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TMI Blog2017 (4) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... me. (iii) On the facts and in the circumstances of the case, the Ld. CIT(A) has exceeded his powers in directing to allow the set off over and above the amount determined by the appellate authorities in the original appellate proceedings. 2. It is noted that this is the second round of appeal where the matter has reached the Tribunal. The genesis of this appeal lies in the the additional ground of appeal which was taken by the appellant in the first round of appeal before the Tribunal. Here it would be relevant to refer to the findings of the ld CIT(A) in the first round of appeal which was the subject matter of appeal before the Coordinate Bench and which formed the basis of filing the additional ground of appeal before the Tribinal: "As regards to addition of undisclosed profit from the sale of Mahala property amounting to Rs. 12800000/- it is submitted that the sale of property under question was made on 3.7.2006 which is beyond the AY under appeal i.e. the same relates to AY 2007-08. Thus no addition can be made in the year relevant assessment year the undisclosed profit from the sale of Mahala Property amounting to Rs. 12800000/-. More over the ld A/R submits that since t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear, therefore, we are of view that this matter should go back to the file of AO to consider the submission of the assessee. There is no dispute that set off is allowable against surrendered amount. However, onus is on the assessee to prove that the surrendered amount was available with the assessee for allowing set off against the income added by the AO or by the ld. CIT(A). If the set off is not allowed, then it will tantamount to double taxation. Therefore, the set off has to be allowed. 50. One of the contentions of the assessee that the AO is not allowing set off for the reason that if set off is allowed, then the assessed income will be reduced or not. The question is to allow set off. The AO has added the amount for AY 2006-07. However the ld CIT(A) has directed to add this amount for AY 2007-08. Therefore, for this reason if the assessed income of the AY 2006-07 becomes less than the disclosed income, then effect has to be given as per direction of ld CIT(A) as assessee has not filed any appeal against such findings of ld CIT(A). 51. In view of these facts and circumstances, we set aside this issue to the file of AO to examine the additional grounds in the light of o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been able to provide any details as to how he has computed the revised income before the AO at the time of giving effect to the order of CIT(A). It may be seen that the assessee has declared following undisclosed income in AY 2007-08 as referred in para 5.1 of the asstt order:- S. No. Details of income surrender Amount 1. Undisclosed investment made in the property at NRI colony Jaipur on the basis of seized Annex A-1 and other papers Rs. 5340000 2. Undisclosed investment made in the property at Shri Nath Nagar, Jaipur on the basis of seizes annexure A-4 Page 6 and other seized annexures Rs. 816000 3. Undisclosed investment made in the property at C-10, Jai Singh Highway, Jaipur on the basis of Annexure A-4, page 1 to 24, A-15 page 1 to 40 and other seized Annexures Rs. 16500000 4. Undisclosed investment made in the property at Subhash Chowk Amer Road Jaipur on the basis of seized annexure A-6, page 44, A-10 page 12 to 18, A-13 page 1 to 39 and other seized Annexures Rs. 3015000 5 Undisclosed investment made in the excess stock found during the course of search in the business concern Rs. 28000000 Rs. 48336340 19. It may be seen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; (i) On account of un-named property (-) Rs. 2000000 (ii) On account of MI Road property (-) Rs. 3075000 (-)Rs.5075000 Less:- LTCG on MI Road property to be Considered based on DVO report Rs.2270079 Add:- Capital gain on MI Report as per DVO reports as discussed Rs.1002862 Add:-Part Investment in Mahala property pertaining to This year as per order of the CIT(A) Rs.4504000 Add:- Profit on sale of Mahala property Rs.12800000 Less:- Set off for investment in undisclosed Stock surrendered as discussed Rs.12800000 Rs. NIL Total Income Rs.87713010 2.3 Being aggrieved with the above order of AO, the assessee carried the matter in appeal before the ld. CIT(A) and his findings are contained at para 4.3 of its order which is reproduced below:- "4.3 I have considered the assessment order of the AO u/s 254/250/154/143(3) dated 28.12.2011 and the submissions made by the AR of the appellant. (i) I am inclined to agree with the observation of the AO that the AO has to act strictly in accordance with the findings and directions of the higher authorities in set aside proceedings and while giving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has simply ignored/excluded the set off of Rs. 26723945/- allowed by AO in order dated 29.06.2009. (ii) The appellant had taken following additional ground before the ITAT for AY 2007-08 in ITA No. 646/JP/09. "The learned CIT(A) has erred in not given direction to the Assessing Officer to give effect to the following findings given by him in the order for AY 2006-07- Undisclosed profit of Rs. 1,28,00,000/- on sale of Mahla property required to be considered in AY 2007-08. Set off of this profit required to be allowed with the surrendered amount of undisclosed investments for properties by the assessee group in AY 2007-08". The Hon'ble ITAT set