TMI Blog2022 (7) TMI 682X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 154 was not legally tenable. Again, the ITAT Jaipur in the case of Sudesh Kumar Gupta [ 2020 (6) TMI 463 - ITAT JAIPUR] held that where while completing assessment under section 143(3), Assessing Officer did not invoke provisions of section 69, provisions of section 115BBE which were contingent on satisfaction of requirements of section 69, could not be independently applied by invoking provisions of section 154. During the course of assessment proceedings, the assessing officer had made due enquiries and was aware of the fact that assessee had disclosed the amount as business income in his return of income in respect of which it had claimed expenditure in relation to interest/remuneration paid to partners. After making due enquiries, AO allowed the claim of the assessee by treating the undisclosed income found during survey as assessee s business income and allowing corresponding expenditure against the same in the assessment proceedings. Therefore, in light of the facts of the case and the judicial precedents on the subject as discussed above, in our view, Ld. PCIT has erred on facts and in law in invoking section 263 provisions in the instant facts, to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and ₹ 44,85,820/- as remuneration of partners which are not permissible deductions as per the provisions of section 115BBE of the Act. Therefore, show cause notice was issued to the assessee under section 263 of the Act in response to which the assessee submitted letter dated 11-03-2020 wherein the assessee contended that the AO had made inquiries during the assessment proceedings and allowed the claims of the assessee after examining details furnished and documents submitted. The assessee further submitted that the amount disclosed during survey constituted business income and has been rightly assessed under section 28 of the Act and cannot be hit by the provisions of section 68/69/69C of the Act, and accordingly provisions of section 115BBE of the Act cannot be invoked. The PCIT however rejected the assessee s submission and held that the assessment order is erroneous and prejudicial to the interests of the revenue, and accordingly set aside the same for fresh adjudication, with the following observations: 7.3 It was further stated that the said amount of sales revenue was applied as investment in the project. This statement appear to have been made by the assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the revenue. Thus, the order deserves to be revised under section 263 of the Income-tax Act, 1961. 9. It is the bounden duty of the Assessing Officer to collect and appreciate the facts and to properly apply the law while making the assessment. It can be seen from the above that assessment made by the Assessing Officer is in a very casual and mechanical manner. Under these circumstances, it would be appropriate to set aside the assessment order so far as the issue of invoking provisions of section 115BBE of the Act is concerned after obtaining explanation regarding exact nature of the receipts on which disclosure is made during the Income-tax survey. 10. Thus, in the interest of justice And since the twin conditions namely, (i) the order of the Assessing Officer sought to be revised is erroneous: and (ii) it is prejudicial to the interest of the revenue are satisfied, the impugned assessment order is set aside for fresh assessment only to the extent of the issue discussed supra. 4. During the course of proceedings before us, the counsel for the assessee drew our attention to show cause notice issued under section 263 of the act by the PCIT at page 1 of the paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above income should have been assessed as undisclosed income of the assessee, and accordingly taxed under section 115BBE of the Act and without allowing deduction of interest/remuneration paid to partners. Accordingly, the order passed by the assessing officer was erroneous and prejudicial to the interests of the revenue. 5.1 A perusal of the assessment records show that the assessing officer had made inquiries in respect of the assessment amount of ₹ 3,53,280/- paid as interest to partners and ₹ 44,85,820/- as remuneration paid to partners during the course of assessment proceedings. It is settled law that if the assessing officer has taken one of the views which is possible in law, the assessment order cannot be said to be erroneous and prejudicial to the interest of the revenue. The Gauhati Tribunal in the case of Abdul Hamid v. ITO [2020] 117 taxmann.com 986 (Gauhati - Trib.) held that where Department had itself accepted undisclosed amount of assessee in his bank account as undisclosed business receipts/turnover , section 115BBE would not attract. In the case of Babulal K. Daga 387 ITR 114 (Gujarat High Court) , the respondent-assessee who was engaged in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t necessary that tax rate has to be charged as per provision of section 115BBE. The facts of the case were that Assessing Officer completed assessment in case of assessee under section 143(3) at assessed income of Rs. 41.78 lakhs which included income surrendered pursuant to search of Rs. 22.19 lakhs as current year's business income offered to tax, by charging tax and interest at normal rates and raised nil demand. Thereafter, Assessing Officer issued notice under section 154 on ground that tax rate on surrendered income was to be charged as per provision of section 115BBE. However, it was found that there was nothing stated in either pre-amended or post-amended provisions of section 115BBE that where assessee surrenders undisclosed income during search action for relevant year, tax rate has to be charged as per provisions of section 115BBE. The ITAT held that there was no finding that provisions of section 115BBE had been invoked by Assessing Officer during assessment proceedings and tax rate had been charged at rate of 30 per cent on surrendered income under section 115BBE and thus, action of Assessing Officer in rectifying and increasing rate of taxation from 30 per cent to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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