SHRI DIVAKAR GARG PROP GARG CLINIC, BATHINDA V. PRINCIPAL COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1, LUDHIANA

ITA 151/ASR/2023

AI Insights

The case involves appeals by Sh. Divakar Garg and Smt. Shweta Garg against the orders of the Principal Commissioner of Income Tax (Central), Ludhiana, which set aside the original assessment orders for the Assessment Year 2018-19. The PCIT invoked section 263 of the Income Tax Act, citing that the original assessments were erroneous and prejudicial to the interest of the revenue, as they did not adequately address the unaccounted professional receipts and other discrepancies noted during a survey. The tribunal found that the Assessing Officer had not conducted necessary enquiries and had accepted the assessee's explanations without proper scrutiny, leading to the dismissal of the appeals.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114552 (ITAT-AMRITSAR)
• Duration Of Justice: 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 21-06-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 21-05-2023
• Other Referred Cases: PCIT vs. M/s. Khushi Ram & Sons Pvt. Ltd., SVS Oil Mills vs. ACIT, Kim Pharma Pvt. Ltd. vs. CIT, Roshan Di Hatti vs. CIT, Kale Khan Mohammad Hanif vs. CIT, M/s. Bhima Jewellers vs. PCIT Kozhikode, Mahalakshmi Liquor Promoters (P) Ltd vs. Commissioner of Income Tax, Dr. Rabindra Kumar Singh vs. CIT (Central), Patna, Rajalakshmi Mill Ltd vs. ITO, Coimbatore, Ambika Agro Suppliers vs. ITO, Jalgaon, Deniel Merchants Pvt. Ltd. vs. ITO, Lakshmi Vilas Bank Vs JCIT, PCIT VS SHRI BRAHAM DEV GUPTA
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: VIPAN GARG
• Keywords: Unexplained cash credit; Business income; Revision of order; Search and seizure; Salary income; Deemed to accrue or arise in india; Difference of opinion; Change of opinion; CHAPTER IV
• Section: 68; 69; 263; 69C; 15; 80C; 143(3); 142(1); 133A; 40(a)(ia); 69B; 143(2); 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 151/Asr/2023 Assessment Year: 2018-19 Sh. Divakar Garg Garg Clinic, Namdev Road, Bathinda, Punjab 151 001 [PAN: AMEPD 6819Q] Vs. Pr. Commissioner of Income Tax (Central), Ludhiana (Appellant) (Respondent) I.T.A. No. 152/Asr/2023 Assessment Year: 2018-19 Smt. Shweta Garg # 1 st Floor, Garg Clinic, Namdev Road, Bathinda, Punjab 151 001 [PAN: BPEPS 2367N] Vs. Pr. Commissioner of Income Tax (Central), Ludhiana (Appellant) (Respondent) Appellant by : Sh. Vipan Garg, CA Respondent by: Sh. S. R. Kaushik CIT DR Date of Hearing: 22.06.2023 Date of Pronouncement: 12.07.2023 ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 2 ORDER Per Dr. M. L. Meena, AM: Both the appeals have been filed by the assessee against the separate orders of the Ld. Pr. Commissioner of Income Tax (Central), Ludhiana even dated 31.03.2023 in respect of Assessment Year 2018-19. 2. The assessee has raised the following grounds of appeal in ITA No. 151/Asr/2023: “1. That the Ld. Pr. CIT (Central), Ludhiana seriously erred in law as well as on the facts of the case in invoking the provision of section 263 of the Income Tax Act. and therefore, the impugned order dated 31/03/2023 u/s 263 of the Income Tax Act kindly be quashed. 2. That the Ld. Pr. CIT (Central), Ludhiana seriously erred in law as well as on the facts of the case in invoking the provision of section 263 of the Income Tax Act for imposing the tax rate u/s 115BBE. However, Onus proved by the assessee i.e., assessee having explained and disclosed the nature and source of income and cash in hand at the time of survey as well as during assessment proceedings. 3. That the Ld. Pr. CIT (Central), Ludhiana has erred both in Law and on facts by invoking the provisions of section 115BBE read with section 69 B and making an estimation of income surrendered cash amounting to Rs. 2,37,99,081/- without any adverse material on record, without verifying the fact that there is no surrender of income at the time of survey. 3.1 That the Ld. Pr. CIT (Central), Ludhiana has erred both in Law and on Facts by invoking the provisions of section 115BBE read with section 69B, ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 3 whereas the provisions of Section 69B relates to, amount, of investments, not fully disclosed in books of accounts of a taxpayer. 4. That the Ld. Pr. CIT (Central), Ludhiana has erred both in Law and on facts at calculation of undisclosed income however there are no undisclosed income and no surrender of income, all the income correctly reported in the regular financial books of account which are impounded by the department at the time of survey and are not rejected by the Ld. AO as well as Ld. Pr. CIT (Central). 