TMI Blog2022 (8) TMI 377X X X X Extracts X X X X X X X X Extracts X X X X ..... s like laying a general rule, which to our mind is beyond the mandate of law, that wherever there is a survey and some income is detected or surrendered by the assessee, the deeming provisions are attracted by default and by virtue of the same, provisions of section 115BBE are attracted. The ld PCIT has to record his specific findings as to the applicability of the relevant provisions and how the explanation called for and offered by the assessee is not acceptable in the facts of the present case which is clearly absent in the instant case. Therefore, where the ld PCIT himself is not clear about the applicability of relevant provisions and in the same breath holding the Assessing officer to task by not invoking the said provisions is clearly shooting in the dark which cannot be sustained in the eyes of law and the order so passed therefore cannot be held as erroneous in the eyes of law. There are documents in form of statement of the assessee recorded u/s 133A during the course of survey and the surrender letter dated 21.10.2016 submitted by the assessee at the time of survey and these documents are very much part of the records which is available at the time of assessment as we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ountant Member For the Assessee : Shri S.C. Jain, CA For the Revenue : Shri Vivek Nangia, CIT D/R ORDER PER VIKRAM SINGH YADAV, ACCOUNTANT MEMBER: This is an appeal filed by the assessee against the order of Learned Principal Commissioner of Income Tax, Patiala [in short the Ld. PCIT] passed u/s 263(1) of the Income Tax Act, 1961 (in short the Act ) dated 28.03.2021 wherein assessee has raised the following grounds of appeal :- 1. On the facts and circumstances of the case and in law, the PCIT, Patiala has erred in initiating proceedings u/s 263 of the Income Tax Act, 1961 by wrongly assuming jurisdiction u/s 263 and hence, the order passed by the ld. PCIT u/s 263 of the Income Tax Act, 1961 is bad in law and void authorities below-initio. 2. Without prejudice to ground no. 1 above, on the facts and circumstances of the case and in law, the ld. PCIT Patiala has erred in assuming jurisdiction and passing the revisionary order u/s 263 of the Income Tax Act, 1961 in spite of the fact that the ld AO has made adequate inquiries and verification of documents, books of accounts were also sought from the assessee during the course of assessment proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een paid thereon. It was further submitted that the ld. PCIT has erred in holding that the income so surrendered during the course of survey is covered as per the provisions of section 68, 69, 69A, 69B, 69C and 69D read with section 115BBE of the Act. It was submitted that the assessee is carrying on the business for past many years and the return of income has been filed on the basis of audited books of account and there has been no dispute with regard to the mode and manner of earning the income which is none other than the income derived from the activity of carrying on the business. It was submitted that during the course of survey, the assessee was found to be carrying on the same business as per the regular books of account and no other activity other than the activity as per books of account have been noticed and, therefore, the amount which have been offered during the survey is on account of income derived from the same business activity as noticed during the course of survey. It was accordingly submitted that there cannot be any dispute that the nature of income so offered is in the nature of business income and which cannot be brought to tax under the aforesaid deeming p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y income to be adjudicated under section 68 to 69C of the Income Tax Act in case of the assessee, as the nature and source of the income surrendered by the assessee clearly stands explained. Where the nature and source of the income offered by the assessee firm clearly stands explained, no addition can be made under section 68 to 69C of the Act and the provisions of section 115BBE cannot be invoked. Further reliance has been placed on various Hon ble High Court and Coordinate Benches decisions. 6. Per Contra, the ld. CIT D/R has vehemently argued the matter and submitted that the onus is on the assessee to explain the source of income so surrendered and further, even the AO has failed to enquire about the source of income so surrendered and has accepted the returned income as so filed by the assessee. Further, the ld CIT/DR relied on the findings of the ld. PCIT and our reference was drawn to the relevant findings which read as under:- (x) In the case of the assessee, survey u/s 133A was conducted on 21.10.2016 i.e. relevant assessment year 2017-18. The following discrepancies were found, confronted and accepted by the assessee during the course of survey proceedings. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed is erroneous as income is not assessed under the respective provision of the Act. Further as already discussed above, as per the provisions of section 115BBE, income referred to in Section 68 to Section 69D are chargeable to tax at specific rate of tax. As the above incomes of the present assessee is income referred to in these sections the same is chargeable to tax at the rate prescribed under section 115BBE of the Income Tax Act. Hence the assessment order is prejudicial to the revenue. Under the aforesaid circumstances, the order of the AO is both erroneous as well as prejudicial to the interests of the revenue. Further reliance has been placed on various Hon ble High Court and Coordinate Benches decisions. 7. We have heard the rival contentions and purused the material available on record. For exercise of jurisdiction u/s 263 of the Act, the order passed by the Assessing officer should satisfy the twin tests of being erroneous as well as prejudicial to the interest of the Revenue. As per ld PCIT, the discrepancies found, confronted and accepted by the assessee during the course of survey attract the deeming provisions of section 68, 69, 69A, 69B 69C and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the relevant deeming provisions of the Act. In this regard, we find that there are documents in form of statement of the assessee recorded u/s 133A during the course of survey and the surrender letter dated 21.10.2016 submitted by the assessee at the time of survey and these documents are very much part of the records which is available at the time of assessment as well as at the time of examination by the ld PCIT. In the statement so recorded at the time of survey, the assessee was specifically asked about the source of his income and in response, he has submitted that he is getting income from Gandhi General Store and share of profit from partnership firm, M/s Gandhi Soap and Detergent Industries. Thereafter, in respect of excess cash found at the time of survey, the assessee was asked a specific question to explain the difference and in response, he has submitted that the difference or the excess cash is on account of sales realization during the previous days which he offers over and above his normal business income. Thereafter, in respect of difference in stock of Rs 25,50,000/-, he has submitted that the difference is on account of higher gross margins in the earlier perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be a case where a different view has been expressed by the ld PCIT, however, the same doesn t lead to the conclusion that the view taken by the Assessing officer as erroneous as the AO has taken into consideration the entirety of facts and circumstances of the case, the explanation offered by the assessee during the course of survey regarding the source of such income and thereafter, has assessed the income under the head business income . The view so taken by the Assessing officer is after due application of mind and therefore cannot be held as unsustainable in the eyes of law. In the facts and circumstances of the present case, where there are specific questions asked during the course of survey regarding the nature and source of income and which has been adequately responded to by the assessee and thereafter acted upon in terms of disclosing the income in the return of income under the appropriate head of income and where the same is duly examined and taken into consideration by the Assessing officer during the course of assessment proceedings, the order so passed by the Assessing officer cannot be held as erroneous in nature. 10. In light of aforesaid discussions and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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