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2022 (9) TMI 1028 - Income Tax
Revision u/s 263 - Additional income towards excess stock - whether the excess stock should be assessed as unexplained expenditure u/s.69C? - HELD THAT:- In the given case, in the statement recorded during the course of search the Shri Anand Kumar, one of the partners in the assessee firm, he has admitted that there is difference in the stock recorded in the books and the physical stock and agreed to offer the same as additional income.
PCIT has not brought anything contrary to record to state that the amount admitted towards excess stock is from a difference source. When the additional income is offered towards excess stock, the stock being part of the business of the assessee is offered to tax as business income - PCIT has merely substituted his views to the extent that the AO should have done further enquiry when PCIT himself admits that the additional income is from the excess stock. We are of the considered opinion that the revisionary jurisdiction could not be allowed to be exercised by the PCIT either for substituting his own opinion for that of the AO or for making a fishing and roving enquiry.
PCIT in the present case has wrongly invoked the jurisdiction under section 263 and the controversy in the present case is fully covered by the judgment of Gabriel India Ltd.[1993 (4) TMI 55 - BOMBAY HIGH COURT] - Accordingly the impugned order of the PCIT with regard to the issue of setting the order of AO u/s.143(3) with regard to this issue is quashed.
Applicability of section 269ST to the investments made in cash - Mode of undertaking transactions - A.R. submitted that provisions of Section 269ST of the Act is applicable only to the receiver of the amount and not the payer - HELD THAT:- The facts of the case here as has been noted by the AO is that the assessee has made payments of Rs.4.50 crores to the shareholders of M/s.Lax Bio Feeds Pvt Ltd., apart from the agreed share price. As per the statement recorded u/s.132(4) from the partner of the assessee the source of the amount paid was the inflated purchases and payments made boat owners and that the said payments have not been recorded in the books of accounts. It is also noted by the AO that the amount invested has already been taxed as undisclosed income is already offered to tax in AY 2017-18. Further from the combined reading of the above provisions it is clear that section 269ST and the penalty provisions for not complying with the said section as contained in section 271DA are applicable to the receiver of the sum. Considering the facts of the case and the relevant provisions of the Act, we are of the view the action of PCIT invoking section 263 stating that the AO’s order is erroneous to the extent of AO not verifying whether investments are in violation of section 269ST is not tenable. We therefore quash the order of PCIT with regard to this issue.
Assessee appeal allowed.