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TMI Blog2024 (8) TMI 1423X X X X Extracts X X X X X X X X Extracts X X X X ..... placed before him, the order passed by AO is erroneous. Thus, merely stating that there was survey operation at the business premises of the assessee where excess stock is found on which provisions of section 115BBE are attracted, the same cannot be a basis for exercise of jurisdiction u/s 263 of the Act. In view of the same, order so passed by the Ld. PCIT(Central) u/s 263 is set aside by cancelling the order passed by him. Appeal of the assessee is allowed. - Dr. S. Seethalakshmi, JM And Dr. Dipak P. Ripote, AM For the Assessee : Shri P.C. Parwal, CA For the Revenue : Shri Arvind Kumar, CIT-DR ORDER PER: DR. S. SEETHALAKSHMI, JM This appeal filed by the assessee is directed against order of the ld. Pr. CIT(Centra), Jaipur dated 21-03-2024 for the assessment year 2018-19 raising grounds of appeal as under:- 1. Under the facts and circumstances of the case, order passed by the Ld. PCIT u/s 263 is illegal bad in law and the same be quashed. 2. The Ld. PCIT has erred on facts and in law in holding that the assessment order dt. 23.04.2021 passed u/s 143(3) is erroneous in so far as it is prejudicial to the interest of revenue as the excess stock of Rs. 23,62,332/- found during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se (a) clause (b) of Explanation 2 to section 263 set aside the assessment order to the file of AO. It is also noted that the ld. PCIT (Central) on examination of the details/ record available before him observed that the assessment order passed on 23-04-2021 for A.Y. 2018-19 by the AO is held to be erroneous in so far as it is prejudicial to the interest of the revenue for the purpose of section 263 of the Act. The said order has been passed by the AO in a routine and casual manner without applying the applicable sections of the Act. The issue of short declaration of excess stock of Rs. 1,47,507/- and non application of provisions of section 115BBE on surrendered excess stock of Rs. 23,62 332/- has remained to be considered in the assessment order. Therefore, the AO has not verified the details which were required to be verified under the scope of scrutiny. The order of the AO is, therefore, liable to revision under the explanation (2) clause (b) and clause (a) of section 263 of the Act. The assessment order is set aside to be made afresh in the light of the observation made in this order. The AO is required to make necessary verification in respect of the observations made in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idering that such additional income fell under the purview of ss. 68 and 69 and that tax was chargeable u/s 115BBE as against normal rates. (ii) Surya Hatchery Vs. PCIT (2023) 222 DTR 57 (Chd.) (Trib.) (Case laws compilation PB 25-53) AO having accepted the additional income surrendered by the assessee at the time of survey u/s 133A as normal business income after making enquiries into the nature of assessee's income and considering the assessee's replies and the relevant facts on record, it cannot be held that the assessment order has been passed without a proper enquiry and therefore, the Principal CIT was not justified in passing the impugned revisional order u/s 263 on the basis that the surrendered income is assessable as per the provisions of sec. 115BBE. (iii) CIT Vs. Embassy Brindavan Developers (2023) 294 Taxman 437 (SC) Notice issued in SLP against High Court s order that where assessee purchased property for development of a Tech Park, however, same was sold for want of funds without any development whatsoever and AO had taken a view that assessee was liable to pay capital gain tax on profit from said transaction, merely because out of two plausible views availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porated this transaction by debiting the purchase account and crediting the income from undisclosed sources. In the annual accounts, the purchases of Rs. 70,04,814/- were finally reflected as part of total purchases amounting to Rs. 33,47,19,658/- in the profit and loss account and the same also found included as part of the closing stock amounting to Rs. 1,94,42,569/- in the profit/loss account since the said stock of rice was not sold out. In addition to the purchase and the closing stock, the amount of Rs. 70,04,814/- also found credited in the profit and loss account as income from undisclosed sources. The net effect of this double entry accounting treatment is that firstly the unrecorded stock of rice has been brought on the books and now forms part of the recorded stock which can be subsequently sold out and the profit/loss therefrom would be subject to tax as any other normal business transaction. Secondly, the unrecorded investment which has gone in purchase of such unrecorded stock of rice has been recorded in the books of accounts and offered to tax by crediting the said amount in the profit and loss account. Had this investment been made out of known source, there was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. PCIT(Central) has issued show cause notice u/s 263 dt. 13.03.2024 mentioning that during survey proceedings excess stock of Rs. 23,62,332/- was found which is surrendered by the assessee. The excess stock of Rs. 23,62,332/- was purchased out of books and therefore it is unexplained expenditure u/s 69C chargeable to tax at special rate u/s 115BBE and not at the normal rate. The assessee by referring to Q. No.16 of the statement recorded during survey contended that assessee surrendered the amount of Rs. 23,62,332/- as income of the year under consideration out of which Rs. 22,14,825/- was credited to P L A/c which is offered to tax in the return of income and on the balance amount of Rs. 1,47,507/- assessee paid the tax with interest on 13.03.2024. The AO in the assessment order after considering the fact that assessee has offered the excess stock as business income of the year under consideration has charged the tax at normal rate and when AO has accepted this view, his order cannot be considered as erroneous more so when there are decisions on this issue in favour of the assessee. We note that during the course of survey statement of assessee was recorded. In reply to Q. No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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