TMI Blog2015 (11) TMI 1375X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's appeal for Asst. Year 2010-11, against the order dated 20.03.2014, passed by the learned CIT, Bathinda under section 263 of the Act. The assessee has taken two grounds of appeal; however, the crux of grounds of appeal is the grievance of the assessee against the order passed by CIT, Bathinda under section 263 of the Act. The case was earlier heard on 2.2.2015, but it was re-fixed for certain clarifications and thereafter after few adjournments had come up for hearing before the present Bench. 2. The brief facts of the case are that the assessee is a Manufacturer of Rice Sheller Machineries and its parts. A survey was carried out on the premises of the assessee on 14.09.2009 u/s 133A of the I.T. Act, 1961. During the course of survey, the assessee surrendered an additional income of ₹ 1,25,00,700/- over and above the normal income for the year under consideration. The assessee filed its return of income on 26.07.2010 and declared income of ₹ 63,02,570/-. The case of the assessee was selected for scrutiny. During the assessment proceedings, the assessee was asked to justify the low returned income as compared to the surrendered income. The assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iv) Labour advance Rs.5,60,000/- v) Office renovation ₹ 8,40,000/- 4.2 During the course of hearing, I had specifically requested the learned Counsel of assessee to submit as to the nature and sources of ₹ 85.60 lacs items shown under the head 'Directors' imprest account . He was also requested to submit as to how this amount can be treated as business income. Similarly he was asked to explain the source and business connection of other items of surrender of income mentioned above. However, the assessee has not been able to give any satisfactory reply and explanations in this regard. The assessee had merely repeated that these items are business income without supporting the claim with any cogent reasons or verifiable evidence. 4.3 I had also asked the assessee to explain the nature of these entires from their books of accounts. The assessee has submitted relevant photocopies of ledger account. However, the said entry in the ledger account are nothing but the repetition of the entries mentioned in para 4.3 above and the correspondin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature and source of acquisitions, or the explanations offered by the assessee is not satisfactory, are hit by the deeming provision of section 69A of the I.T. Act, 1961. The fact of the case of the assessee squarely fall under the said provisions. 4.6 Since the income surrendered by the assessee falls under the section 69 of the I.T. Act, 1961, the same has to be taxed separately without the adjustment of any losses or deductions available to the assessee under the normal computation of income under the head income from business and profession . The Law on this issue was laid down by the Hon'ble Gujrat High Court in the case of Fakir Mohd. Haji Hasan [120 Taxman 11] and in 247 ITR 290 (2002) that section 69,69A, 69B and 69C are deeming provisions and this income can not be set off under any other head of income. In view of the legal position on this issue clearly laid down by the jurisdictional High Court, various other case laws relied upon by the assessee do not help the case of the assessee in any manner since this issue is directly and squarely covered by the jurisdictional High Court in the case of Kim Pharma (supra). To give an example, the assessee has relied hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of taxable income. 3. Aggrieved the assessee is in appeal before us. 4. At the out set the learned AR invited our attention to copy of balance sheet and Profit and Loss account placed at paper book page 12 to 32 and our specific attention was invited to the Profit and Loss account placed at paper books page 29 and it was submitted that the surrendered income was duly credited to the Profit and Loss account as the surrendered income was made over and above the normal profits of the concern of the assessee. He further took us to page 35 where a copy of letter written by Assessing Officer on 15.07.2011 was placed. Our specific attention was invited to Para-11 of the said letter where Assessing Officer had specifically required the assessee to explain net income disclosed in the return of income viz-a viz surrendered income. Therefore, the learned AR submitted that during the course of assessment proceedings, the Assessing Officer has specifically raised this issue and assessee had filed a detailed reply vide its letter dated 18.1.2013 placed at paper book page 37 to 40 and he further, took us to paper book page 44 where a further explanation submitted by the assessee vide le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned AR submitted that the Hon'ble Delhi High Court had held that there was distinction between lack of enquiry and inadequate enquiry and if there was any enquiry even inadequate that would not by itself give action to the Commissioner to pass order under section 263 of the Income tax Act, merely because he had a different opinion in the matter. The learned AR submitted that in the present case the Assessing Officer had raised the query and assessee had duly explained the same and after considering the explanation of assessee the Assessing Officer had passed the assessment order. Therefore, it was submitted that in this case the Assessing Officer had made full