5. That the Ld. Pr. CIT (Central), Ludhiana has erred both in Law and on facts and not appreciating the fact that cash in hand has been generated from regular receipts accounted for in the regular books of accounts and the cash in hand was reported in the statement u/s 133A on the day of survey as well, and explained during assessment proceedings as well. 6. That the Ld. Pr. CIT (Central), Ludhiana has erred both in Law and on facts in wrongly setting aside the assessment order dated 15.03.2021 despite there being complete application of mind by the Ld. AO and it was nothing but a case of change of opinion, based on which, assumption of jurisdiction u/s 263 is not permissible. The impugned order dated 31.03.2023, therefore, lacks valid jurisdiction u/s 263 of the Act, and hence the same kindly be quashed. 7. That the Ld. Pr. CIT (Central), Ludhiana has erred both in Law and on facts at the time of passing the order u/s 263 however order passed by AO is not erroneous and prejudicial to the interests of the Revenue. Pr. CIT himself is also not clear in which section the income is taxable than how the order of the Ld. AO is erroneous and prejudicial to the interest of revenue and liable to be quashed. 8. The Appellant carves for leave to add, delete or modify and of the Grounds of Appeal before or at any time of hearing.” 3. The assessee has raised the following grounds of appeal in ITA No. 152/Asr/2023: ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 4 “1. That the Ld. Pr. CIT (Central), Ludhiana seriously erred in law as well as on the facts of the case in invoking the provision of section 263 of the Income Tax Act and therefore, the impugned order dated 31/03/2023 u/s 263 of the Income Tax Act kindly be quashed. 2. That the Ld. Pr. CIT (Central), Ludhiana seriously erred in law as well as on the facts of the case in invoking the provision of section 263 of the Income Tax Act for imposing the tax rate u/s 115BBE. However, Onus proved by the assessee i.e., assessee having explained and disclosed the nature and source of income and cash in hand at the time of survey as well as during assessment proceedings. 3. That the Ld. Pr. CIT (Central), Ludhiana has erred both in Law and on facts by invoking the provisions of section 115BBE read with section 69 B and making an estimation of income surrendered cash amounting to Rs. 70,25,449/- without any adverse material on record, without verifying the fact that there is no surrender of income at the time of survey. 3.1 That the Ld. Pr. CIT (Central), Ludhiana has erred both in Law and on Facts by invoking the provisions of section 115BBE read with section 69B, whereas the provisions of Section 69B relates to, amount, of investments, not fully disclosed in books of accounts of a taxpayer. 4. That the Ld. Pr. CIT (Central), Ludhiana has erred both in Law and on facts at calculation of undisclosed income however there are no undisclosed income and no surrender of income, all the income correctly reported in the regular financial books of account which are impounded by the department at the time of survey and are not rejected by the Ld. AO as well as Ld. Pr. CIT (Central). 5. That the Ld. Pr. CIT (Central), Ludhiana has erred both in Law and on facts and not appreciating the fact that cash in hand has been generated from regular receipts accounted for in the regular books of accounts and the cash in hand was reported in the statement u/s 133A on the day of survey as well, and explained during assessment proceedings as well. 6. That the Ld. Pr. CIT (Central), Ludhiana has erred both in Law and on facts in wrongly setting aside the assessment order dated 15.03.2021 despite there being complete application of mind by the Ld. AO and it was ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 5 nothing but a case of change of opinion, based on which, assumption of jurisdiction u/s 263 is not permissible. The impugned order dated 31.03.2023, therefore, lacks valid jurisdiction u/s 263 of the Act, and hence the same kindly be quashed. 7. That the Ld. Pr. CIT (Central), Ludhiana has erred both in Law and on facts at the time of passing the order u/s 263 however order passed by AO is not erroneous and prejudicial to the interests of the Revenue. Pr. CIT himself is also not clear in which section the income is taxable than how the order of the Ld. AO is erroneous and prejudicial to the interest of revenue and liable to be quashed. 8. That the Ld. Pr. CIT(Central), Ludhiana has erred in Law and on facts by not verifying the fact that no loan from certain parties have been taken, instead there is a secured car loan outstanding in the books of accounts which was taken during the financial year 2016-17, and rolled over in the year under consideration and interest has been paid on this loan only. 9. The Appellant carves for leave to add, delete or modify and of the Grounds of Appeal before or at any time of hearing.” 