TMI Blog2022 (12) TMI 1344X X X X Extracts X X X X X X X X Extracts X X X X ..... efore a case where the AO has erred in not applying the rate of tax as per the amended law as applicable for the impugned assessment year and the order so passed is therefore rightly held by the ld PCIT as erroneous in so far as prejudicial to the interest of the Revenue. We therefore didn t find any justifiable basis to interfere with the order of the ld PCIT who has rightly exercise his revisional jurisdiction u/s 263 by setting aside the order of the AO to the extent of applying the rate of tax as per amended Section 115BBE for the impugned assessment year on the quantum of additions made and sustained u/s 69C of the Act. We sustain the order of the Ld. PCIT(C) in light of aforesaid directions and the appeal of the assessee is dismissed. - ITA NO. 454/CHD/2022 - - - Dated:- 10-11-2022 - Smt. Diva Singh, JM And Shri. Vikram Singh Yadav, AM For the Assessee : Shri Sudhir Sehgal, Advocate For the Revenue : Shri Vivek Nangia, CIT -DR ORDER PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the Assessee against the order of Learned Principal Commissioner of Income Tax (Central ), Ludhiana [ in short the Ld. PCIT(C) ] passed u/s 263 of the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order so passed be not set-aside as being erroneous in so far as prejudicial to the interest of the Revenue. 2.2 In response, the assessee submitted before the ld PCIT that being aggrieved with the assessment order, the assessee has moved in appeal before the Ld. CIT(A) who has since passed an order wherein the addition of Rs. 42,04,640/- has been reduced to Rs. 28,37,506/- and addition of Rs. 12,46,878 has been reduced to NIL. It was also submitted that since the assessment order dt. 28/12/2019 has been subjected to appeal, the AO s order would get merged with the order of the Ld. CIT and the same cannot be subject matter of revision u/s 263 of the Act. 2.3 It was further submitted that the AO was consciously clear that since addition were made under section 69 and 69C, the tax will be charged under section 115BBE and applying his mind and knowing the fact that tax has to be calculated by applying provisions of Section 115BBE of the Act, the AO applied tax rate @ 30% as was requirement of the Act for the assessment year under consideration. 2.4 The submissions so filed by the assessee were considered but not found acceptable to the Ld. PCIT(C). As per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be said that he has taken the possible view and it cannot be subject matter of revision under section 263 of the Act. In support, reliance was placed on the decision of Hon ble Andhra Pradesh High Court in case of PCIT Vs. Deccan Jewellers Pvt. Ltd. reported in (2021) 438 ITR 131 as well as decision of the Coordinate Chandigarh Benches in case of M/s Sham Jewellers and M/s Shyam Fashion Mall (ITA No. 275/Chd/2022 and 315/Chd/2022 vide order dt. 22/08/2022) wherein it was held that where the assessee has no other source of income either disclosed or unearthed by the Revenue except business income, the invocation of provisions of section 115BBE was held not to be in order. It was submitted that the facts in the present case are on stronger footing as it is a case under section 263 where the AO has already taken a possible view unlike the aforesaid decision where the matter under appeal relates to assessment order u/s 143(3)/153 of the Act. 3.2 It was further submitted that even the Ld. PCIT(C) was not of confirmed view as to whether the provisions of Section 115BBE are applicable or not as in para 6 of the impugned order, he has merely set aside the matter to the file of the AO t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e clear cut finding and satisfaction recorded by the Assessing Officer before the provisions of section 115BBE or section 69C are invoked. It cannot be automatic and there are certain checks and controls, before invoking section 69 or provisions of section 115BBE. The said view has been taken by the Hon'ble Bench in the case of Sh. Gandhi Ram in ITA No. 121 /Chd/2021 and reliance is being made to para 7, 8 9 of the order and, thus, the observation of the Ld. DR is not correct. 5.1 As regards the judgment of 'M/s Kim Pharma' relied upon by the Ld. CIT/DR, it was submitted that the same has been considered by the Chandigarh Bench of the ITAT in the case of 'M/s Sham Jewellers' at page 128 of the Paper Book, filed by the assessee in para 10.22, and the judgment of 'Fakir Mohamded Haji Hasan' was also part and parcel of the judgment referred to in the case of 'Kim Pharma'. Thus, in a way, that judgment have been considered by the Bench, while giving the judgment in the case of M/s Sham Jewellers and Others. 5.2 Further, referring to the judgment of Chandigarh Bench in the case of M/s Sham Jewellers, it was submitted that as per ground No.5, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 69C of the Act amounting to Rs. 42,04,640/-, which on appeal by the assessee, has subsequently been sustained by the Ld. CIT(A) to the extent of Rs. 28,37,506/- and thereafter, on further appeal before the Tribunal, has been sustained to the extent of Rs. 10,71,106/- by Coordinate Chandigarh Benches vide its decision dt. 19/05/2022. The other addition made u/s 69 has since been deleted by the ld CIT(A) and which has been affirmed by the Coordinate Benches. Therefore, as submitted by the ld AR, the effective addition which now stand is the amount of Rs. 10,71,106/- under section 69C as so confirmed by the Coordinate Benches vide its order dt. 19/05/2022. 7. Though the quantum of addition so made by the AO has been restricted on subsequent appeals, the findings of AO continues to remain relevant for determining whether the provision of Section 115BBE are attracted in the instant case or not and whether there is a failure on the part of the AO to invoke the said provisions and apply the rate of tax as so specified therein especially where the provision of Section 69C of the Act have been invoked by the AO and applicability thereof sustained by the Ld. CIT(A) as well as by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17-18). Further, during the course of assessment proceedings assessee has failed to substantiate his claim inspite of numerous opportunities afforded to him. Hence, it is clearly established that assessee has failed to give any explanation vis-a-vis Annexure-A3 impounded from its business premises during the course of survey AND Annexure-A2, A3, A4 A5 seized from residence during the course of search. 3.11 It is pertinent to mention here that assessee is knowingly avoiding the reply to these three Annexures at the time of search, at the time of post-search investigation and during the assessment. These Annexures clearly shows employee wise, month wise and year wise details of payments made to them. Further, assessee has not able to prove that why employee wise, month wise and year wise details of salary paid was written in these Annexures. It was clearly established that during the course of search that the assessee has incurred unexplained expenditure on salary relying upon the findings as per show cause notice, I hereby make an addition of Rs. 39,88, 288/- for the A.Y. 2016-17, Rs. 42,04,640/- for the A:Y 2017-18 and Rs. 29,66,795/- for the A.Y. 2018-19 as unexplained ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chargeable had his total income been reduced by the amount of income referred to in clause(i). 12. It is the case of the assessee before the ld PCIT that the Assessing officer was consciously clear that since the additions were made u/s 69C, the tax will be charged u/s 115BBE and after applying his mind and knowing the fact that tax has to be calculated by applying the provisions of section 115BBE, the Assessing officer applied tax rate at the rate of 30%. We therefore find that in the present case, the AO has determined the assessee s income under section 69C of the Act read with section 115BBE of the Act and while determining the rate of tax, has been apparently guided by the pre-amended law where the rate of tax was 30% as against rate of tax of 60% as per the amended law which was applicable for the impugned assessment year 2017-18. Therefore, we find that the issue is not really about the applicability of section 115BBE of the Act rather the real issue is about the rate of tax as per section 115BBE of the Act. Where the ld PCIT has stated that the AO has not applied the rate of tax as per section 115BBE, what he meant was rate of tax of 60% given that the AO has already ..... X X X X Extracts X X X X X X X X Extracts X X X X
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