9911796707
TMI Blog2024 (7) TMI 1620X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and various other reasons and further contrary to the real facts of the case hence the same may kindly be quashed. 2.1 The ld. AO as well as the ld. CIT (A) have grossly erred in law as well as on the facts of the case in treating the surrendered income on account of sundry debtors and excess cash fond as income undisclosed or unexplained investment or money u/s 69 & 69A in place of "business income" as the same was generated from business or was of business income and also erred in making the addition of Rs. 2,06,60,000/- u/s 69 and 69A on account of surrendered income. also erred in making the addition without invoking the provision of sec. 145(3) and without rejecting the books of accounts, also erred in not considering the material and details in their true perspective and sense despite available on record. Which are against the provisions as per law and further contrary to the real facts of the case hence the ld. AO may kindly be directed to treat the surrendered income as business income and the additions may kindly be deleted in full. 2.2 The ld. AO as well as the ld. CIT (A) have also grossly erred in not giving the benefit of deduction, expenses or losses a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 018, and duly served upon the assessee through registered e-mail by ITBA on 01.09.2018 and also by registered post. 3.1 Due to change of incumbent, a fresh opportunity of being heard was given by ld. AO u/s 129 of the IT Act, on 05.08.2015. Further, a notice u/s 142(1) of the Act and a questionnaire were issued to the assessee on 21.08.2019 and 15.10.2019, and duly served to the assessee through email. In compliance with the notice issued u/s 142(1), the assessee submitted its reply on e-proceeding module on different dates and same was taken on record by the assessing officer. 3.2 The assessee firm is a partnership firm engaged in the business of real estate as developers and builders. For the year under consideration, the project was in the initial stage and no flat whatsoever was completed or sold by the assessee. After examination of the replies and documents submitted by the assessee, the assessment was concluded by the AO on the returned income. 3.3 But, while doing so, ld. AO noted that a survey u/s 133A was carried out at the business premises of assessee on 04.07.2016, whereupon a diary was found containing particulars of certain unaccounted debtors to the tune of Rs.&n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure/investment. (v) It is clear that the purpose and object of the latest amendment is only to prevent the unaccounted money in system and if found any income under section 68, 69, 69A 69B 69C and 69D tax should be charged @ 60%. (vi) The plea of the assesses that the amendment to section 1158BE should come into force wef. AY 2018-19 is not acceptable because it is clearly mentioned in the amended section u/s 115BBE that the amendment is applicable for A.Y. 2017-18 and onwards. (vii) The case laws given by the assessee are not applicable in the case of assessee because facts of cases given by the assessee and this cases are differ. (viii) The assessee himself admitted in reply filed on 06.11.2019 that unexplained investment in form of sundry debtors are covered u/s 69 &excess cash is covered u/s 69A of the IT Act but the disclosed income u/s 69 & 69A in the hand the assessee has not disclosed such undisclosed sundry debtors u/s 69 & excess cash u/s 69A of IT Act in the IT return but disclosed under income from other sources. 3.5 Based on the provisions of section 69 and 69A of the IT Act for unexplained investment in form of sundry debtors and excess cash, Ld. AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from 30% to 60%. 3.3 In circular No. 3/2017 and 11/2019 of the CBDT it has been clearly mentioned that this amendment takes effect from 01.04.2017 and will, accordingly, apply from A.Y. 2017-18 and subsequent assessment years. The real purpose of introducing this amendment was only change higher tax in respect of income/expenditure/investment on the assessee who fails to explain the nature and source of said income/expenditure/investment. It is clear that the purpose and object of the latest amendment is only to prevent the unaccounted money in system and if any income is found under deeming sections tax should be charged at higher rate. 3.4 Circular clarifies the language of amendments in a language easily understandable to norma taxpayers. The plea of the assessee that the amendment to section 115BBE should come into force w.e.f. A.Y. 2018- 19 is not acceptable because it is clearly mentioned in the amended section u/s 115BBE that the amendment is applicable for A.Y. 2017-18 and onwards. Circulars are integral part of the amendment. 