4. In both the appeals, the assesses have challenged the sole and common issue on identical facts, except variation in the amount, that the Ld. Pr. CIT (Central), Ludhiana has erred both in Law and on facts in wrongly setting aside the assessment orders despite there being complete application of mind by the Assessing Officer (“in short ”the AO”) AO and it was nothing but a case of change of opinion, based on which, assumption of jurisdiction u/s 263 is not permissible and hence, the impugned orders dated 31.03.2023, therefore, lacks valid jurisdiction u/s 263 of the Act. ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 6 Accordingly, both these appeals were heard together and adjudicated by this common order for the sake of brevity. 5. Brief facts of the case as per record are taken from ITA No. I.T.A. No. 151/Asr/2023 as a lead case for discussion and adjudication of the appeal as per the assessment order dated 15.03.2021, passed by the AO which reads as under: “This is the case of Divakar Garg, Prop. M/s. Garg Clinic, Namdev Road, Bathinda. Return declaring income of Rs. 2,98,67,740/- was filed by the assessee on 19.09.2018. The case was selected under compulsory scrutiny as per CBDT guidelines and a statutory notice u/s 143(2) of the Income Tax Act, 1961 was issued on 23.09.2019 and served upon the assessee electronically. 2. The case was centralized with DCIT-CC-1, Ludhiana vide order u/s 127 of the I.T Act, 1961 bearing No. Pr. CIT-1/Amritsar/ Tech./2020-21/979 passed by Pr. CIT-1, Amritsar on 24.11.2020. Thereafter, notice u/s 142(1) of the Income Tax Act, 1961 dated 01.02.2021 along with detailed questionnaire issued and served upon assessee through ITBA for 08.02.2021. In response written submissions / information, as called for, was furnished by the assessee online through its E-filing account. Books of accounts were produced and test- checked. 3. After perusal and examination of the documents / evidences submitted, returned income of Rs.2,98,67,740/- is accepted.” 4. Assessed. Demand notice, computation sheet alongwith a copy of this order is issued for service upon the assessee.” 6. The Ld. Principal Commissioner of Income Tax (Central), Ludhiana [In short “the PCIT”] while invoking the revisionary proceedings examine ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 7 the assessment record and issued show cause notice which reads as under: 2. In this case, the assessee filed return of income on 19.09.2018 declaring income of Rs.2,98,67,740/- which includes the amount of Rs.2,37,99,081/- on account of professional receipts found during the course of survey action not recorded in the books of accounts and calculated tax at normal rates. The assessment u/s 143(3) of the I.T. Act, 1961 (‘the Act’ henceforth) was completed on 15.03.2021 and the income was assessed at the returned income of Rs.2,98,67,740/-. 3. On perusal of the records, it has been observed that the tax was calculated at normal rates on the income surrendered during the course of survey action on account of Professional Receipts not recorded in the books of accounts. However, the income surrendered during the course of survey action should be treated as assessee is in possession of unexplained money and treatment of tax liability thereon should be under the provision of section 69B of the Income Tax Act, 1961 and tax was to be calculated u/s 115BBE of the Act on the said surrendered income. 4. In light of the above, it is evident that the assessment order passed on15.03.2021 u/s 143(3) of the I.T.Act, 1961 is apparently considered erroneous in so far as it is prejudicial to the interest of the revenue within the meaning of section 263of the I.T. Act, 1961. 5. Further, assessee requested to submit the following details:- 1. A brief note on activities of the assessee in the year under consideration as also in immediately two preceding years as well as in subsequent year. 2. A brief note that how assessee conducts his profession and flow of activities vis-a-vis receipt of fee? 3. A monthly chart of cash flow and income recognized during the year under consideration. 6.1 The Ld. PCIT has stated contention of the assessee in summary manner as under:- ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 8 1. No income of Rs.70,25,449/- has been surrendered on account of Professional receipts. 2. At the time of survey, Trial Balance and books of accounts for the year ended 31.03.2018 was impounded. 3. That during the course of statement recorded at the time of survey, the assessee has explained the documents impounded which includes the Trial Balance and books of accounts for the year ended 31.03.2018. 4. That no documents were impounded during the course of survey which could be ascertained that there are unaccounted professional receipts. 5. The assessee has submitted month wise cash flow statement for the period April, 2017 to March, 2018. 