TMI Blog2021 (5) TMI 795X X X X Extracts X X X X X X X X Extracts X X X X ..... e disclosed'. However, after claiming deduction u/s 40(b) of the Act towards interest paid to partners net income in the return was declared by the assessee, which was accepted by the AO in the impugned assessment order passed u/s 143(3) of the Act on 11.12.2017. Thus, it is abundantly clear from the order of assessing officer, as noted above, that assessing officer has examined the issue of on-money and applied his mind, therefore, his order should not be subjected to revision proceedings under section 263. As during the assessment stage, the assessee submitted the books of accounts and other documents.. The books of accounts of the assessee are audited by a chartered accountant. The assessing officer examined the books of accounts, survey documents and evidences submitted by the assessee and applied his mind. The assessing officer conducted sufficient inquiry. To gather more information and then prove the claim of the assessee wrong is not the object of section 263 of the Act. The object of section 263 is to examine whether order passed by the AO is erroneous as well as prejudicial to the interest of revenue. Therefore, based on this factual position, the order pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2014. During the course of survey proceedings, statement of Shri Odhavjibhai Shamjibhai Pagdar, partner of the firm was recorded on oath u/s 131 of the Act. In reply to Q.No.21 to 23 of the statement, Shri Odhavjibhai Shamjibhai Pagdar has admitted receipt of unaccounted income of the firm in the form of on-money of ₹ 4,75,00,000/- and disclosed the same as income of the firm for F.Y. 2014-15 relevant to A.Y.2015- 16. The assessee-firm has shown the amount of ₹ 4,75,00,000/- in the profit and loss account under the head 'Income Disclosed' and computed the income accordingly. However, against the disclosed income of ₹ 4,75,00,000/-, the firm has shown total income of ₹ 4,42,80,220/- in the return of income for A.Y.2015- 16 which is less by ₹ 32,19,780/- (₹ 4,75,00,000- ₹ 4,42,80,220). The assessee - firm has claimed this amount of ₹ 32,19,780/- as expenses against the disclosed income, which the ld PCIT objected stating that it is irregular in view of the provisions of section 115BBE of the Act. Despite such facts and circumstances and specific provisions of law in section 115BBE(2) of the Act, the Assessing Officer has com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment determining total income at ₹ 4,42,80,220/- and thereby allowing your erroneous claim to the tune of ₹ 32,19,780/-, rendering the assessment so completed as erroneous in so far it is prejudicial to the interest of Revenue. 3. The undersigned, therefore, propose to pass an order u/s 263 of the Act against the assessment order passed u/s 143(3) dated 11.12.2017 by the Assessing Officer for the A.Y. 2015-16, in so far as it is erroneous as well as prejudicial to the interest of revenue. 4. In case, you have any objection to the proposed action, you are requested to appear before me either personally or through your authorized representative on 09.01.2020 at 12.15 PM along with written submission at the office of the undersigned at Room No. 227. Aayakar Bhavan. Maiura Gate. Surat and to show cause as to whv such order should not be passed. In case of non compliance on your part, the matter will be decided on merits and material available on record. 5. The assessee could not appear against the above said show cause notice, therefore the ld. PCIT has again issued show cause notice. Thereafter, in response to the show cause notice, the assessee has appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he firm amounts to Business Income. Accordingly, the same is credited to the profit and loss account for the year under revision. Ld. ACIT has also taken a note of this aspect in his body of order. It is further to explain that income of the firm for A Y 2015-16 was ₹ 4,80,60,494/-and an amount of ₹ 37,80,279/-has been paid to the partners in form of interest. Therefore, returned income is arrived at ₹ 4,42,80,220/-. It is humbly argued that interest to partners of the firm is nothing but a portion of profit of the firm. But due to specific provision of the Act, it has been given to the partners in form of interest. Thus, there is no claim of expenses of ₹ 32,19,780/- as shown at para 2 of your show cause notice. The assessee has shown disclosed income + regular income and therefore, its income was at ₹ 4,80,60,494/- as against disclosure of ₹ 4,75,00,000/-. As assessment of income has been made as Business Income and not as income from Other Sources i.e u/s 68/69/69A/69B/69C of the I Act, provisions of section 115BBE(2) of the act has no application. Alternatively, and without prejudice to our above submission, it is to submit with due resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer should not be erroneous and prejudicial to the interest of the Revenue, hence order passed by the ld PCIT may be quashed. 9. On the other hand, the Learned Departmental Representative (in short the ld. DR ) submits that on money is assessable under section 69A of the Act, therefore no expenditure should be claimed against the on money so disclosed by the assessee. Besides, ld DR also relied on the order of the ld. PCIT, particularly Para Nos.4 and 4.1 of the order of the ld PCIT. 10. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. PCIT and other material brought on record. It is undisputed fact in this case that a survey u/s 133A of the Act was carried out at the business premises of the assessee on 04.12.2014. During the survey, certain facts were discovered and statement of Shri Odhavjibhai Shamjibhai Pagdar, one the partners of the firm, was recorded on oath u/s 131 of the Act. In the statement so recorded, an amount of ₹ 4,75,00,000/- was disclosed as 'income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losed during the survey proceedings at ₹ 4,75,00,000/- in the profit and loss account and vide paper book page no.34, the assessee after having included said income disclosed during the survey in the profit and loss account, has claimed interest expenditure. We have gone through page no.85 of the paper book wherein, in answer to question no.21, the assessee has stated that the income of ₹ 4,75,00,000/- belongs to their business firm Trividh Corporation. In the answer during survey proceedings, the assessee also stated that amount of ₹ 4,75,00,000/- was received on account of booking and selling of residence units, residential flats / units in the Astha Medicare and Residency and therefore it is a cash amount received by M/s Trividh Corporation in connection with the project of Astha Medicare and Residency. Therefore, it is income of that project from business and thus assessee claimed expenditure, which has been thoroughly examined by the assessing officer.Since, the Assessing Officer has passed the order after due application of mind and after scrutinizing the claim of the assessee, therefore the order passed by the Assessing Officer should not be erroneous and p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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