TMI Blog2018 (5) TMI 1646X X X X Extracts X X X X X X X X Extracts X X X X ..... f incriminating documents, it is not clear as to whether it was out of the business transaction, the assessee was carrying on in the regular course of business. However, authorities had not given any finding on the nature of such incriminating documents nor with regard to income surrender with respect to these documents. Restore the issue with regard to surrender of income arising out of incriminating documents to the file of the Assessing Officer to find out the nature of such income if arising out of the business transaction carried on by the assessee and to decide the issue afresh as per law.. - ITA No. 143/Jodh/2018, ITA No. 142/Jodh/2018, ITA No. 144/Jodh/2018, ITA No. 146/Jodh/2018 And ITA No. 145/Jodh/2018 - - - Dated:- 25-5-2018 - SHRI R.C. SHARMA, ACCOUNTANT MEMBER For The Assessee : Shri Rajendra Jain (Adv) For The Revenue : Sh. Ashok Khanna JCIT ORDER PER: R.C. SHARMA, AM These are the appeals filed by the di fferent assessees against the separate orders of the ld. CIT(A), Bikaner dated 14/11/2017 and 15/11/2017 respectively for the A.Y. 2014-15 in the matter of order u/s 143(3) of the Income-tax Act, 1961 [hereinafter referred to as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and was earning income out of trading as well as interest income from M/s M.R. Seeds Pvt. Ltd. That during the year under consideration, a survey was conducted on 09.01.2014 at the business premises of the assessee. During survey, the assessee has offered an amount of ₹ 10,90,000/- for taxation on account of incriminating documents, excess cash found and stock discrepancies. During the assessment proceeding the assessee has explained before the ld AO that the surrender amount was in relation to business activities and there are direct nexus with business and accordingly he has treated same as business income. The ld AO has not brought on record any evidence or material to establish that the assessee was involved in any other activities and as such the income disclosed as business income by the assessee is accordance with law and also supported from judicial decisions. 8. Reliance was placed on the decisions of Hon'ble Rajasthan High Court in the case of CIT of CIT v/s Bajargan Traders D.B. I.T. No. 258/2017 dated 12/09/2017 the Hon'ble Rajasthan High Court held as under:- 2.10. We have heard the rival contentions and perused the material available on recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable and related to the regular business stock of the assessee. The decision of the Co-ordinate Bench in case of Shri Ramnarayan Birla (supra) supports the case of the assessee in this regard. Therefore, the investment in the excess stock has to be brought to tax under the head business income and not under the head income from other sources . In the result, ground No. 1 of the assessee is allowed. 9. It was further argued that from the above jurisdictional High Court decisions the excess stock and incriminating documents and cash found as a result of search are related to business activities and as such same may kindly be accepted as business income. Further it is relevant to mention here that the ld CIT (A) has categorically recorded the finding that even when source is explained and same is accrued through business undertaken by the assessee, it will be treated as income u/s 68 to 69C and provisions of section 115BBE will apply accordingly. The observation made by the ld CIT (A) is totally and apparently contrary to the provisions of the law and also against the decision of Hon'ble Jurisdictional High Court referred above. 10. As per th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd does not have any independent identity as an asset but as mixed part of overall stock found in the survey/search then such excess stock would represent business income only. 4.2 Recently the Hon ble ITAT Jaipur Bench in case of DCIT vs. Ramnarayan Birla 482/JP/2015 dated 30.09.2016 in the similar facts held that the excess stock is to be assessed as part of the normal stock and to be taxed under the head income from business. The relevant finding of the ITAT is as under:- We have heard rival contentions and perused the material available on record. Undisputed facts emerged from the record that at the time of survey excess stock was found. It is also not disputed that the assessee is engaged in the business of jewellery. During the course of survey excess stock valuing ₹ 77,66,887/- was found in respect of gold and silver jewellery. The Coordinate Bench in the case of Chokshi Hiralal Maganlal vs. DCIT, 131 TTJ (Ahd.) 1 has held that in a cases where source of investment/expenditure is clearly identifiable and alleged undisclosed asset has no independent existence of its own or there is no separate physical identity of such investment/expenditure then first wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income from business only. ii. Reliance was also placed on the decision of Hon'ble ITAT, Jodhpur Bench in the case of ACIT, Central Circle -1 v/s Miraj Tradecom Pvt. Ltd., I.T.A. No. 124/JODH/2017 dated 03/07/2017 wherein the Hon'ble Bench held as under: - ( v) It was also settled position of law that income referred in section 115BBE i.e. 68, 69 A/B/C etc. does not state head of income and assessing authority has to look to the surrounding circumstances in order to determine as to under what head the said income should be assessed. In this regard, we rely on the decision of Mumbai Bench