6.2 After considering the submission of the appellant and perusal of the assessment order and material on record, the Ld. PCIT has set aside the assessment order by holding the same as erroneous and prejudicial to the interest of revenue as follows: “5.2 The undersigned has perused the assessment record and material available. Further, submissions made by the assessee before the Assessing officer during the course of assessment have also been gone through. Written submissions made by the assessee during the course of revision proceedings u/s 263 have also been perused. I am afraid that the request of the assessee for dropping proceedings u/s 263 cannot be accepted on the fact obtaining in the case and the legal position under the Act. It is a case where Assessing Officer has failed to conduct enquiries as regards nature of the disclosure and availability of cash on the day of survey. This is being discussed hereinafter as under: - 5.2.1 Perusal of the record reveals that during the survey on 26.04.2018, the assessee has offered to pay tax on the income of about Rs.3.00 crore for the A.Y. 2018-19. On the date of survey i.e. on 26.04.2018, cash at the business premises was inventorized which showed cash balance of Rs.51,120/- only. On the other hand, the assessee claimed that balance as per books of accounts as on 25.04.2018 was Rs.2,53,94,706/-. Further, during the recording of statement ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 9 at the time of survey, the assessee had explained that he carries excess cash at home because of security reasons and not kept at business premises. Further, the assessee has submitted monthwise cash flow statement for the period April, 2017 to March, 2018 which reveals that cash balance at the beginning of April, 2017 was Rs.49,665/-. However, thereafter it has shown steady increase and as on 31.03.2018, it was Rs.2,52,35,231/-. The cash flow statement submitted by the assessee is given below:- MONTH MONTH OPENING BALANCE RECEIPTS WITHDWRALS MONTH END CLOSING BALANCE APRIL 2017 49665.67 2021068.00 740776.00 1329957.67 MAY 2017 1329957.67 2085575.00 1770014.00 1645518.67 JUNE 2017 1645518.67 1863500.00 1101980.00 2407038.67 JULY 2017 2407038.67 3544060.00 507038.00 5444060.67 AUG. 2017 5444060.67 3107915.00 814079.00 7737896.67 SEPT. 2017 7737896.67 3272900.00 735525.00 10275271.67 OCT. 2017 10275271.67 3211390.00 571550.00 12915111.67 NOV. 2017 12915111.67 3017921.00 577123.00 15355909.67 DEC. 2017 15355909.67 3924090.00 809220.00 18470779.67 JAN. 2018 18470779.67 3402460.00 994120.00 20879119.67 FEB 2018 20879119.67 3258280.00 1342185.00 22795214.67 MARCH 2018 22795214.67 3078689.00 638672.00 25235231.67 ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 10 5.2.3 It is also seen that the assessee has been making withdrawals of cash on regular basis. The steady increase in the cash balance is unusual and in the case of a professional it is much more unconventional. This aspect has not at all been examined by the AO. It is improbable that assessee would have to carry heavy cash of Rs. 13.30 lac to 102.75 lac in the first half of the Financial Year and 102.75 lac to 252.35 lac in the later half of the Financial Year. 5.2.4 It is further seen that assessee had paid advance tax during the F.Y. 2017-18 of Rs.7,85,000/- only which was sufficient only to cover an income of Rs.25 lac to 30 lac. However, it had paid self-assessment tax of Rs. 1,02,69,130/- for the year under consideration. All these facts do not indicate usual business/professional phenomenon. This has not at all been examined by the Assessing Officer. These facts also raise concerns and doubts about the correctness of books of accounts of the assessee which the AO has not examined. 5.2.5 In the considered view of the undersigned, the above unusual factual pattern makes the difference, which remained to be examined. The courts have also recognized that single significant fact can make difference in arriving at the conclusion in the given facts and circumstances. This is also true for examining application of case laws, if any, relied upon by the assessee viz-a-viz factual matrix obtaining in a case. 5.2.6 It has been pointed out that the assessee has shown availability of huge cash as per the cash flow statement, a scan copy of which has been captured earlier. The unusual and strange claim of huge cash availability with the assessee does not meet the eyes. 5.2.7 Since the Assessing Officer has not conducted any enquiries in relation of the aforesaid facts and circumstances having bearing on the assessment, the assessment order passed by the AO suffers from the error as well as prejudice. In this way, twin conditions get satisfied. The Assessing Officer has accepted the assessee’s version without application of mind and ascertaining the actual position. In the factual background, it cannot be said that