aside this issue to the file of AO to consider the issue of set off of undisclosed profit of Rs. 1.28 crores against the amount surrender by the assessee since facts in that regard were not clear (iii) The AR has submitted that the said Mahla property was sold on 3.7.2006 as per date of sale deed and the ld. CIT(A) directed the AO to give set off of sale consideration and profit in the year of sale which is available for other investment made by the assessee in the AY 2007-08. It has been submitted by the AR that the said propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per direction of ld. CIT(A) since the AO has added the amount for AY 2006-07, whereas the ld. CIT(A) has directed to add this amount for AY 2007-08. Thus, in this case there is shifting of income from AY 2006-07 to AY 2007-08 and the ratio of the Hon'ble Supreme Court decision of CIT Vs Shelly Products 261 ITR 367 is not applicable. In view of above discussion, the AO is directed to allow set off of Rs. 251,60,000/- instead of Rs. 128,00,000/- in the order dated 28.12.11, notwithstanding the fact that the assessed income would fall to Rs. 737,94,065/- i.e. below the returned income of Rs. 827,40,410/-. In fact, it is also seen that the although the assessed income would fall below the returned income in AY 2007- 08 by Rs. 89,46,345/- but at the same time, the assessed income has gone up by Rs. 94,15,000/- in AY 2006-07 on account of additions relating to the Mahla property. The AO is directed to work out the revised income and relief as directed above. In view of the above, the ground No. 1,4 & 5 are partly allowed on above terms, ground No. 3 is allowed and ground No. 2 is dismissed. " 2.4 Now the Revenue is in appeal before us. Ld. DR has vehemently argued the matter, took ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) has allowed the same as per para (vi) on page 19 of the appellate order. The Learned CIT(A) has correctly held that the set off of this amount of Rs. 2,51,00,000/- would be available against the undisclosed stock surrendered by the assessee at the time of search of Rs. 2.8 Crores. The Learned CIT(A) has further observed that there is nothing on record which may show that this amount of Rs. 2,51,60,000/- was invested elsewhere. The finding of the Learned CIT(A) is perfectly in order. This finding of the Learned CIT(A) is in tune with the earlier order dated 19.05.2009 wherein the Learned CIT(A) had directed that the sale proceeds of the purchase of this property require to be set off with the available surrender of the investment. 2. Shifting of income from Assessment Year 2006-07 to 2007-08 It was submitted that the Learned CIT(A) has further correctly held that as per the earlier order dated 19.05.2009 the profit on sale of this property was required to be considered in Assessment Year 2007-08 instead of in Assessment Year 2006-07. Thus the income on sale of this property of Rs. 1,28,05,000/- was wrongly taken in Assessment Year 2006-07 was shifted/transferred to Assessment Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TAX OFFICER (2011) 11 ITR 0017 The moot question arising out of this appeal is whether the income determined by the AO on the basis of the return filed by the assessee can be a figure lower than the income returned by the assessee. It is a well settled that the principle for determining the taxable income of the assessee under the IT Act should be within the purview of the law in force. If the taxable income determined by the AO is not in accordance with such principle it is open to the assessee to contend the same before the higher authorities to follow the correct application of law to determined the actual taxable income of the assessee. In our considered view, the lower authorities, not expected, to say that merely because the assessee has returned income which is higher than the income determined in accordance with legal principles such returned income can be treated as lawfully assessed. An assessee is liable to pay tax only upon the taxable income. The law imposed by the AO to assess the income according to law and determined the tax payable thereon. In doing so, the AO cannot assess the income of the assessee an amount which is not taxable as per law though shown by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground as submitted before the Co-ordinate Bench in terms of examining the set off of undisclosed profit of Rs. 1.28 Crores against the amount surrendered by the assessee. And in light of these directions, the AO has considered the submissions of the assessee and has stated that since the sale of Mahala property has happened on 3.7.2006, the profit arising from such sale of Mahala property amounting to Rs. 1.28 Crores (after considering the sale consideration of Rs. 3.76 Crores and cost of purchase of Rs. 2.48 Crores as per seized documents) has been worked out and the same was allowed set off against the surrender of stock of Rs. 2.8 Crores. In our view, the AO has rightly given effect to the directions of the Coordinate Bench and we see no infirmity in the same. 2.8 At the same time, we are not in agreement with the findings of the ld CIT(A) where he states at para 4.3 (vi) of his order that set off OF sale proceeds would be available against the undisclosed stock surrender of Rs. 2.8 crores found at the time of search of sale proceeds realized out of books of Rs. 2.51 crores since there is no material/evidence on record that this amount was invested elsewhere and in view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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