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TMI Blog2024 (7) TMI 824X X X X Extracts X X X X X X X X Extracts X X X X ..... n its financial statements, which was duly audited, the acceptance of the same by the AO as professional receipts evidently was in accordance with judicial pronouncements and therefore justified. PCIT, has ignored all the above facts as well as legal propositions which were very much part of record before him, and went on to hold that no inquiry was conducted by the AO on the issue of surrender of income during survey by the assessee. DR was unable to controvert the above facts pointed out for the assessee before us. PCIT s finding of non inquiry vis-a-vis the documents and statements recorded during survey, is not based on any hard facts. In fact, the facts on record reveal AO having conducted due inquiry on the issue of surrender made by the assessee and considering the statement of the assessee during survey making voluntary surrender of professional unaccounted receipts, his acceptance of the surrender as business income is in accordance with law. PCIT has merely stated no inquiry conducted by the AO on the records of survey before him, but not pointed out how and on what basis he arrived at this finding.Merely stating that the AO has not examined the records/documents pertaini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f applicability of section 115BBE. 2.1 That on the facts and circumstances of the case and in law, the Principal Commissioner of Income-tax (PCIT) Rajkot-1 erred in exercising jurisdiction u/s 263 by setting aside the aforesaid issue even though the same had been discussed and scrutinized by the Assessing Officer in detail while framing the assessment u/s 143(3) of the Act. 2.2 That on the facts and circumstances of the case and in law, the Principal Commissioner of Income-tax (PCIT) Rajkot-1 erred in setting aside the order by stating that the assessing officer has not conducted any inquiries or applied his mind on the issue of applicability of section 69A and section 115BBE of the Act. 3. As transpires from the order of the ld.Pr.CIT, revisionary powers were exercised finding the assessee to have been incorrectly allowed the income surrendered by it during survey ,of Rs. 15.00 lakhs, to be treated as being in the nature of business income liable to tax @ 30%,which , as per the Ld.PCIT, ought to have treated as unexplained income/credit u/s 68 of the Act, and subjected to tax at a higher rate i.e. 60% as prescribed under section 115BBE of the Act. 4. The facts which emerge out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ractice which has been explained in the statement recorded u/s.131(1A) of the Act. The assessee's submission that the undisclosed income was professional receipt or otherwise needs verification from the facts available on record including the records pertaining to survey proceedings. To determine the issue one has to go to the records / documents found during the course of survey, the statements recorded of the assessee and outcome of any enquiries during the course of survey and thereafter in the assessment proceedings. However, none of the above verifications have been carried out by the AO while completing the assessment which ought to have been done so to determine the taxability under the provisions of section 115BBE of the Act. 6. The above facts will indicate that AO has not conducted any inquiries / applied his mind and law in respect of taxing the undisclosed income @ 60% as per the provisions of section 115BBE of IT Act. Such cases where the assessment has been completed without conducting any inquiries tantamount to erroneous orders as also order prejudicial to the interest of Revenue. For such proposition of law. Reliance is made on following cases: 1 Rampyari Devi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. In this manner the assessee's case is also covered under para 'a' of Explanation 2, of section 263(1) of I.T. Act. Therefore the order passed by the AO is erroneous and prejudicial to the interest of revenue to that extent. 7. Thus, the finding of the error by the ld.Pr.CIT in the assessment order in the present case is vis- -vis lack of inquiry by the AO on the issue of surrender made by the assessee during the survey, before accepting it as professional receipts of the assessee. Having gone through the order of the Ld.PCIT, the assessment order passed u/s 143(3) of the Act sought to be revised by the Ld.PCIT and having heard both the parties and considered all documents referred to before us, we hold that the impugned order passed u/s 263 of the Act is not sustainable .And the reason for the same is that we do not find any basis for the finding of error by the Ld.PCIT pertaining to lack of inquiry on the issue of income surrendered by the assessee, that in fact the records reveal to the contrary that due inquiry was conducted by the AO who had thereafter taken a plausible view accepting the surrender as relating to the business income of the assessee liable to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has no other source of income, other than the business income and the AO had conducted inquiry and perused the details submitted, and taken a decision to accept the explanation provided by the assessee after proper application of mind, the provision of section 115BBE of the Act could not be invoked to tax the income as deemed income. That therefore the view of the ld.Pr.CIT invoking the provisions of section 263 on this aspect was not justified. Reference in this regard was made to the decision of ITAT, Bangalore Bench in the case of Karthik Estate Vs. Pr.CIT, ITA No.432/Bang/2022 dated 24.8.2022. Copy of the order was placed before us. 13. Our attention was also drawn to various decisions of the ITAT holding surrender made by the assessee relating to its business or professional receipts, to be accepted as such in circumstances, where no other identifiable assets or expenditure was found by the Department for invoking section 69A/B/C of the Act, in the case of Fashion World Vs. ACIT, ITA No.1634/Ahd/2006 and in the case of Bajaj Sons Ltd. Vs. DCIT, ITA No.1127/Chd/2019. 14. It is clearly evident from the above that the assessee had surrendered Rs.15 lakhs in the stat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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