assessee has taken one of the possible views. Even in the submissions, assessee has not been able to demonstrate that the Assessing Officer has taken a permissible view. The discussion made above clearly reveal that the Assessing Officer has passed the order, without making enquiries or verification which should have been made. In this regard, reliance is placed on ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 11 explanation (2) below section 263(1). Since, reliance is placed on explanation, it is stated that same would be applicable retrospectively. However, in our case, this issue of retrospectivity would not stand in a way as the relevant year under consideration is A.Y. 2018-19 & explanation was inserted by Finance Act, 2015 w.e.f. 01.06.2015. Therefore, invoking of jurisdiction is justified and the case laws prior to insertion of explanation (2) will not be applicable even if explanation is treated as perspective in nature. 5.2.8 In view of the above, it is evident that the Assessing Officer has not examined vital facts highlighted above having significant bearing on taxability of additional income declared in survey and claim that these represented regular business incomes. There is no question of Assessing Officer taking possible view. Legal position with regard to onus is clear that a particular income is from a source is on the assessee and not on the department. Therefore, the twin conditions get satisfied and therefore, the assessment would fall in the category of erroneous and in so far as prejudicial to the interest of the revenue. 5.2.9 In view of the above, it is evident that the Assessing Officer has not examined vital facts highlighted above having significant bearing on taxability of additional income declared in survey and claim that these represented regular business incomes. There is no question of Assessing Officer taking possible view. Legal position with regard to onus is clear that a particular income is from a source is on the assessee and not on the department. Therefore, the twin conditions get satisfied and therefore, the assessment would fall in the category of erroneous and in so far as prejudicial to the interest of the revenue. 5.2.10. It would be relevant to discuss a general contention taken by the assessees that where assessee was engaged in certain professional activities and had a single source of income, in this case from the medical facility and there was no other source with the assessee. In such a situation, it is generally submitted that any additional income offered by the assessee is required to be taxed under the head income from business or profession and consequently provisions of section 115BBE would not be attracted. This important issue is being dealt with in the next paragraph. Treatment and taxation of surrendered income under section 115BBE ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 12 6.1 During the course of survey action, the assessee has offered additional for taxation. It was submitted that he will file return of income for the year under consideration about 3.00 crore and pay tax thereon. This level of income offered to be returned for the A.Y. 2018-19 is much higher than the previous year income and even the subsequent year income. This year was extremely special in so far as level of income returned viz-a-viz the past history is concerned. The Assessing Officer was required to examine the treatment of large income offered in the form of additional income from profession at the time of filing of return of income. The issue to be examined by the Assessing Officer was whether the nature of the income was regular business/professional income or income from other sources, hither to not disclosed and to be subjected to taxed at higher rates. While deciding this, facts and circumstances obtaining in the case, as highlighted above were required to be considered. 6.2 In this regard, it is relevant to discuss another contention generally taken by the assessee that the provisions of section 115BBE are applicable only where the total income of an assessee includes any income referred to in section 68, 69, 69A, 69B, 69C & 69D and reflected in the return of income u/s 139. It is also generally submitted that while framing the assessment, the AO had accepted the reply of the assessee after due application of mind and without making any addition. Thus, in such situation, the assessment should not be subjected to revision u/s 263. However, it is to be noted that the issue to be examined in the case is availability of unusual cash flow pattern highlighted above. The Assessing Officer was required to examine all these aspects at the touchstone of Principal of Human Probabilities or preponderance of Probability. The Assessing Officer has failed to examine this vital aspect while passing the assessment order. 