TMI Blog2023 (3) TMI 780X X X X Extracts X X X X X X X X Extracts X X X X ..... either not reflected in the return of income or determined by the assessing officer and in both the cases it will be covered by the provisions of section 115BBE and the rate of taxation has been increased from 30% to 60% on such specified income. Nothing stated in the pre-amended or post amended provisions of section 115BBE that where the assessee surrenders undisclosed income during search action for the relevant year, the tax rate has to be charged as per provisions of section 115BBE - Therefore, the applicability of the amended provisions which prompted the PCIT to assume jurisdiction under section 263 is highly debatable issue, and therefore, in our understanding of the law, the PCIT has wrongly assumed jurisdiction. Appeal of assessee allowed. - ITA No. 1096/DEL/2022 - - - Dated:- 17-3-2023 - SHRI N. K. BILLAIYA , ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA , JUDICIAL MEMBER For the Assessee : Shri Sandeep Goel, Adv For the Department : Ms. Sapna Bhatia, CIT-DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER:- This appeal by the assessee is preferred against the order dated 24.03.2022 framed u/s 263 of the Income-tax Act, 1961 [hereinafter referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sum and substance of the aforestated grievances of the assessee is that the PCIT erred in law in assuming jurisdiction u/s 263 of the Act and further erred in holding that the assessment order dated 11.06.2019 is erroneous and prejudicial to the interest of the Revenue. 4. The representatives of both the sides were heard at length. The case records carefully perused and relevant documentary evidences brought on record duly considered in light of Rule 18(6) of ITAT Rules. 4. Briefly stated, the facts of the case are that the assessee filed its return of income electronically on 01.11.2017 declaring total income of Rs. 10.59 crores. Return was processed u/s 143(1) of the Act and was subsequently taken up for scrutiny assessment through CASS and, accordingly, statutory notices u/s 143(2) and 142(1) of the Act were duly served upon the assessee. 5. Notice u/s 142(1) dated 05.03.2019 reads as under: Notice under Sub Section (1) of Section 142 of the Income Tax Act, 1961 Sir Madam/M/s In connection with the assessment for the assessment year 2017-18 you are required to a) Furnish or cause to be furnished on or before 12/03/2019 at 11:00 AM the accounts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f these loan providers in your books. 3. Any other evidence/detail to discharge the onus cast on you u/s 68 of IT Act, 1961 in respect of these unsecured loans 1. Furnish quantitative details of closing stock/inventory reported to be Rs 1,95,97,880/- in your P/L account along with working ( basis of valuation) of the same. 1. Explain the nature of other income of Rs 50,04,124/-credited in your P/L account 1. Justify the allowability of statutory dues remaining unpaid as on 31.03.2017 as per section 438 of IT Act, 1961. Also furnish evidence of actual payment of bonus of Rs 55,11,194/- to decide on its allowability. 1. Justify the reasonableness of payments made to related persons as per u/s 40A(2)(b). 1. Furnish copy of account of each partner in your books for FY2016-17. Explain the source of addition to capital/capital introduced by them, with supporting evidence. 1. Furnish details of loans and advances ( of Rs 6,72,50.164/-) as appearing in your balance sheet as on 31.03.2017 with their copy of account for FY2016-17 Also justify the business purpose of such advances. 1. You have reported dividend income of Rs 18,26,738/- under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the partner's along with copy of Bank statement. With regard to add ition made during the year in the partners capital account, the assessee is enclosing bank statement with narrations in which it would be noted that there has been withdrawals from the capital account and mostly those withdrawals have been deposited back. Other than this the assessee has taken loans from other assessee's for which confirmation of account with ITR and bank statement is being enclosed. The assessee is also enclosing copies 0 f ITR for all the partners. 6. The assessee is enclosing copies of challan in support of statutory liabilities u/s 43B paid before due date of filing of return as reported in column No-26(i)(B)(a) of Form No-3CO. 7. The assessee has already submitted confirmation copies of Unsecured Loans and further it is stated that no Fresh loan or amount has been added in this year. Infact the amount pertaining to interest paid has been credited and TOS amount has been debited and in some parties amount has been returned back. This can be verified from the statement of account submitted. 8. The assessee has earned Dividend Income received from Shares and Mutual Funds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered a sum of Rs. 10,00,00,000/- included this amount in P L A/C for the year paid taxes on above sum at normal rate of tax the same was accepted in assessment also. As this credit recorded in the books remained unexplained. For the year the source of the above sum was not explained, therefore the source of Rs. 10,00,00,000/- remained unexplained and thus the amount of Rs. 10,00,00,000/- needs should be added u/s 68 read with 1158BE of the IT. Act 1961. 3. In view of the above, the assessment order passed by the AO, Circle- 2(1)(1).Ghaziabad, is erroneous and prejudicial to the interest of revenue and may be cancelled or modified by invoking the provisions of section 263 of the Income Tax Act, 1961. 9. A perusal of the aforesaid notice clearly shows that the ld. PCIT has assumed jurisdiction on the assumption of the fact that the surrendered amount of Rs. 10 crores by the assessee during the survey proceedings is credited and the source of such credit is not explained. Therefore, the assessee is liable for tax rate as per the provisions of section 68 r.w.s 115BE of the Act. 10. The basis of the assumption of jurisdiction and issue of aforementioned notice is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 10,59,75,100/-. During the survey assessee had surrendered additional income of Rs. 10 Crore to cover the discrepancies. Subsequently, in the course of audit, the Revenue Audit Party (RAP) observed that, A survey u/s. 133A was conducted in this case on 20- 09-2016 and the assessee surrendered a sum of Rs. 10,00,00,000/- included this amount in P L A/c and the same was accepted in assessment also. As this credit recorded in the books remained unexplained. For the year the source of the above sum was not explained, therefore the source of Rs. 10,00,00,000/- remained unexplained and thus the amount of Rs. 10,00,00,000/- was required to be added u/s. 68 read with 115BBE of the 1.T. Act 1961, but the same was not done. The RAP worked out revenue loss of Rs. 5,29,78,050/- on this account. The audit observations as mentioned above have not been found /prima facie acceptable for the reason that the stand of the audit to take surrender of Rs. 10,00,00,000/- during survey u/s. 133A as unexplained credit, therefore liable for tax under section 115BBE, appear to be based on presumption that the said amount pertains to nature of unexplained credit as contemplated in section 68 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be permitted. As the revision proceedings in this case have triggered with the AO sending a proposal to the ld. CIT and then the latter passing the order u/s 263 of the Act on the basis of such a proposal, we hold that it became a case of jurisdiction deficit resulting into vitiating the impugned order. Without going into the merits of the case, we quash the impugned order on this legal issue itself. 15. On this count also, the order of the ld. PCIT is liable to be quashed. 16. The bone of contention is whether the amount surrendered during survey operation which has been shown in the return of income as business income be taxed as per the provisions of section 115BE of the Act and having not done so, whether the order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. 17. At the very outset, we would like to state that the amendment has been brought in section 115BE w.e.f. A.Y 2017-18, but the same was not there in the statute on the date of survey. Taking a leaf out of the amended provisions, the PCIT was of the opinion that the tax rate should have been 60% instead of 30% because of which the assessment order has become prejudicial ..... X X X X Extracts X X X X X X X X Extracts X X X X
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