4. In view of the above discussion it is held that there no ambiguity in the language of section 115BBE and its applicability in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors u/s 69 of the act in the return of income but disclosed under income from other sources and paid tax at normal rate. 3. The ld. AO has stated that unexplained debtors in the form of debtors are covered u/s 69 and excess cash is covered u/s 69A of the I.T. Act hence tax should be chargeable u/s 115BBE. Hence, the ld. AO has issued the show cause notice on dt. 15.10.2019 asking to the assessee why the tax on Rs. 2,06,60,000/- should be charged @60%+surcharge @25% and cess 3% u/s 115BBE. In response to the same, the assessee firm has filed his reply on date. 08.11.2019 also reproduced from page No. 2 to 7 of the assessment order. 4. However, the ld. AO did not accept the contention of the assessee firm and stated that section 115BBE was originally introduced by the Finance Act, 2012 w.e.f 01.04.2013 applicable for A.Y. 2013-14 and onwards. Sec. 115BBE was amended vide taxation laws. (second amendment) act 2016 w.e.f. 01.04.2017 i.e. for A.Y. 2017-18 and onwards in this amendment the Govt. has only changed the tax rate from 30% to 60% and Surcharge @25% of the income determined u/s 68, 69, 69A, 69B and 69D. The ld. AO has further noted that vide circular No. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernational Project Pvt. Ltd. (order dated 28.02.2019) ii) Jaipur bench ITAT Lt. Smt. GurbachanKaur (order dated 05.12.2019) iii) Jaipur Bench ITAT Manju Kaushik (order dated 09.12.2019) iv) Lucknow bench ITAT Ravi Prakash Khandelwal (order dated 08.11.2019) v) Mumbai G Bench ITAT order in case of Su-Raj Diamond Dealers Pvt. Ltd. order dated 27.11.2019 vi) Mumbai D bench ITAT order in case of R&H Property Developer Pvt. Ltd. order dated 30.07.2019. The ld. CIT (A) has not speak a single word on theses issue and submission, which show he either has satisfied with our plea or he is not having anything to rebut our contention. Hence the assessment order is liable to be quashed on this ground. 2. Wrongly Interpreted that assessee has considered declared income in survey under the head of income from other source whereas it should be considered under the head of income from business:- 2.1. That prior to 1st April 2017 the question whether the declared income sought to be taxed was in the nature of income u/s 68 to 69D or not or the question with regards to nature of activity from which such declared income was derived was not at all relevant as the rate of taxatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that these entries pertain to his proprietorship concern M/s Shivam Coir Foam products, Khanna. It was further stated that these entries are advances/receivables from various persons in respect of his business dealings and were recorded for the purpose of memory. It was further stated that to buy piece of mind, he offers a sum of Rs 15 lacs as additional income for the current financial year subject to no penal action. The same was subsequently reiterated in the surrender letter dated 5/09/2018 wherein the assessee has stated that he offers the additional income for current financial year at normal rate of tax as the said income has been earned by him out of business transactions in the current year. We therefore find that it is a case where there are unrecorded sales made by the assessee during the current financial year and receivables arising out of such unrecorded sales have been offered to tax as additional business income by the assessee. The source of such unrecorded receivables is thus the unrecorded sales which have been explained by the assessee and thus, the necessary nexus with the business of the assessee has been established. The name of the person, the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shall apply. The AO is thus directed to assess the income of Rs 50 lacs under the head "Income from Business/profession" and apply the normal rate of tax. 10. In the aforesaid factual background, it was submitted that the assessee has been engaged in the business of manufacturing of wearing apparels and is not engaged in any other business and neither the assessee has any other source of income. The same fact has been accepted by the department during the course of survey action as well as during the course of assessment proceedings later on wherein, no adverse opinion w.r.t. any other source of income of the assessee. Hence, in the first instance, it is hereby submitted that the assessee is engaged only in the business of manufacturing of wearing apparels and any income which accrues to the assessee or any asset which is in the possession of the assessee are wholly earned from the business income of the assessee. During the course of survey action on 29.08.2018, the Ld. AO conducted the physical verification of the stock and compared the same with the value of stock in the books of account maintained by the assessee which itself justifies that the department itself believes t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he business. A perusal of the assessment order would also show that nowhere in the body of the assessment order, the AO has even contradicted this explanation of the