6.3 These general arguments are examined. It is important to emphasize here that it is necessary to establish a linkage between the additional income offered with the business or professional income, if any. On perusal of the record and the reply to show cause notice u/s 263, it is seen that this aspect has not been examined by the Assessing Officer viz-a-viz the special facts brought out earlier in the discussion which the Assessing Officer has failed to examine. Hence, from the above discussion, it is clear that the nexus between the surrendered income and business needs to be established before the same can be treated as income from business, which the assessee has failed to do. The Assessing Officer has failed to conduct necessary enquiries in this ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 13 regard. Once again, reference is invited to Explanation 2below section 263 of the Act which was recently added by way Finance Act, 2015. The purpose of explanation is to clarify law, and therefore, same are applicable retrospectively in general. However, in our case, assessment year involved is 2018-19, retrospective application of Explanation 2 is not an issue. This would be applicable as the undersigned is of the opinion that Assessing Officer has failed to conduct necessary enquiries which in the opinion of the undersigned should have been done. It has been pointed out in earlier paragraphs that nothing has been enquired about the unusual cash flow pattern discussed above. The legal issue relating to onus of the assessee and consideration of section 115BBE is elaborately made in the subsequent paras. 6.4 Merely having a known business activity will not, per se, render any unexplained asset/ income as business/profession income u/s 28, unless the burden of proving the source u/s 68 to 69D is also discharged. The onus of proving that such receipts are from an activity other than disclosed business activities is not upon the AO. Therefore, there can be no presumption against the deeming fiction u/s 68 to 69D to hold that income/investment, whose source is not explained, will still be classified as income under any head u/s 14. It would be, therefore, impermissible to attempt and classify such incomes under any of specific heads, even if there is any activity which can be remotely/indirectly linked to such deemed income. The word 'source' in the same context would refer to nexus of such income generating activity/transaction with name and identity, creditworthiness of person with whom such activity/transaction was done along with proving the genuineness of transaction also. 6.5 The requirement of proving these 3 essential ingredients to prove the source in order to escape the rigors of the deeming fiction has been upheld universally. The conjoint burden of proving the 'nature and source' is therefore, not restricted to merely claiming the nexus of any activity/transaction to a particular credit/income/asset but also requires to establish with cogent evidence the nexus of such activity/transaction with source also by providing the name and identity, creditworthiness of person with whom the activity/ transaction was done along with proving the genuineness of transaction. 6.6 In above context, it is important to note that the Assessing Officer has not been able to bring on record necessary documentary evidences to justify the additional income offered to tax. This assessee later claimed as part of regular professional receipts. Still further assessee claimed that it was having huge ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 14 cash balance in the cash book. The Assessing Officer has not examined the unusual pattern in so far as cash is concerned. This has already been highlighted in the earlier paragraphs. This unusual pattern needed to be examined on the touchstone of principle of human of probability or simply the preponderance of probability. 6.6.1 It would be relevant to refer to some of the case laws in relation to the aforesaid observations particularly that initial onus lies with the assessee and not the Assessing Officer. The discussion is contained in the subsequent paras. 6.7 In the case of PCIT vs. M/s. Khushi Ram & Sons Pvt. Ltd., the Hon’ble High Court of Punjab & Haryana in ITA No. 126 of 2015 dated 21.07.2016 held as under: “It is not necessary that the surrendered amount is from business income. It could be on account of any other transaction legal or otherwise. Merely because an assessee carries on certain business, it does not necessarily follow that the amounts surrendered by him are on account of its business transactions. There is no presumption that absent anything else an amount surrendered by an assessee is his business income. It is for the assessee to establish the source of such surrendered amount.” 