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TMI Blog2024 (9) TMI 1657X X X X Extracts X X X X X X X X Extracts X X X X ..... the same under the head Income from business . Therefore, the presumption is to be drawn that the additional income was derived from the business. Thus, it cannot be said that the source for the additional income remain unexplained and, therefore, the provisions of section 115BBE have no application to the present case. The assessee s survey statement had also explained the reasons of stock deficiency of non-maintenance proper book results in regular business only. We thus adopt the above detailed reasoning mutatis mutandis to uphold the learned CIT(A) s detailed discussion reversing Assessing Officer s action assessing the assessee s entire stock u/sec. 115BBE - Decided in favour of assessee. - Shri Rama Kanta Panda, Vice President And Shri Satbeer Singh Godara, Judicial Member For the Assessee : Shri Shubham Rathi. For the Revenue : Shri Ajay Kumar Keshari. ORDER PER SATBEER SINGH GODARA, J.M. This assessee s appeal, arises against the order of the learned CIT(A), Pune-12, Pune s DIN Order no. ITBA APL /S/250/2023-24/1059775422(1) dated 16.01.2024 in proceedings u/sec. 143(3) of the Income Tax Act, 1961 (in short the Act ). Heard both the parties. Case file perused. 2. The Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled return of income on 25.09.2019 by declaring total income at Rs. 9,49,31,020/-(including declared income of Rs. 7,00,01,100/-). The said case was selected for scrutiny and during the assessment proceedings the entire information asked by the assessing officer was furnished by the appellant. 3.3 I have considered the facts of the case and the submissions made by the appellant. The issue involved in this appeal is that when there is a survey or search action wherein certain undisclosed income is found, under which head it can be brought to tax and at what rate the tax should be charged. This issue has been discussed by various High-Courts and Tribunals from time to time and depending on the facts of the case, it was decided as to whether such income was taxable as business income or deemed income assessable u/s 68, 69 or 69A to 69D of the Act. Some of these decisions are discussed as under. Decisions where it was held that the surrendered income is taxable under the provisions of section 68, 69, 69A to 69D of the Act: 3.4 The Hon'ble Gujarat High Court in case of Fakir Mohmed Haji Hasanvs CIT 120 TAXMAN 11 (Gujarat) had to decide question whether value of gold found during se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee are not explained at all, or not satisfactorily explained, then the value of such investments and money, or value of articles not recorded in the books of account or the unexplained expenditure may be deemed to be the income of such assessee. It follows that the moment a satisfactory explanation is given about such nature and source by the assessee, then the source would stand disclosed and will, therefore, be known and the income would be treated under the appropriate head of income for assessment as per the provisions of the Act. However, when these provisions apply because no source is disclosed at all on the basis of which the income can be classified under one of the heads of income under section 14 of the Act, it would not be possible to classify such deemed income under any of these heads including Income from other sources which have to be sources known or explained. When the income cannot be so classified under any one of the heads of income under section 14, it follows that the question of giving any deductions under the provisions which correspond to such heads of income will not arise. If it is possible to peg the income under any one of those heads by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m his income. 3.5 The Hon'ble Punjab and Haryana High Court in case of Kim Pharma Pvt Ltd vs. CIT [2013] 216 Taxman 153 (P H), has held that where amount surrendered during survey was not reflected in books of account and no source of income from where it was derived declared by the taxpayer then it was assessable as deemed income of the assessee u/s 69A of the Act and not as business income. 3.6 The Hon ble Madras HC in case of M/s. SVS Oils Mills vs. ACIT [2020] 113 taxmann.com 388 (Madras), has held that where there was a clear admission by assessee firm that excess stock found during survey was added in its stock register but no corresponding entry was passed in books of account, it could be considered that investment in such stock was made out of undisclosed source. Thus, addition was to be made under section 698 in respect of such excess stock. Decisions where it was held that sections 68, 69, 69A to 69D are not applicable: 3.7 On the other hand, in following decisions, it was held that sources of surrendered/ undisclosed income are explained, deemed income provisions under sections 68, 69, 69A to 69D are not applicable and consequently, tax rate u/s 115BBE is also not ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act or it is to be taxed as deemed income taxable under section 68 to 69D of the Act , is essentially a question of fact and it entirely depends on whether the assessee has been able to satisfactorily explain the source of such undisclosed income or not. If, a satisfactory explanation is provided about the nature and the source, in that case the source would stand explained and therefore, the income would be computed under the appropriate head of income as per the provisions of the Act. However, when no source is explained based on which the income can be classified under any of the heads of income specified under section 14, then it would be classified as deemed income and shall be taxed as per the rates provided under section 115BBE of the Act. 3.13 It is also important to mention here that the Hon ble Supreme Court in case of Kale Khan Mohammad Hanif vs CIT [1963] 50 ITR 1 (SC) held that onus of proving the source of a sum of money found to have been received by the assessee is on him. However, if the taxpayer disputes the levy of tax on the same then it is up to him to show either the receipt is not income, or it is exempt from taxation under the provisions of the Act. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings by the AO regarding the manner in which additional income was derived. Thus, in view of the binding judicial pronouncements relied upon by the appellant, the AO s action of taxing the income declared during survey u/s 69B r.w.s. 115BBE is, therefore, not found to be right. 3.18 Therefore, by applying the ratio of the decisions relied upon by the appellant, it is held that the impugned amount of Rs. 7,00,00,100/- cannot be taxed as deemed income u/s 69B of the Act as done by the assessing officer. Accordingly, the provisions of section 155BBE cannot be made applicable to income of Rs. 7,00,00,100/-. The grounds no. 1 to 5 are accordingly allowed. Ground No. 6 : 4. Learned CIT-DR vehemently argues in support of the assessment findings that the Assessing Officer had rightly invoked the impugned sec. 115BBE higher rate of taxation regarding the assessee s unaccounted stock conducted during the course of survey as per M/s. SVS Oil Mills vs. ACIT [2020] 113 taxmann.com 388 (Madras). His further case is that once the assessee failed to attribute the impugned unaccounted stock to have been derived from regular business activity(ies); it deserves to be assessed u/sec. 115BBE higher ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o of the decision of the Hon ble Rajasthan High Court in the case of Bajargan Traders (supra) is squarely applicable to the facts of the present case. The reliance placed by the ld. CIT (A) on the decision of the Hon ble Madras High Court in the case of M/s. SVS Oils Mills (supra) have no application to the facts of the present case, inasmuch as, in the said case, no explanation as to the source of excess stock was offered, whereas, in the present case, it is undisputed fact that the additional income was derived from business. Therefore, the orders of the Assessing Officer as well as the ld. CIT (A) are reversed and direct the Assessing Officer not to tax the additional income under the provisions of section 115BBE of the Act. The Assessing Officer shall tax the additional income under the normal rate of income tax. Accordingly, the grounds of appeal filed by the assessee stand allowed. 6. This is indeed coupled with the fact that the assessee s survey statement dated 26.03.2019 [in question no. 13] had also explained the reasons of stock deficiency of non-maintenance proper book results in regular business only. We thus adopt the above detailed reasoning mutatis mutandis to uphol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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