9911796707
TMI Blog2023 (12) TMI 1258X X X X Extracts X X X X X X X X Extracts X X X X ..... y though calculated the tax liability on the surrendered amount at normal rate of tax however, if the said calculation is not in accordance with the provisions of the Income Tax Act the same would not be binding on the decision of the AO while passing the assessment order. The surrendered income on account of excess stock was declared by the assessee under the head other sources and the same was assessed by the AO as income from other sources. There is no quarrel on the point that if the AO has raised the query on this issue of applicability of provision of section 115BBE which was replied by the assessee then question of lack of inquiry does not arise. However, in the case of the assessee the AO has not even taken up this issue despite the income was assessed as income from other sources and therefore, this case does fall in the category of complete lack of inquiry on the part of the AO. Pr. CIT has referred and relied upon various decisions including the decision of the jurisdictional High Court in case of CIT vs. Deepak Garg [ 2007 (5) TMI 186 - MADHYA PRADESH HIGH COURT] Accordingly in the facts and circumstances of the case we do not find any error or illegality in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xed under section 28 to 44 of the Income-tax Act, 1961 and not under section 69/69A of the Income-tax Act, 1961. Similar view has already been taken by Hon ble Jurisdiction Bench in the case of Shri Vijay Kumar Surana [ITA No.644/Ind/2019] 2. There was a survey u/s 133A of the Act in case of the assessee on 20.02.2018. During the course of survey proceedings excess stock of jewellery was fond and consequently the assessee surrendered income of Rs.1,35,43,914/- on account of excess stock in the return of income. The assessee declared total income of Rs.1,40,02,467/- which included income from other sources of Rs.1,35,43,914/- as surrendered during the course of survey. The assessment was completed under the faceless scheme u/s 143(3) r.w. section 143(3A) 143(3B) of the Act on 16.03.2021 whereby the AO accepted the returned income of Rs.1,40,02,467/-. Thereafter on examination of the assessment record the Pr. CIT found that the order passed by the AO is erroneous so far as prejudicial to the interest of the revenue as the AO has not applied provisions of section 115BBE in respect of the amount surrendered by the assessee on account of excess stock. A show cause notice u/s 263 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d explained that during the course of survey excess stock of Rs.1,35,43,914/- had been declared by the assessee as current year income. The AO after considering the reply of the assessee has accepted the return income therefore, the AO has conducted due inquiry to verify the correctness of the return of income and after his satisfaction the AO has accepted the return income. Ld.AR has relied upon the judgment of Hon ble Andhra Pradesh High Court in case of Pr. CIT vs. Deccan Jewellery Pvt. Ltd. and submitted the excess stock as a result of suppression of profit from business over the year cannot be treated as undisclosed investment u/s 69 of the Act and therefore, the provisions of section 115BBE cannot be applied. Ld.AR then relied upon the decision of Chandigarh, ITAT in case of Gandhi Ram vs. PCIT 197 ITD 677 and submitted that the Tribunal has held that when the AO duly taken cognizance of the statement recorded during the course of survey and passed the assessment order after due application of mind the same cannot be held as erroneous due to lack of inquiry or for that matter requisite inquiry on the part of the AO. Thus, Ld. AR has submitted that when the AO has taken a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee has challenged the impugned order of the Pr. CIT on the ground that the AO has conducted due inquiry and then accepted the returned income. The AO has issued a notice u/s 142(1) dated 02.03.2021 placed at page no.46 47 of the paper book as under: 5.1 In the said show cause notice the AO has raised two quarries (iv) (v) regarding the details of income declared during the survey proceedings u/s 133A. In reply the assessee has explained in para 4 of letter dated 08.03.2021 as under: During the survey proceedings u/s 133A of the Income Tax Act, the excess stock of Rs 1,35,43,914/- has been declared by assessee as current year income. Copy of statement recorded during survey proceedings along with other relevant documents is enclosed. 5.2 Thus, the AO has issued a limited query to verify the quantum of surrendered income declared during the proceedings u/s 133A and in reply also the assessee has given details of the total amount of income declared by the assessee. As it is apparent and manifest from the show cause notice issued u/s 142(1) as well as reply filed by the assessee that the AO has not taken up the issue of higher rate of tax u/s 115BBE of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut the path that as to how the taxation rates will be applied in respect of addition made under section 68, section 69, section 69A, section 69B, section 69C or section 69D. AO has simply accepted that the assessee has incorporated the excess-stock in the P L account without examining the nature of surrender. Needless to mention that the function of assessing authority is not only of adjudicator but also of investigator. In the present case, it is quite apparent from assessment-order that the AO has not made requisite enquiry to ascertain the nature and tax implications of the impugned incomes. Reliance is placed on the decision of hon'ble ITAT at Indore in the case of Chandan Garments Private Ltd. Vs PCIT (ITAT Indore) ITA No. 125/Ind/2022 dated 02/12/2022 wherein PCIT's action u/s 263 was upheld for invoking Section 115BBE in a surrender case. 5. In view of the facts narrated in para 4, it is clear the A.O. has failed to do proper enquiry on the issue at the time of assessment proceedings hence, the assessment order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of revenue. The A.O. has not applied his mind. Non-applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing the assessment order. This cannot be ground to shut out the jurisdiction of the Commissioner that an adequate enquiry was conducted by the assessing officer. We may clarify that order of the Commissioner is in two parts. Part one consists of reasons for issuing the show cause notice, and later part deals with findings recorded by the Commissioner after affording opportunity of hearing to the assessee. As stated above, Commissioner has recorded a categorical finding that order of assessing officer for want of adequate enquiry, was erroneous and prejudicial to the interest of revenue and after setting aside the assessment order, remanded the matter to the assessing officer for fresh assessment on merits. The Commissioner also directed assessing officer to observe rules of natural justice and to provide opportunity of hearing to assessee before making fresh assessment order on merit. This adequately safeguards the interest of the assessee and would cause no prejudice. In Daga Entrade (P.) Ltd.'s case [(2010) 327 ITR 467], the Hon'ble Gauhati High Court held that if the order of the Assessing Officer was passed ignoring relevant material, causing prejudice to the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2018-19 is directed to be set aside on the limited issues as discussed above. The Assessing Officer is directed to reframe the assessment order after considering above said issues after giving proper opportunity of being heard to the assessee. 5.4 Thus, the Pr. CIT has referred and relied upon various decisions including the decision of the jurisdictional High Court in case of CIT vs. Deepak Garg 229 ITR 435 as well as decision of the Hon ble Supreme Court. Accordingly in the facts and circumstances of the case we do not find any error or illegality in the impugned order of the Pr. CIT setting aside the order of the AO on the issue of applicability of the provisions of section 115BBE as there is a complete lack of inquiry on the part of the AO on this issue. The decisions relied upon by the Ld.AR of the assessee will not help the case of the assessee when there is a complete lack of inquiry on the part of the AO. The AO shall consider and decide this issue in accordance with provisions of section 115BBE of the Act after considering relevant facts and in accordance with law. We have not expressed any view on the merits of the issue. 6. In the result, appeal of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