6.8 In the case of SVS Oil Mills vs. ACIT, Chennai, the Hon’ble High Court of Madrasin ITA No. 765 of 2018 dated 26.03.2019, held in para 9 of the order, as under: “When the excess stocks were found during the Survey, there is no question of allowing the Assessee to record any additional purchases because such purchases had already been recorded in the books of accounts of the Assessee. Therefore, the excess stock, per se, has to be naturally brought to tax as ‘undisclosed income’ by itself and there is no question of any corresponding deduction from that in such cases. ” 6.9 In the case of Kim Pharma Pvt. Ltd. vs. CIT in ITA No. 106 of 2011 dated 27.04.2011, the Hon’ble High Court of Punjab & Haryana held that, where the amount surrendered during the survey was not reflected in the books of accounts and the source from where it was derived was not declared, the same was assessable as deemed income u/s 69A of the Act. ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 15 6.10 The Hon’ble Supreme Court in the cases of Roshan Di Hatti vs. CIT [1977] 107 ITR 938 (SC) and Kale Khan Mohammad Hanif vs. CIT [1963] 50 ITR 1 (SC) held that the law is well-settled that the onus of proving the source of a sum of money found to have been received by an assessee is on him. Where the nature and source of a receipt, whether it be of money or other properly, cannot be satisfactorily explained by the assessee, it is open to the revenue to hold that it is the income of the assessee and no further burden lies n the revenue to show that the income is from any particular source. 6.11 The above conclusion also get support from the decision of Hon’ble ITAT Cochin Bench, Cochin in the case of M/s. Bhima Jewellers vs. PCIT Kozhikode in ITA No. 208/Coch/2018, Assessment Year 2013-14 vide order dated 20.08.2018. The relevant para of this order is reproduced below:- “6.2. The opening words of section 14 'Save as otherwise provided by this Act' clearly leave scope for 'deemed income of the nature covered under the scheme of sections 69, 69A and 69C being treated separately, because such deemed income is not income from salary, house property, profits and gains of business or profession, or capital gains, nor is it income from 'other sources' because the provisions of sections 69, 69A, 69B and 69C treat unexplained investments, unexplained money, bullion, etc., and unexplained expenditure as deemed income where the nature and source of investment, acquisition or expenditure, as the case may be, have not been explained or satisfactorily explained. Therefore, in these cases, the source not being known, such deemed income will not fall even under the head 'Income from other sources'. Therefore, the corresponding deductions, which are applicable to the incomes under any of these various heads, will not be attracted in case of deemed incomes which are covered under the provisions of sections 69, 69A, 69B & 69C in view of the scheme of those provisions. 7. It is therefore, clear that, when the investment in or acquisition of gold, which was recovered from the assessee was not recorded in the books of account and the assessee offered no explanation about the nature and source of such investment or acquisition and the value of such gold was not recorded in the books of account, nor the nature and source of its acquisition explained, there could arise no question of treating the value of such gold, which was ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 16 deemed to be the income of the assessee, as a deductible trading loss on its confiscation, because such deemed income did not fall under the head of income 'Profits and gains of business or profession'. 8. In our opinion, therefore, the Tribunal was perfectly right in holding that the value of the gold was liable to be included in the income of the assessee as the source of investment in the gold or of its acquisition was not explained and that the assessee was not entitled to claim that the value of the gold would be allowed as a deduction from his income." 6.12 In the case of ITO Vs Dulari Digital Photo Services (P) Ltd. ([2012] 24 Taxman.com.31(CHD)), the question before the Co-ordinate Bench was whether unexplained cash credit under section 68 of the Act can be considered for set-off against losses under various heads of income. After examining the relevant provisions in detail, Coordinate Bench has clearly outlined that for income to be considered even from other sources, the sources have to be established. The relevant observations read as follows: "14...... Section 2(45) defines 'total income' as 'the total income referred to in section 5, computed in the manner laid down in this Act". It is relevant to note that the principal charging section 4 makes the 'total income referred to in the principal charging section. Section 14 classifies the heads of income while