assessee. The AO has not brought on record any iota of evidence to demonstrate that the assessee had any other source of income except income from business and, therefore, it is our considered view that deeming such income under the provisions of sections 68 or 69 would not hold good. In our view, in such a situation, the AO could not have legally and validly resorted to taxing the income of the assessee at the rate of 60% in terms of provisions of section 115BBE of the Act." * In the case of M/s. Sham Fashion Mall in ITA No. 315/CHD/2022, the Hon'ble Chandigarh Bench of ITAT has held as under: "12.0 In ITA No. 315/CHD/2022, in the case of Sham Fashion Mall, the only issue before us is the challenge to the provisions of section 115BBE by the AO and its sustenance by the Ld. CIT-(A). In this case the returned income has been accepted by the AO. We have also gone through the assessment order as well as the order of the Ld. CIT-(A) and it is seen that nowhere in the orders of both the lower authorities is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained asset was found during the search action so far as the aforesaid surrender of Rs. 15 lacs was concerned. In these circumstances, the aforesaid surrender of Rs. 15 lacs can be said to have been offered to cover up the discrepancies in respect of likely disallowances of claims, if any, relating to its business income. 9. In view of this, since the aforesaid surrender is not covered under the provisions of Section 68, 69, 69A, 69B, 69C and 69D, the provisions of Section 115BBE are not attracted in this case. 10. In view of the above, the action of the lower authorities in invoking provisions of Section 115BBE on the surrender income of Rs. 15 lacs is set aside and the AO is directed to compute the said surrendered income under normal provisions as applicable to the business income of the assessee. 11. In the result, appeal of the assessee stands allowed." * The Hon'ble Chandigarh Bench in the case of The DCIT vs M/s Khurana Rolling Mills Pvt. Ltd. as reported in ITA No. 745/CHD/2016: "9. In the facts of the present case, it is not disputed that the surrender had been made on account of undisclosed debtors. Since the facts are identical to that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee, wherein it was alleged that it is for the purpose of the business. Therefore, to the extent the expenditure incurred for construction of the building, out of unexplained source is concerned, it is to be construed as earned from the business and it will take character of the business income. Once this income is to be assessed under the "business income", then all incidental benefits for set off from brought forward loss or any other expenditure is to be given to the assessee." The ld. CIT (A) has not spoken a single word on theses issue and submission and no contrary judgments have been brought, which show he either has satisfied with our plea or he is not having anything to rebut our contention. Hence the income so surrendered is to held as business income on which provisions of Sec. 115BBE is not applicable. 3. Wrongly erred in invoking Sec. 69 and Sec. 69A of the Income Tax Act, 1961: The ld. has wrongly invoked the provisions of Sec. 69 and 69A on the income surrendered and declared in the ITR. 3.1 Further during the course of survey action at the business premises of the assessee on 05.07.2016 as well as during the course of assessment proceedings, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded in the books of accounts and not offered satisfactory reply. On perusal of the provision it is proved that the provision of Sec 69 of the I. T. Act is not applicable on the assessee. 3.3 That during the F.Y. 2016-17, a survey u/s 133A was conducted on the premises of the assessee on dated 04.07.2016. The assessee declared an amount of Rs. 1,97,35,000/- on account of noted in diary found during the course of survey. Since the survey team could not found any investment made by the assessee which were not recorded in the books of account, any documents/ information/records which showed that assessee was found to be the owner of any money, bullion, jewellery or any other valuable article which were not recorded in the books of account but which showed that the assessee has incurred any expenditure for which it had offered no explanation about the sources of such expenditure or part thereof. Therefore since no evidence was found to show that declared income represented any undisclosed income, the sources of which had not been disclosed by the assessee so it could not be regarded as deemed income under the provision of Sec. 69 of the income Tax Act, 1961. The same was als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome of the assessee firm. Having held so, the same was assessable under the head 'business and profession' and as stated above. The excess cash found of Rs. 9,25,000/- are related to the undisclosed income of the firm as mentioned in the reply of question no. 10 of the statement recorded. And no provisions of 115BBE of the Act is