9911796707
TMI Blog2025 (3) TMI 522X X X X Extracts X X X X X X X X Extracts X X X X ..... IONER OF INCOME-TAX [2000 (2) TMI 10 - SUPREME COURT]
Thus, invoking of sec.263 was not legally justified when the ld. AO considered the income offered as sourced from the business of the assessee. Thus, we note that the AO has taken one of the impossible view by treating the income offered during survey operation as income under the head business and profession. Appeal of the assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ount and offered only the income part embedded in it. A query was raised on this issue vide notice u/s 142(1) dated 10/08/2021 which reads as follows: "Please refer to notice u/s 142(1) dated 18/03/2021 and your reply dated 23.04.2021. In the notice vide question no. 2 you were asked to show where the declared income of Rs. 15,02,652/- was shown in your ITR and computation. In response, the assessee made following submission: "There are entries of cash sales recorded in Exhibit A-11 and few papers of Exhibit A-19 as well as Bill No. 2160 dt. 19-02-2018 for Rs. 1275 as per page no. 60 of Exhibit A-17, the sales of which were recorded in the cash book for FY 2017-18 (Exhibit A-2). These sales were recorded after survey on 19-02-2018 in the cash book amounting to Rs. 2,52,652/- and Rs 12,47,348 totaling Rs. 15,00,000/-. These sales as per Audited Trading A/c of Rs. 91,08,834/- including this figure of sales of Rs. 15,00,000. The copy of Cash Book dt. 19-02-2018 and Ledger Copy of Sales A/c dt. 19-02-2018 are enclosed herewith (Annexure-1). As is evident that the assessee included the undisclosed sales of Rs. 15,00,000 in the Books of Account which in turn increased their GP and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearly mentioned in the assessment order that the same was taxed as undisclosed income of Rs. 15,02,652/- declared at the time of survey in the statement recorded and accordingly was added to the total income of the assessee firm. Thus, ld. PCIT noted that since, the addition of Rs. 2,52,652/- was made on account of excess cash found and Rs. 12,50,000 was added as unexplained money u/s 69A of the Act on account of stock. On both the additions, the tax was required to be charged at special rates under the provision of section 115BBE of the Act, whereas a perusal of Computation Sheet revealed that the tax was charged at normal rates. In view of the facts mentioned above, ld. PCIT holds a view that the order passed u/s 143(3) for the AY 2018-19 dated 23.08.2021 was erroneous and prejudicial to the interest of the revenue. Accordingly, a show cause notice as per provision of section 263 of the Act was issued to the assessee on the issue that remained to be examined / verified while passing assessment order, was issued to the assessee on 07.03.2024 through online portal fixing the case for hearing on 19.03.2024. The assessee filed the reply to the said show cause notice vide letter d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e necessary verification in respect of the observations made in this order after allowing reasonable opportunity to the assessee. I wish to make it clear that I am not disturbing the assessment that has already been made. I am only passing an order where unexplained money and unexplained investment is to be brought under the correct provisions of the Act. The assessment order is set aside and restored to the file of Assessing officer to verifying the issues as discussed in the order and that to on independent satisfaction of the Assessing Officer. 5. Aggrieved from the order of ld. PCIT the assessee preferred the present appeal before this tribunal. In support of the grounds so raised by the assessee, the ld. AR of the assessee heavily relying on the written submission filed before the ld. PCIT and repeatedly submitted that the income that has been considered as additional income is sourced from the business only. The statement of the partner was also recorded wherein he gave clarification about the source. The ld. AO has considered the overall facts and taxed the income as per his will and wisdom. Now ld. PCIT merely in the proceeding u/s. 263 of the Act cannot change the char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee firm situated at Bazaza Bazar, Alwar. For the year under consideration the assessee firm e-filed its return of income u/s 139 on 19/10/2018 vide acknowledgement no. 339545431191018 declaring a total income of Rs. 48,700/-. The case of the assessee was selected for scrutiny notice u/s. 143(2) and 142(1) were issued and the assessee furnished its reply which was placed on record by the ld. AO. Records reveals that the assessee engaged in the business of retail trading of clothes. While survey and post survey proceedings, statements of Shri Ankit Khandelwal, one of the two partners of the assessee firm, were recorded on two occasions 19.02.2018 and 22.02.2018. While replying to question number twenty of his statement recorded on 19.02.2018, he admitted that the firm had an undisclosed income of Rs. 15,02,652/- and the same was other than the regular business income. However, during assessment proceedings, it was noticed that the assessee has shown the amount of Rs. 15,00,000/- as its undisclosed sales in the P&L account and offered only the income part embedded in it. A query was raised on this issue vide notice u/s 142(1) dated 10/08/2021. In response, the assessee submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sclosed income was on account of cash and stock. In response to the said show cause notice no reply was submitted and therefore, ld. AO noted that the assessee has nothing to say in the matter and thereby he taxed that undisclosed income of Rs. 15,02,652/- in the hands of the assessee while doing so he has not invoked the provision of section 68 of the Act and accordingly assessment was completed on 23.08.2021. From the orders of the lower authorities and the submissions of the assessee, it is found that the pre-requisites to the exercise of jurisdiction by the CIT u/s 263, is that the order of the AO is established to be erroneous in so far as it is prejudicial to the interest of the Revenue. The ld. PCIT has to satisfy the twin conditions, namely the order of the AO sought to be revised is erroneous; and it is prejudicial to the interests of the Revenue. If any one of them is absent i.e. if the assessment order is not erroneous but it is prejudicial to the Revenue, Section 263 cannot be invoked. It is noted that this provision cannot be invoked to correct each and every type of mistake or error committed by the AO; it is only when an order is erroneous as also prejudicial to rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the issue is reproduce herein below : "13. On appraisal of facts, we are persuaded by the first limb of the arguments. The determination of true nature and character of income is highly contextual and law has not devised any straight jacket formula in this regard. The classification of income under a particular head of income may significantly vary having regard to the nuanced facts of each case. When seen contextually, the additional income in instant case was conceded by the assessee in the course of survey operations at her business premises. The income surrendered is sort of lumpsum figures offered in the form of excess stock, unaccounted advance to staff, excess cash generated etc. from business operations. Such additional income confessed in survey at business premises gives a facial impression of business attributes. In the light of assertions made in statement in survey and post survey proceedings placed in the paper book, the assessee appears to have made out an arguable case that such income is concomitant of business activities and thus impressed with the character of business income as correctly disclosed in the ROI. The action of AO is not open to attack as erroneo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
