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TMI Blog2023 (11) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... ined whereas in the present case the amount surrendered during survey was duly reflected in the books of account and the source it was declared/explained as business activity with due payment of Tax liability and the authorities below failed to prove the contrary to disprove source of income other than Business income. Respectfully following the order of the Co-ordinate Bench, Chandigarh in the case of M/S. ARORA ALLOYS LTD [ 2019 (11) TMI 410 - ITAT CHANDIGARH] we direct the Assessing Officer to treat surrendered income to the extent of expenditure on building as business income. - Dr. M. L. Meena, Accountant Member And Sh. Anikesh Banerjee, Judicial Member For the Appellant : Sh. Rohit Kapoor, CA And Sh. V.S. Aggarwal, ITP For the Respondent : Smt. Ratinder Kaur, Sr. DR ORDER PER DR. M. L. MEENA, AM: The captioned appeal is filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)-5, Ludhiana dated 19.04.2023 for Assessment Year: 2017-2018 challenging the confirmation of the order of the ld. CIT(A), by challenging applicability of provisions of section 115BBE of the Income Tax Act, 1961 without appreciating the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional disclosure made under head of building under construction amounting to Rs. 81,95,000/- was treated as unexplained investment under section 69 of the Income Tax Act, 1961 and tax thereon charged as per section 115BBE of the Income Tax Act, 1961. The CIT(A) relied on the decision of the Hon ble ITAT Amritsar Bench in the case of Rakesh Kumar v. DCIT in ITA No. 65/Asr/2023 order dated 14.06.2023 where it was held vide para 8.1, as under: 8.1 We respectfully consider the order of the Hon ble Jurisdictional High Court in the case of Kim Pharma P. Ltd. (supra). The observation of the Hon ble High Court is related to the surrendered income which is unidentifiable, the amount surrendered during survey would not reflected in the books of account and the source from where it was derived was not declared.The same was assessable as deemed income u/s 69A of the Act. We respectfully observed the order of the Hon ble High Court. It is not under the factual matrix in assessee s case. The assessee declared the income and filed the return u/s 44AD of the Act under the presumptive scheme. The assessee declared the surrendered income in the return and all the surrendered income are na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings. All the income surrendered are reflected in the books of accounts It is further stated that once a specific surrender made by the assessee has been accepted by the Income Tax department and Tax on the same has been realized, the department cannot take a U turn while framing the assessment of the assessee by taxing the same under the head Income from other sources under Section 69 of Income Tax Act, 1961. It has to be assessed under the Head Income from Business. Further the surrender made by the assessee was on account of cash found during the survey, discrepancy in the cost of construction of building, discrepancy in stock. By no stretch of imagination, any of these incomes can be considered as income under any head other than business income. In this regard reliance is being placed upon the following case laws: - a) 2019 (11) TMI 410 - IT AT CHANDIGARH M/S. ARORA ALLOYS LTD VERSUS DCIT, CIR. 1 LUDHIANA. Source of surrendered income - Deemed income against which no deduction/set off - HELD THAT:- In the case of Famina Knit Fabs [2019 (5) TMI 8 - ITAT CHANDIGARH] the Tribunal has examined this issue elaborately and propounded that onus is on the assessee to es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessed on gross basis, as treated by the Assessing Officer. In view of the above discussion, the appeal of the assessee is partly allowed. No.- IT A NO. 1481/CHD/2017 b. 2015 (11) TMI 631 - ITAT CHANDIGARH Other Citation: [2015] 43 ITR (Trib) 414 (ITAT [Chand]) GAURISH STEELS P. LTD. VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX Treatment of surrendered income - whether the income surrendered is to be taxable as business income or income from other sources or as deemed income under sections 69A, 69B and 69C - Held that:- Assessing Officer has nowhere disputed the business losses incurred by the assessee. The books have not been rejected. It was stated at the Bar that even at the time of survey, in the trading account prepared by the survey team, there were losses incurred by the assessee. All these facts have not been disputed by the Assessing Officer. Further, the surrender made by the assessee was on account of cash found during the course of survey, discrepancy in the cost of construction of building, discrepancy in stock and discrepancy in advances and receivables. By no stretch of imagination, any of these incomes apart from cash can be considered as income under an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad other than business income. In our view, once a specific surrender made by the assessee explaining the source as business income and investment transaction in excess stock, cash and building construction as above, before the Income Tax department and due Tax has been realized, the department would not have case to take a U turn while framing the assessment of the assessee by taxing the same under the head Income from other sources under Section 69 of Income Tax Act, 1961. It is noted that the Ld. CIT(A) has failed to appreciate that the expenditure incurred for creating a business asset ought to have been generated through the business carried out by the assessee was accounted for in the books of accounts in the absence of anything proved contrary to the same. The CIT(A) has failed to consider the statement recorded during survey wherein it has been clearly stated by the assessee before the authorized officer that the expenditure incurred on factory was born out of undisclosed business income. Even the survey team has not found any other source of income except the business income. Thus, it can be safely inferred that apart from cash all other income surrendered may be brought t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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