9911796707
TMI Blog2021 (7) TMI 1171X X X X Extracts X X X X X X X X Extracts X X X X ..... and thereafter only the same can be treated as business income and as per section 71 of the Act, the losses can be set off against business income only , needful was not done, hence the income disclose during the survey for the cost incurred for development appellate is required to be treated as investment made outside the books of account and is required to be held as income from any other sources. Hence the set off the business losses can not be permitted against the income from any other source.See M/S KIM PHARMA (P) LTD. VERSUS COMMISSIONER OF INCOME TAX. PANCHKULA AND ANOTHER [ 2013 (1) TMI 495 - PUNJAB AND HARYANA HIGH COURT] - Decided against assessee. - I.T.A. No. 702/Asr/2013 - - - Dated:- 7-7-2021 - Sh. Laliet Kumar, Judicial Member And Dr. M. L. Meena, Accountant Member For the Appellant : Sh. Surinder Mahajan, C. A. For the Respondent : Smt. Ratinder Kaur, D. R. ORDER PER LALIET KUMAR, J.M. This appeal of the assessee is directed against the order dated 10.09.2013 passed by the Commissioner of Income Tax (Appeals)-1, Ludhiana in respect of A.Y. 2009-10. 2. Grounds of appeal: 1. A. That Learned Commissioner of Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 44.70,775/- and assessee explained vide his letter dated 26.12.2011. Page 11 of paper book .That detailed chart of calculation of cost of land sold charged to profit loss account was also filed, Page 12 of paper book. From the chart , the AR of the assessee had submitted that total cost of land development expenses which included ₹ 83,00,000/- surrendered during survey have been charged to total saleable land measuring 468 Marlas, out of which 79.83 Marlas was sold during the. year under consideration. It was further submitted that out of ₹ 83,00,000/- surrendered. during survey on account of development expenses ₹ 14,15,788/- (83,00,000/468*79.83) have been charged to cost of land sold balance ₹ 68,84,212/- have been charged to closing stock. 6. The assessing officer was not satisfied with the explanation given by the assessee during the course of assessment and. A.O. made addition of ₹ 83,00,000/- as per observation in para 3.1 of Asset order by holding that amount of ₹ 83,00,000/- debited in trading account is not allowable since this amount was surrendered during survey operations over above normal business income. 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led an appeal bearing No. 721 for deleting the addition of ₹ 6 8,84,212/- however the appeal of the revenue was dismissed on account of law tax effect. 9. The Ld.AR for the assessee had submitted that the order passed by the CIT(A) is not sustainable in the eyes of law. It was submitted that while making addition of ₹ 83,00,000/- Ld. A.O. has lost sight of following facts:- a) That ₹ 83,00,000/- was development cost of total saleable land measuring 468 Marlas out of which only 79.83 Marlas have been sold during the year. Cost of ₹ 14,15,788/- has been. charged to land sold balance ₹ 68,84,212/- has been included in closing stock. .As such charge to trading account is. only. of ₹ 14,15,788/- not ₹ 83,00,000/-. b) That amount of ₹ 83,00,000/- 83,00,000/- another amount surrendered total ₹ 1,20,00,000/-.have been duly declared in the return as detailed below:- Sr. No. Description Amount 1. Under the head business income 89,95,000/- 2. Under the head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per the provisions of section 71 of the Act. The assessing officer during the assessment proceedings, had given the notice against set off the business losses and the assessee was asked to explain the business losses claimed by the assessee for an amount of ₹ 44,70,775/-. It is a matter of record that the assessing officer in the entire assessment order had not disputed the business losses however the assessing officer had only denied the claim of the assessee on the premise that the income declared by the assessee was from any other sources and not Business income. 13. In our considered opinion, once the assessee had surrendered the amount, during the course of survey on account of the investment made for the development of Kartar estate, then it is essential for the assessee to disclose the source of such investment, in case the assessee able to disclose the source of investment, in that case only the amount surrendered shall be considered to be business income of the assessee, however in case the assessee failed to prove, then surrendered amount on account of development cost would be considered as income from any other source within the scope of 69A to 69C of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee that the income was surrendered as income from job work but no evidence to prove the stand of the assessee has been brought on record. The assessee had also surrendered additional income of ₹ 10 lakhs in asst. yr. 2005-06 on account of sundry credits, repairs to building and advances to staff, which being relatable to business carried on by assessee was included as income from business. However, in respect of cash found duringsurvey, which was not reflected in the books of account, no source was declared by the assessee and in the absence of nature of source of cash being proved, the same is not assessable as income from business. In the circumstances, we uphold the order of the CIT(A) in including the additional income as deemed income under s. 69A of the Act and not allowing the benefit of the business losses determined against the said deemed income. The grounds of appeal raised by the assessee are dismissed. 6. The Tribunal had relied upon a decision of the Gujarat High Court in Fakir Mohmed Haji Hasan v. CIT [2001] 247 ITR 290/[2002] 120 Taxman 11. In that case, interpreting the scope and describing the scheme of ss. 69, 69A, 69B and 69C of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure, as the case may be, have not been explained or satisfactorily explained. Therefore, in these cases, the source not being known, such deemed income will not fall even under the head 'Income from other sources'. Therefore, the corresponding deductions which are applicable to the incomes under any of these various heads, will not be attracted in the case of deemed incomes which are covered under the provisions of ss. 69, 69A, 69B and 69C of the Act in view of the scheme of those provisions. 7. The said decision fully applies to the facts of the present case. 15. Respectfully following the decision of the Hon ble High Court, the appeal of the assessee is liable to be dismissed and we accordingly dismissed the same. 16. At this stage, we would like to mention that the though CIT(A) had deleted the addition for amount of ₹ 68,84,212/-against which the revenue had filed the appeal, however the same had been dismissed on account of low tax effect, therefore the appeal of the revenue, cannot be revived as the same had already been dismissed by the bench. Further we are also of the opinion that the assessee cannot be worsen off, in his appeal and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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