 w.e.f. 01.04.2017 which specifically say that no deduction in respect of any expenditure or allowance or set off any loss shall be allowed to the assessee under any provision of the act in computing his income referred to in clause (a) of sub-section (1). In sub-section (2) of section 115BBE as introduced by Finance Act, 2012 only disallowance of expenditure or other allowance was considered against unaccounted income u/s. 68 to section 69D but business loss was not covered. It is only by Finance Act, 2016 w.e.f. 01.04.2017 it is inserted in the provision to deny benefit of set off of any loss. Therefore, in the case of the assessee, if we reduce the business income by ₹ 50,00,000/- (Income Tax Declaration During Survey) then we shall arrive at loss of ₹ 49,70,470/-. In that case the amount of ₹ 50,00,000/- will become taxable under the head income from other sources . But a set off of business loss of ₹ 49,70,470/- shall become allowable since the provision to deny set off of loss is introduced w.e.f. 01.04.2017 in section 115BBE of the Act. Even under these circumstances also, the assessee will derive the gross total i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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