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TMI Blog2022 (8) TMI 377X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 proceedings and AO has taken one permissible view. The order passed by the AO is neither erroneous nor prejudicial to the interest of revenue, hence the order of PCIT Patiala should be set aside. 3. The survey was conducted by the Income Tax Department on 21.09.2016 and the income was surrendered under the head Business Income and the relevant advance tax cheques were also taken by the AO to be deposited against the advance tax. Section 115BBE vide the Taxation Laws (Second Amendment) Act, 2016 (No. 48 of 2016) was passed by the Hon'ble Lok Sabha of India on 29.11.2016. The Second Amendment Act, 2016 received the assent of the President on the 15th December, 2016 and is published for general information. The survey was conducted and income was surrendered much before the date of amendment, hence the cognizance of PCIT Patiala is not tenable in the eyes of law." 2. Briefly the facts of the case are t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come 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 provision read with section 115BBE of the Act. It was submitted that it is a settled law that the burden is on the Department to prove that the income so derived has to be assessed under the deeming provision. However, there is no iota of evidence with the Department to prove the same. It was submitted that by ignoring the documentary evidence found during the course of survey that the assessee was only engaged in the business as per regular books of account, the ld. PCIT has given a finding that the deeming provisions are applicable in the case of the assessee. It was further submitted that the letter filed during the course of survey states "The above said surrender is made over and above my regular income for the current year" and the facts as mentioned therein have not been disputed so far and letter filed by the assessee has been accepted and taxes were paid to Income Tax Officer through advance che ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Sr. No. Particulars Amount 1. Excess Cash Rs. 8.50 lakhs 2. Excess Stock Rs. 25.50 lakhs 3. Construction of Shed/Godown Rs. 25.00 lakhs 4. Advances made to Sundry Parties Rs. 43.00 lakhs Total Rs. 102.00 lakhs In this regard, it is noted that the case of the assessee is squarely covered under provisions of Sections 68, 69, 69A, 69B & 69C as under :- a. Excess cash is clearly covered u/s 68 or 69A. b. Excess stock is covered u/s 69 or 69B. c. Construction of Shed/Godown is covered u/s 69B or 69C. d. Advances made to Sundry Parties is covered u/s 69, 69B or 69D. (xi) In view of the above discussion, the discrepancies found during the survey proceedings attract provisions of Section 115BBE of the Income Tax Act, 1961, as per amendments made by the Taxation Laws (Second Amendment) Act, 2016, which entail tax rate of 77.25%. (xii) Furthermore, the Hon'ble Kerala High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT, the Assessing officer has failed to enquire about the source of income in order to assess the income under the appropriate head of income or the relevant deeming provisions and accordingly, the order so passed has been held as erroneous and prejudicial to the interest of Revenue. Thereafter, the ld PCIT has gone ahead and held that income of the assessee is income referred in the aforesaid deeming provisions and chargeable to tax under section 115BBE of the Act. 8. Firstly, how the ld PCIT has arrived at a conclusive finding that 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 is not apparent from the impugned order. Merely stating that excess cash is clearly covered u/s 68 or 69A, excess stock is covered u/s 69 or 69B, construction of Shed/Godown is covered u/s 69B or 69C and advances made to Sundry Parties is covered u/s 69, 69B or 69D is like an open ended hypothesis which is not supported by any specific finding that the matter shall fall under which of the specific sections and how the conditions stated therein are satisfied before the said provisions are invoked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding nature and source of cost of construction of building amounting to Rs 25,00,000/- and advances given to various persons. We therefore find that the assessee has been asked specific questions regarding not just the discrepancy but the nature and source thereof during the course of survey and it is clearly emerging that the source of such income is his business income. Further, the said fact is corroborated by the surrender letter dated 21.10.2016. Apparently, the ld PCIT has failed to take into consideration these documents which are very much part of the records. Following the surrender so made, the assessee has offered the additional income as business income in his return of income and paid due taxes thereon. During the course of assessment proceedings, the Assessing officer has specifically taken cognizance of these facts, as apparent on the face of the assessment order, that assessee has voluntarily surrendered Rs 1,02,00,000/- over and above the normal business income in his return of income and has accordingly not drawn any adverse inference. We therefore find that the Assessing officer has duly taken cognizance of statement of the assessee recorded during the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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