of ITAT in the case of ITO v. Dharambir Hansraj Agarwal [23 ITD 589] observed that section 68 does not expressly state as to under what head the said income should be assessed. Section 68 is silent about the head under which the said income should be assessed. The Assessing Officer has to look to the surrounding circumstances in order to determine the head of income under which the said income should be assessed. Relevant para is reproduced as under: - 3. Even if we hold that the explanation of the assessee about the nature and source of those amounts was not satis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndisclosed source, such income can be treated as business income, if the assessee has no other source of income. Same view has been taken by Calcutta High Court in case of Mansfield and Sons v. CIT [1963] 48 ITR 254. In view of above, receipts is fully explained on date of search as per statement recorded towards premium from distributers/ stockiest and also accounted for in the books of accounts/ ITR/ audited Balance Sheet of the relevant assessment year, therefore, it was supposed to be assesesd as income from business as the part of amount assessed/ accepted during the year under consideration as business receipts in absence of any contrary/ corroborative documents with the department. ( viii) Considering the fact that the sum of ₹ 6.50 Crores was received by the respondent Company as premium from distributers/ stockiest looking to Goodwill as Miraj is an established brand name and out of total premium amount offered to tax ₹ 6.75 Crores, a sum of ₹ 25 Lacs is accepted as business receipt by ld ACIT, we hereby request before your honour to direct the department to consider the entire receipts as Business income as respondents had no source of recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of earlier years to the extent of ₹ 2,67,62,208/- is permissible once it is considered as first argument to consider the receipts of ₹ 6.50 Crores as business receipts as remaining premium amount of ₹ 25 Lacs considered during the year under consideration of the respondent company in absence of any other corroborative/ seized documents before the department as the provisions of clause (i) of sub section (1) of section 72 which clearly provide for set off brought forward business losses in the subsequent year against the profits and gains of business or profession. Therefore, we hereby request to direct the department to (i) consider receipts as business receipts as part of amount is accepted during the year (ii) there is no other source to get such receipts by the company (iii) as per above judicial pronouncements and allow the set off of brought forward business losses and dismiss the departmental appeal. Thus appeal of the revenue is dismissed. Ground No. 3 Whether on the facts and in the circumstances of the case the CIT (A) was right in observing that the amendment made by Finance Bill 2016 to the provisions of section 115BBE of the Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und during the course of search. The assessee is in the business of diamond trade and such stock was part of the business affair of the company. Therefore since income declared is in the nature of business income, the same is not taxable under any of the section referred above and accordingly section 115BBE has no application in case. 20. Furthermore, the memorandum to the Finance Bill, 2012 read on Section 115BBE reads as under :- Under the existing provisions of the Income-tax Act, certain unexplained amounts are deemed as income under section 68, section 69, section 69A, section 69B, section 69C and section 69D of the Act and are subject to tax as per the tax rate applicable to the assessee. In case of individuals, HUF, etc., no tax is levied up to the basic exemption limit. Therefore, in these cases, no tax can be levied on these deemed income if the amount of such deemed income is less than the amount of basic exemption limit and even if it is higher, it is levied at the lower slab rate. In order to curb the practice of laundering of unaccounted money by taking advantage of basic exemption limit, it is proposed to tax the unexplained credits, money, investment, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that losses incurred in mutual fund from which dividend received, cannot be considered for the purpose of section 14A of the Act and held that: We may reiterate that one must keep in mind the conceptual difference between loss expenditure, cost of acquisition, etc. while interpreting the scheme of the Act. In view of the decision of Hon ble Supreme Court, business loss cannot be treated at par with the expenses / allowances and such business loss can be set off against any type of income as section 71 do not debar from setting off such losses. Consistent with the view taken by the co-ordinate bench in the above cited case, we also hold that the order passed by Ld CIT(A) on all the issues does not call for any interference. 12. On the other hand, the ld Departmental Representative has relied on the orders of the authorities below and further contended that the Assessing Officer was perfectly justified in adding the amount u/s 68/69 of the Act. Accordingly, the levy of tax U/s 115BBE of the Act was @ 30% on such income. 13. I have heard the rival contentions and record perused. I have also carefully gone through the orders of the authorities below. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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