also applicable. On this preposition kindly refer the case of Famina Knit Fabs And Anr. vs. ACIT AND ANR 198 TTJ 258 (Chd.). The survey team at the time of recording the statements has also not referred the provisions of 68/69 and 69A nor stated surrendered income shall be taken u/s 68/69 and 69A. Then how the department can take the same u/s 68/69 and 69A. It was the duty of survey team to bring its intention at the time of taking the surrender from the assessee firm. As it was the duty of department to explain the same to the assessee. A general persons cannot understand the technicalities of the complex law of the income tax . And it is also the settled legal position of the law the Income tax Authorities cannot take advantage of ignorance of assessee toward of law. It is law principal of law that right income should be taxed in right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o comply with summons u/s 131(IA-Therefore order on CIT (A) is accordingly set aside and thus penalty u/s 272A(1)(c) levied by AO is not in accordance with law therefore same is cancelled-Assessee's appeal of allowed. * Hon'ble ITAT, Indore Bench in the case of ACIT v. Anoop Neema vide its order in ITA 05/Ind/2020 dated 06.01.2022 has held: 7. We have heard rival contentions and perused the records placed before us. Revenue's sole grievance is that Ld. CIT (A) erred in not treating the income of Rs. 1,41,75,568/ declared during the course of search carried out on 15.12.2016 as unexplained investment u/s 69 r.w.r.t. 115BBE of the Act. We notice that during the course of search excess stock of gold weighing 6433.812 gms was found amounting to Rs. 1,41,75,568/-. Mr. Anoop Neema in his statement recorded or oath on 16,12.2016 u/s 132(4} of the Act accepted the value of excess stock as additional business income for financial year 2016-17. So far as, admission of undisclosed income of Rs. 1.41, 75,569/- is concerned there is no dispute at the end of both the parties. The bone of contention is that whether the provision of section 115BBE of the Act are applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e prejudicial to the interest of the revenue. 10. The mode point is whether the amendment is prospective or retrospective, as on the date of survey, the amended provisions were not there in the statute. In our considered opinion, this is a highly debatable issue, which cannot be subject matter of exemption of jurisdiction under section 263 of the act. Moreover, a perusal of the assessment order clearly shows that the assessing Officer has nowhere Invoked the provisions of section 68/69 of the act to impute the tax rate of section hundred and 15BBE of the act. The above matter is directly covered by the recent decision of this Hon'ble bench in the case of DCIT v/s Sh. Ram Narayan Birla in ITA No. 482/Jp/2015 dt. 30.09.2016, where the Hon'ble Bench at page 4 in para 4.3 held that "Undisputed facts emerged from the record that at the time of survey excess stock was found. It is also not disputed the assessee is engaged in the business of jewellery. During the course of survey excess stock valuing Rs. 77,66,887/- was found in respect of gold and silver jewellery. The coordinate Bench in the case of Chokshi Hiralal Maganlal v/s DCIT 131 TTJ (Ahd)1 has held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t identifiable other investment which was found during the course of survey. It is also admitted fact the appellant admittedly is engaged in business from past many years. The sundry debtors and excess cash, if any found during the course of survey was of business only and that too on account of the suppressed profits of business over the years. The sundry debtors and excess cash have not been separately identified and the undisclosed income of past years if any was invested in same business in the form of sundry debtors and excess cash. Under such circumstances, the sundry debtors and excess cash if any cannot be separated from the total of business either recorded or not recorded in the books of accounts. So, the investment in sundry debtors is part and parcel of business only. Further in the present case the ld. AO nowhere proved nor placed any material evidence on the records from, which it can be inferred that the sundry debtors found was not part of business but the other known sources. The ld. AO has based his case just on assumptions and presumptions without bringing on records any positive evidence or cogent reason in support of his observations as the sundry debtors wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... And the department accordingly had taken the cheques of advance tax from the assessee firm of that tax on surrender amount. Thus the assessee firm has honestly fulfilled his promise while filling the ITR in which firm has paid the entire tax i.e. firm has honoured the surrendered. Firm has not departed from his promise and contract. Now the department has breached from its promise or contract i.e. it is the breach of promissory or contract. The department has back from his