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TMI Blog2023 (4) TMI 1162X X X X Extracts X X X X X X X X Extracts X X X X ..... w. Thus, the ground of appeal number 1 5 of the assessee are allowed. CIT s observation that AO has not verified the survey disclosure - AO had verified during the scrutiny proceedings that assessee has offered the amount disclosed during the survey for taxation. The AO based on the submission has satisfied himself that the amount disclosed during the survey has been properly reflected by the assessee in the return of income. After satisfying himself, the AO passed the order under section 143(3) of the AcT Pr.CIT s observation that AO has not verified the survey disclosure is not based on facts. Therefore, the order passed by the AO is not erroneous. Once the AO takes a view on a particular issue after considering all facts, the ld.Pr.CIT may or may not agree with the view taken by the AO, but that does not mean that the assessment order is erroneous. When two views are legally possible and AO adopts one view the Assessment Order cannot be said to be erroneous for the ld.Pr.CIT to invoke jurisdiction u/s.263. Decided in favour of assessee. - ITA No. 280/PUN/2021 - - - Dated:- 28-3-2023 - SHRI S. S. GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE , ACCOUNTANT MEMBER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese cash advances were not recorded in the books by the assessee. During the survey cash of Rs.9,71,600/- was found but the cash as per cash book was Rs.2,21,600/-, thus there was excess cash of Rs.7,50,000/-. 5. The assessee in the return of Income, B/S, P L A/c has shown the survey declaration as under : 15 : Other Inocme 6512216.00 52963763.00 Declared Income in Survey U/S 133 9049200.00 0.00 Other Non-Operating Income 0.00 3552.00 15561416.00 5299928.00 16 : Cost of Materials Consumed Opening Stock 4398719.00 3251583.00 Add : Declared in Survey U/S 133 4725500.00 0.00 Add : Purchases 45217380.00 51460749.00 54341599.00 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of excessive Cash, Rs 10.03,700/- on account of unaccounted advances and Rs. 72,95.500/. on account of difference in stock fall within the purview of section 69 (unexplained investments) / 69A (unexplained money) /69 C (unexplained expenditure) as you could not offer any explanation about these amounts either during survey proceedings or during assessment proceeding and hence only offered them as its additional income. These very facts shows that the above 3 amounts were unexplained income of the company. The provisions of Section 115BBE governs the income referred to in Section69, Section69A, Section 69C. Sub-section (2) of Section 115BBE has provided that no deduction of expenditure shall be allowed to the assessee in computing the Income referred to u/s 69/ 69A/ 69C. Difference in stock which has no satisfactory explanation and which is accepted by the assessee, is unexplained investment u/s 69 and hence covered by the provisions of section 115BBE, The net expenses of Rs.21,55,500/- are, therefore, disallowable u/s 115BBE. It is pertinent to note here that survey action u/s 133A was carried out in this case in the relevant to AY 2016-17. Further, the case was also selecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Compulsory Scrutiny as there was survey and books of accounts have been impounded, however, the Ld.AO even in the last order sheet entry passed on 25/12/2018, mentioned that the case of the assessee was selected for Limited Scrutiny . The AO has not mentioned in the said order sheet entry anything regarding Compulsory Scrutiny. Therefore, once the AO was convinced that the case was selected for Limited Scrutiny , accordingly the AO informed the assessee, therefore, the ld.Pr.CIT erred in claiming that the case falls under Compulsory Scrutiny. Hence, the Order u/s.263 is bad in law. Submission of Ld.Departmental Representative(ld.DR) : 10. The Ld.Commissioner of Income Tax(DR) Mr.Sardar Singh Meena filed a paper book. The Ld.DR vehemently supported the order of the Pr.CIT. He referred to Scrutiny Guidelines issued by CBDT vide Instruction no. 08/2015 dated 31/08/2015 (page 33,34 of Paper book filed by DR). Clause 1(c) of the said instruction directs the AO to select the case for Manual selection, in which survey was conducted and books of accounts were impounded. Ld.DR filed copy of the order impounding the books. The Ld.DR explained provisions of Section 115BBE. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fered for taxation. On perusal of the order sheet entry dated 25.12.2018, it is observed that the Assessing Officer has mentioned following things in the order sheet : A survey action u/s.133A of the Act was carried out on 26/08/2015 at the business premises of the assessee company. The assessee has declared an amount of Rs.7,50,000/- on account of excess cash, Rs.10,03,700/- on account of unaccounted advances and Rs.72,95,500/- on account of difference in stock totaling to Rs.90,49,200/-. The AR has submitted that the amount disclosed during the survey proceedings has been included in the return of income filed by the assessee firm for the A.Y. 2016-17 dated 13/10/2016. The explanation offered by the AR of the assessee during the course of assessment proceedings is verified and found to be acceptable.The relevant documents are kept on record. Therefore, no addition is made in this case. 16. Thus, AO had verified during the scrutiny proceedings that assessee has offered the amount disclosed during the survey for taxation. The AO based on the submission has satisfied himself that the amount disclosed during the survey has been properly reflected by the assessee in the ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess. The PCIT therefore agrees that the Assessing Officer has recorded from the details submitted by respondent and the explanation given by respondent that the assessee had regular business connection with the company in which investment has been made and also there was a business income to the assessee from the same. He notes that the Assessing Officer, therefore did not consider the calculation of disallowance under section 14A the interest expense debited by the assessee because the same has been incurred for the purpose of business. The PCIT though was unhappy with the view of the Assessing Officer, the PCIT himself does not say why it should have been considered for the calculation of disallowance under section 14A. Even if one assumes that he has, after reading of the order expressed his views, but still the position is two views therefore were possible. Therefore, if one of the two possible views was taken by the Assessing Officer, the PCIT could not have exercised his powers under section 263 of the Act. 8. Unquote . 16.5 Thus, the principal of the law emanating from the above decision of the Hon ble Supreme Court, the Hon ble Madras High Court, the Hon ble Bombay ..... X X X X Extracts X X X X X X X X Extracts X X X X
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