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TMI Blog2025 (2) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of the assessee by treating undisclosed income found during the survey as assessee's business income.
The purview and scope of section 263 do not envisaged the Pr. CIT to go into the adjudication on merit of the assessment which is made by the Assessing Officer after proper verification of the evidences.
CIT has to only look into the issue whether the assessment order is erroneous or prejudicial to the interest of revenue or not. Therefore, the Pr. CIT was not right in invoking Section 263 of the Act in the present assessee's case. Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... ading and which assessee was trading and whether such chemicals were purchased and the mode of the payment of such purchase along with whom the purchases were made/mode of receipt of the sale consideration. Therefore, the Pr. CIT held that the assessee failed to adduce any evidence to prove that the income was earned from regular business activity. 3.2 The Pr. CIT further held that the assessee is director of M/s. Siddharth Interchem Pvt. Ltd. and declared income of Rs. 71,10,600/- under the head income from salary on account of being full time director for assessment year 2018-19. On account of disclosure made during survey, the assessee offered Rs. 55,14,000/- in the return of income and has given the break up being Rs. 47,54,000/- under the head income from business and profession and Rs. 7,60,000/- under the income from other sources (including Rs. 8,65,120/-). The Pr. CIT subsequently held that recording of entries in the books of accounts without any corroborative evidence to support such entries and offering same to tax as income in the return of income would not meet the conditions of recording any accounts and offering satisfactory explanation with regard to nature and so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the assessment order u/s. 143(3) of the Income Tax Act dated 28-05-2021 is erroneous and prejudicial to the interest of revenue and set aside the said assessment order with a direction to the Assessing Officer to pass fresh assessment order after taking into consideration the issues discussed in the order u/s. 263 of the Act. 4. Aggrieved by the order u/s. 263 of the Act, the assessee has filed appeal before the ITAT. 5. The ld. A.R. submitted that the Pr. CIT erred in passing the order u/s. 263, although the assessment order passed u/s. 143(3) of the Act was neither erroneous nor prejudicial to the interest of the Revenue. The ld. A.R. submitted that the issue discussed by the Pr. CIT u/s. 263 of the Act are already dealt by the Assessing Officer in the assessment proceedings u/s. 143(3) of the Act thereby calling upon the details related to the survey proceedings including that of copy of trading, profit and loss account and balance sheet along with schedules, tax audit report u/s 44AB in Form 3CB/3CD, professional trial plans, profit and loss account and balance sheet for the period of 01-04-2017 to date of survey i.e. 13-03-2018 and from date of survey 31-03-2018. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erchem Pvt. Ltd. and the impounded material found (Annexure BF-1). The Assessing Officer also called upon the details of disclosure made in respect of unaccounted income in cash during survey proceedings. The assessee while answering the queries/questionnaire has given the details of income declared and tax paid for this Assessment Year as well as other three Assessment Years. The income declared in A.Y. 2018- 19 during the survey was 55,14,000/- and tax paid was 41,73,786/-. Thus, the assessee admitted the income before the Assessing Officer. In fact, the assessee declared the said income on the very same day when the survey which was conducted on the assessee's business premises. 7.1 The Ld. DR has relied upon the decision of Hon'ble Apex Court in case of D.N. Singh vs. CIT 454 ITR 595 but this will be applicable if the merits of unexplained money (Bitumen) u/s 69A should be taken into account or not and the said decision ultimately held in favour of the assessee, but ultimately it was on merit and not on the point of validity of Section 263 of the Act. In fact, in the said case, there is a finding that Section 69A was applied in respect of the income which has not been reflecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income of Rs. 41.78 lakhs which included the income surrendered pursuant to the search of Rs. 22.19 lakhs as current year's business income undefined offered to tax by charging tax and interest at normal rates and raised new demand. Notice was also issued by the Assessing Officer under Section 154 of the Act on the ground that the tax rate on the surrendered income was to be charged as per Section 115BBE, however it was found that there was nothing stated in either pre-amended or post-amended provision of Section 115BBE that when the assessee surrendered undisclosed income during the search action for the relevant years, higher tax rate is required to be charged. 5. In the facts of the case, during the course of assessment proceedings, as the Assessing Officer had made due inquiries and was aware of the fact that the assessee had disclosed the income as business income in his return of income in respect of which it had claimed expenditure in relation to interest and remuneration paid to partners and after making inquiries, Assessing Officer allowed the claim of the assessee by treating undisclosed income found during the survey as assessee's business income and in view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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