stands after 3 years +3 months from surrender and after 2 years from the filling the ROI before the 15.10.2019 the department has not given any notice or his views and kept to the assessee firm in dark by taking misinterpretation of the Second amendment of Sec. 115BBE. While if we look in Section 294 of the I.T. Act as above it is the invalid illegal action of the ld. AO. It is was the duty of the revenue to inform to the assessee just immediately the amendment in December 2016 by stating that you (assessee) had given the advance tax cheques and made the surrender at the rate of 30 tax + SC but now the law has changed and you (assessee) should give the more cheque of advances tax cheque or return should be filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at though the amendment was applicable for assessment year 2017-18 but only on income referred to in said section pertaining to the date after 15.12.2016. As in case of the assessee, the unrecorded sundry debtors was found on 4th and 5th of July, 2016 and accordingly at the material time, old provisions of section 115BBE are applicable. It was accordingly submitted that the amendment provisions are not retrospective in operation and are not applicable in the present case and has been wrongly invoked by the Assessing Officer under proceedings initiated u/s 143(3)/154 of the Act .In support, the reliance was placed on Hon'ble Supreme Court decision in case of Karimtharuvi Tea Estate Ltd. vs. State of Kerala[1966]60 ITR 262(SC). Also refer CIT v/s Scindia Steam Navigation Co. Ltd. 42 ITR 589(SC). 4.4 The same was also decided in favour of assessee in following High Courts and Supreme Court decision. (i) The Assessing Officer has failed to appreciate and Consider that it is a settled proposition of law that legislations which modify accrued rights or which impose obligations or imposed new duties or attach a new disability have to be treated as prospective. This is so held by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the year in which the search is initiated under section 132 or requisition is made under section 132A of the income-tax Act. " Addition of this proviso in the Finance Act, 2003 further makes it clear that such a provision was necessary to provide for surcharge in the cases of block assessments and thereby making it prospective in nature. The charge in respect of the surcharge, having been created for the first time by the insertion at the proviso to Section 113, is clearly a substantive provision and hence is to be construed prospective in operation. The amendment neither purports to be merely clarificatory nor is there any material to suggest that it was intended by Parliament. Furthermore, an amendment made to a taxing statute can be said to be intended to remove 'hardships' only of the assessee, not of the Department. On the contrary, imposing a retrospective levy on the assesses would have caused undue hardship and for that reason Parliament specifically chose to make the proviso effective from 1.6.2002. 40. The aforesaid discursive of ours also makes it obvious that the conclusion of the Division Bench In Suresh N. Gupta treating the proviso as clarificatory and givin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended and post-amended provisions of section 115BBE talks about the income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D. The change which has been brought about in the provisions relates to income so referred in aforesaid provisions so defined which is either reflected in the return of income or determined by the Assessing Officer and in both cases, it will be covered by the provisions of section 115BBE of the Act and rate of taxation has been increased from 30% to 60% on such specified income. There is therefore nothing stated in either the pre-amended or post-amended provisions of section 115BBE that where the assessee surrenders undisclosed income during the search action for the relevant year, the tax rate has to be charged as per provision of section 115BBE of the Act. Reliance is also placed on the Judgment of the Hon'ble Income Tax Appellate Tribunal, Jaipur Bench in the case of The Assistant Commissioner of Income Tax, Central Circle-2, Jaipur Vs M/s Sanjay Bairathi Gems Limited in ITA No. 157/JP/2017 wherein their Lordships have held that the excess stock found during the course of survey is a part of the business inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCC 352, 354; CIT v. Podar Cement (P) Ltd., (1997) 5 SCC 482, 506]. But if it changes the law it is not presumed to be retrospective, irrespective of the fact that the phrases used are "it is declared" or "for the removal of doubts". There was and is no ambiguity in the main provision of Section 9(1)(ii). It includes salaries in the total income of an assessee if the assessee has earned it in India. The word "earned" had been judicially defined in S.G. Pgnatale [(1980) 124 ITR 391 (Guj)] by the High Court of Gujarat, in our view, correctly, to mean as income "arising or accruing in India". The amendment to the