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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 ..... nces of the case and in law, the Principal Commissioner of Income-tax (PCIT) Rajkot-1 erred in holding that the assessment order is erroneous and prejudicial to interest of revenue on the issue of 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.PC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eous and prejudicial to the interest of revenue. The assessee has submitted that he has disclosed the unaccounted professional receipts during the course of survey and the source of income was the medical practice 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... far as it is prejudicial to the interest of the revenue if the order is passed allowing any relief without inquiring into the claim. However, the AO did not conduct any such inquiries or verification and simply accepted the assessee's submission. 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-à-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 issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipts. They read as under: 11. It is clearly evident from the above that inquiries were conducted by the AO regarding the nature of income surrendered during survey by the assessee. 12. Our attention was also drawn to judicial pronouncements to the effect that where 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 Departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding error in the assessment order. He was duty bound to go through these records, and point out how the documents pertaining to the survey revealed the acceptance of Rs.15 lakhs surrender made by the assessee as business income, to be an error on the part of the AO. The ld.Pr.CIT - could have arrived at a valid finding of error on the basis of his own examination of records including document or statement recorded of the assessee during survey action undertaken by him under section 133A of the Act. He has not pointed out as to how the documents pertaining to survey could not have lead to a reasonable belief as entertained by the AO that the income surrendered pertained to his professional receipts. 16. We therefore hold that there is no basis for the finding of error by the Ld.PCIT of no inquiry by AO in the assessment framed in the present case and the facts on record reveal otherwise. The order passed u/s.263 of the Act is therefore held to be without valid jurisdiction and is therefore not sustainable in law. The view taken by the AO is a plausible view on the matter. The order of passed by the ld.Pr.CIT under section 263 of the Act is hereby set aside, and the appeal of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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