TMI Blog2024 (1) TMI 1197X X X X Extracts X X X X X X X X Extracts X X X X ..... e inquiries and was aware of the fact that the assessee had disclosed the income as business income in his return of income in respect of which it had claimed expenditure in relation to interest and remuneration paid to partners and after making inquiries, Assessing Officer allowed the claim of the assessee by treating undisclosed income found during the survey as assessee s business income and in view such finding of facts arrived at by the Tribunal, we are of the opinion that no substantial question of law arises from the impugned order of the Tribunal. Decided against revenue. - HONOURABLE MR. JUSTICE BHARGAV D. KARIA And HONOURABLE MR. JUSTICE NIRAL R. MEHTA MR KARAN G SANGHANI (7945) FOR THE APPELLANT(S) ORDER ( P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the case of the assessee was selected for manual scrutiny and returned income of the assessee was accepted. The PCIT noted that the disclosed amount must be taxed under Section 115BBE of the Act rather than being shown as business income. In verification of computation of income, it was seen that the assessee has claimed an amount of Rs.03,53,280/- as interest to partners and Rs.44,85,820/- as remuneration of partners which are not permissible deductions as per the provisions of Section 115BBE of the Act. Therefore, the assessment order being erroneous and prejudicial to the appellant revenue, was revised by PCIT directing the Assessing Officer to pass fresh assessment order only to the extent of issue. 2.2 Being aggrieved by the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such income. He accordingly set aside the assessment by invoking section 263. The Gujarat High Court held that even in case of unaccounted receipts of a businessman, it is only the profit element embedded in the business which can be taxed and not the entire amount. In other words, if the assessee can point out that even on unaccounted receipts, expenditure was also incurred for the purpose of business, it would be only the reasonable profit on such receipts which should be taxed. Thus, revision order was not sustainable. In the case of Deccan Jewellers (P.) Ltd. [2021] 132 taxmann.com 73 (Andhara Pradesh), the High Court held that where nature and source of excess stock found during search was not specifically identifiable from profits whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 115BВЕ. 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 secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in law in invoking section 263 provisions in the instant facts, to hold that the order passed by the assessing officer is erroneous and prejudicial to the interests of the revenue. In the result, the appeal of the assessee is allowed. 4. As observed by the Tribunal, the Assessing Officer has made sufficient inquiry and as such during the course of regular assessment under Section 143(3) of the Act, by assessing the income of Rs.41.78 lakhs which included the income surrendered pursuant to the 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 new demand. Notice was also issued by the Assessing Officer under Section 154 of the Act on the ground that the t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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