section by way of an Explanation in 1983 effected a change in the scope of that judicial definition so as to include with effect from 1979, "income payable for service rendered in India". When the Explanation seeks to give an artificial meaning to "earned in India" and brings about a change effectively in the existing law and in addition is stated to come into force with effect from a future date, there is no principle of interpretation which would justify reading the Explanation as operating retrospectively. This being the case, Explanation 3C is clarificatory - it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Apex Court in the case of Karimtharuvi Tea Estate Ltd AIR 1966 SC 1385, this Court would observe that the argument advanced by Counsel for the assessees (Amicus Curriae) as well as the Department can be made only in respect of a rate prescribed under a Finance Act or an Act providing a surcharge if the same is brought into force on the 1st of April of the assessment year in which assessment for the previous year is being done as the same would only provide for ascertaining the rate, for existing liability under the Income Tax Act. But that is not the case here. Under the new provision, i.e. Section 64(1}(iii) a new liability has been prescribed and not the rate for ascertaining the liability. Such new liability under the Income Tax Act cannot be given a retrospective effect. Such liability can only be fastened on an individual If the same was existing at the time of accrual and not at the time of assessment. The observations of the Apex Court in paragraph 33 of the judgment in the case of Keshoram Industries and cotton mills (supra), clarifies this position. 18. In view of the judgments of the Apex Court in the case of Keshoram Industries (supra) as well as Karimtharuvi Tea Es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the department on the contrary, imposing a retrospective levy on the assessee would have caused undue hardship. Hon'ble ITAT Indore in the case of Priyadharshani Construction vs ITO (2012) 19 ITJ 276 (Trib-Indore) has held that "Substantive law shall be understood to be applicable prospectively unless made specifically retrospective. Thus, it is settled position of law that provision of section 115BBE of the Act is clearly not applicable in case of business income which is taxed under section 28 to 44 of the Income Tax Act. The assessing officer also failed to bring on records any other source of income of the appellant apart from the one that is show in return of income. In view of above facts and circumstances of the case it is respectfully prayed that section 69 of the Income Tax Act 1961 read with section 115BBE is not applicable to the facts of the case of the assessee and the disserve to be delete. * Hon'ble Jodhpur bench of ITAT in the case of Lovish Singhal & Others vs ITO (Appeal No 143/ Jodh/ 2018); * Hon'ble Jaipur bench of ITAT in the case of DCIT vs Ramnarayan Borla [Appeal No 482/ JP/ 2015 dt 30-09-2016), * Hon'ble Supreme Court in the case of Lakhmi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R the assessee claimed that the income falls within the meaning of section 69 or 69A of the Act. Ld. AR of the assessee also submitted that during the assessment proceedings also the assessee submitted that names of the debtors disclosed by the assessee and thus the source of that debtor arise from the business of the assessee. Thus, the assessee in turn also explained that the source of income offered and in turn deposited in the bank account of the assessee sourced from that amount which was disclosed by the assessee in the course of survey. Further, it has been submitted that the disclosure of income was made much before the demonetization announced and therefore, the amount which was disclosed sourced from the business of the assessee firm cannot be considered as undisclosed income of the assessee. Based on the above submissions, ld. AR of the assessee has submitted that the Assessing Officer should not have invoked the provisions of section 68 & 69A of the Act and that too without making any further investigation as to the source of income offered in the ITR so filed. 8. Per contra, ld. DR has relied upon the findings of the Assessing Officer as well as that of ld. CIT(A), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction of this section was to curve the practice of laundering of unaccounted money by taking advantage of basis exemption limit. Thus it was proposed to tax the unexplained credits, money, investment, expenditure etc. which had been deemed as Income under section 68, 69, 69A, 69B, 68C and 69D at the rate of 30% (Plus surcharge and cess as applicable) (ii) The section 115BBE was amended vide taxation laws (second amendment) Act 2016 wef. 01.04.2017 Le. for A.Y. 2017-18 and onwards. In this amendment, the Govt. has only changed the income tax rate from 30% to 60% of the income determined u/s 68, 69, 69A 69B 69C and 69D of the IT Act Surcharge 25% on income tax and applicable cess was also chargeable from the