enquiries and as per the judgment of Hon'ble Court even inadequate enquiries were sufficient to debar the Commissioner to pass order under section 263. It was further submitted that in the case law of CIT vs. Deepak Mittal (supra) the Hon'ble Court held that change of opinion by reappraising the evidence by Commissioner is not within parameters of revisional jurisdiction to Commissioner under section 263 of the Act. The learned AR further submitted that the case law decided by Chandigarh Tribunal is squarely app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of the case as in the case of Gabriel India Ltd. (supra), the Hon'ble Court had held that learned CIT is not empowered to make fishing enquires whereas in the present case the Commissioner had just observed that Assessing Officer had skipped the additions on account of surrendered income and has not made any fishing enquiries. Similarly, he argued that the facts of the case laws of CIT vs. Deepak Mittal 324 ITR 411 are not para material. As regards the Tribunal Order in the case of Khushi Ram Sons (Pvt.). Ltd. vs. CIT (supra). The learned DR submitted that such order has no precedential value in view of judgment of Punjab Haryana High Court in the case of Kim Pharma (Pvt.) Ltd.(supra), wherein the Hon'ble Court has decided the issue of allowance of expenses against the surrendered income in favour of revenue. In this respect, he invited our attention to question-B framed by the Hon'ble Court. The learned DR submitted that as per answer to this question the assessee was not eligible for set off of losses and expenses against the surrendered income and therefore, he argued that the case law of Kim Pharma (supra) was squarely applicable in the present case, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation had passed the assessment order, however, he did not mention the fact of considering this explanation in the assessment order. The only none mentioning of certain enquiries and explanations thereof. in the assessment order in itself does not give a right to Commissioner to pass order under section 263. The Hon'ble Bombay High Court in the case of CIT vs. Gabriel India Ltd.(supra) has held that where the Assessing Officer had made enquiries in regard to nature of expenditure incurred by assessee and assessee had given detailed explanation in that regard and Assessing Officer had accepted the explanation of the assessee, the decision of Assessing Officer could not be held to be erroneous simply because in his order he did not make an elaborate discussion in this regard. In the present case, the Assessing Officer raised an enquiry and assessee filed detailed reply and thereafter, Assessing Officer accepted the explanation and did not make any addition on that account. The order of Assessing Officer cannot be said to be erroneous as he has taken a plausible view, keeping in view the facts and circumstances of the case. The Hon'ble Delhi High Court in the case of CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d set off of unabsorbed losses for the assessment years 2007-08 and 2006-07 and Assessing Officer allowed the same. The learned Commissioner invoked jurisdiction under section 263 of the Act, on the ground that the Assessing Officer had failed to make enquiries in respect of claim of set off on unabsorbed losses, fall in gross profit rate and depreciation and wrongly allowed the claim against the surrendered income which was erroneous and prejudicial to the interest of the Revenue. The Hon'ble Tribunal has held as under: Held, allowing the appeal, that the Assessing Officer had made detailed enquiry at the assessment stage with regard to the fall in gross profit rate, set off the brought forward losses and depreciation. The Assessing Officer called for complete details with regard to manufacturing process, month-wise production, consumption, quantitative sales and justification of major expenses. The assessee furnished complete details and replies before the Assessing Officer and there was no infirmity in the replies of the assessee. The nature of business of the assessee revealed that it might not be possible to give the exact details of manufacturing large number of swee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, in our opinion the Assessing Officer has taken a plausible view as the assessee had surrendered the income as business income which was separately credited to Profit and Loss account. 10. The case law of Kim Pharma Ltd. vs. CIT (supra) as relied upon by the learned DR is not applicable to the facts and circumstances of the present case as in that case the Hon'ble Court had reproduced the findings of Tribunal that assessee during the course of survey had surrendered the income as income from other sources. Whereas in the present case the assessee had surrendered income over and above the normal profits of the concern and not as income from other sources. The findings of Tribunal as recorded by Hon'ble Punjab Haryana High Court are reproduced as under: In the facts of the present case, we find that assessee during the course of survey had surrendered the income as income from other sources though a plea has been raised by the assessee that the income was surrendered as income from job work but no evidence to prove that stand of the assessee has been brought on record. The assessee had also surrendered additional income of ₹ 10 lacs in assessment year 2005- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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