assessee. (iii) Vide circular No. 3/2017 and 11/2019 the CBDT has cleared the position of applicability of this section in which clearly mentioned that this amendment takes affect from 01.04.2017 and will, accordingly, apply from AY 2017-18 and subsequent assessment years. (iv) The real purpose of introducing this amendment was only change higher tax in respect of income expenditure investment on the assessee who fails to explain the nature and source of said incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year." 12. In the given set of facts, it is not a case of investment of the abovesaid amount by the assessee, and rather, as per list prepared by the assessee, a case of receipt of the amounts from the sundry debtors, which was offered for tax as regular income of the assessee firm. Said claim of the assessee was not disputed or challenged, and furthermore, there is no further evidence adverse to said claim raised by the assessee. Therefore, it cannot be said to be a case where provisions of section 69 come into application. Similar issue has been decided by the co-ordinate Bench of ITAT, Chandigarh Benches, Chandigarh in the case of Montu Shallu Knitwers vs. DCIT, in ITA No. 21/Chd/2023, on December 1, 2023. Therein, it has been held as under:- "18. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pared with the value of stock so recorded in the books of accounts and the difference in the value of the stock so found belonging to the firm has been offered to tax. There is thus no dispute that there is a commonality in the stock so found and as recorded in the books and in absence of which, the comparison would not have been possible and difference would not have been worked out. The Revenue has not pointed out that the excess stock has any nexus with any other receipts other than the business being carried on by the assessee. There is thus a clear nexus of stock physically so found with the stock in which the assessee regularly deals in and recorded in the books of accounts and thus with the business of the assessee and the difference in value of the stock so found is clearly in nature of business income. The statement of the partner of the assessee firm is available on record and related documents so found during the course of survey are stated to be in possession of the Revenue authorities. Apparently, the AO has failed to take into consideration the statement of the assessee recorded during the course of survey holistically, and other documents and findings of the survey t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was no physical distinction between the accounted stock or unaccounted stock. No such physical distinction was found by the Revenue either. The assessee has repeatedly claimed that unaccounted business income is invested in stock and there is no amount separately taxable under section 69. The department has ignored this claim of the assessee and sought to tax the difference between book-stock and physical stock as unaccounted investment under section 69 without considering the claim of the assessee that first the business receipt has to be considered and then investment should be treated as coming out of such unaccounted income. The difference in stock so worked out by the authorities below had no independent identity of its own and it is part and parcel of entire lot of stock. The difference between declared stock in the books and what is physically found would only be a mathematical expression in terms of value and not a separate independent identifiable asset. Therefore, it cannot be said that there is an undisclosed asset existed independently. Once this is so then what is not declared to the department is receipt from business and not any investment as it cannot be co-related ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntity being furniture and fixtures, air conditioners etc. They cannot have a direct nexus with business and therefore investment therein has to be considered under section 69 only." 15. In view of the above, AO is directed to consider the sum of Rs. 8,10,011/- as undisclosed business income assessable under the head 'business' and other two sums under section 69. The business income including application of section 40(b) has to be considered accordingly. For calculation of income in view of our above observations, we restore the matter to the file of AO. 22. In the instant case as well, there is no physical distinction between the accounted stock and unaccounted stock. No such physical distinction was found by the Revenue either. We therefore find that the difference in stock so found out by the authorities has no independent identity and is in terms of value terms only and thus part and parcel of entire stock, therefore, it cannot be said that there is an undisclosed asset which existed independently and thus, what is not declared to the department is receipt from business and not any investment as it cannot be co-related with any specific asset and the difference should ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