sections 15 to 59 provide for its quantification. Chapter VI of the Income tax Act provides for aggregation of income and set off or carry forward of loss. Thus Chapter VI is in two parts; first part deals with aggregation of income while the second part deals with set off or carry forward of losses. Chapter has been placed after Chapter IV and V, It comes into play only after the computation of total income under the various heads of income in terms of in terms of Chapter IV has been done. Income falling under Chapter VI is taxed by aggregating the same with the income quantified in terms of Chapter IV. Chapter VI is not subservient to Chapter IV. Besides, section 14 allows the taxability of income under specific provisions of the I.T. Act outside Chapter IV. For the reasons aforestated, the income assessable under section 68 cannot be assessed as income from other sources under section 56. 15. Thus what is taxed under Chapter IV is income from a known source including income from other sources. A source of income means a specific ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 17 source from which a particular income springs or arises. Once a source giving rise to a particular income is identified, it has then to be placed under a particular head of income as specified in section 14. Thus income can be taxed under a specific head of income as enumerated in section 14 only when if is possible to peg the same to a know source/head of income. If the nature and source of a particular receipt is not known, it cannot then be pegged to a known source/head of income. Chapter IV contemplates computation of income arising from known sources/heads of income whereas Chapter VI, on the other hand, contemplates aggregation of the entire sum the nature and sources of which are not known. The aforesaid two Chapters are completely different in their nature, scope and effect. Though the income assessable under them are part of total income as defined in sections 2(45)/4/5 of the I. T. Act yet that does not mean that income assessable under section 68 has to be assessed under section 56. In the case before us, source of unexplained cash credits is not known and hence they cannot be linked to any known source/head of income including income from other sources. In order to constitute 'income from 'other sources', the source, namely, the "other sources", has to be identified. Income from unexplained or unknown sources cannot therefore be considered or taxed as income from other sources. 6.13 The aforesaid view is supported by the judgement of the Hon'ble Gujarat High Court in Fakir Mohamed Haji Hasan V. CIT [2001] 247 ITR 290/[2002] 120 Taxman 11 in which the Hon'ble High Court has held as under:- "The scheme of sections 69,69A, 69B and 69C of the Income-tax Act 1961, would show that in cases where the nature and source of investments made by the assessee or the nature and source of acquisition of money, bullion etc. owned by the assessee or the source of expenditure incurred by the assessee are not explained at all, or not satisfactorily explained, then, the value of such investments and money or the value of articles not recorded in the books of account or the unexplained expenditure may be deemed to be the income of the assessee. It follows that the moment a satisfactory explanation is given about such nature and source by the assessee, then the source would stand disclosed and will, therefore, be known and the income would be treated under the appropriate head of income for assessment as per the provisions of the Act. However, when these provisions apply because no source is ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 18 disclosed at all on the basis of which the income can be classified under one of the heads of income under section 14 of the Act, it would not be possible to classify such deemed income under any of these heads including income from "other sources" which have to be sources known or explained. When the income cannot be so classified under any one of the heads of income under section 14, it follows that the question of giving any deductions under the provisions which correspond to such heads of income will not arise. If it is possible to peg the income under any of those heads by virtue of a satisfactory explanation being given, then these provisions of sections 69, 69A, 69B and 69C will not apply, in which event, the provisions regarding deductions, etc., applicable to the relevant head of income under which such income falls will automatically be attracted. The opening words of section 14 are "Save as otherwise provided by this Act" clearly leave scope for 'deemed income' of the nature covered under the scheme of sections 69, 69A, 69B and 69C being treated separately, because such deemed income is not income from salary, house property, profits and gains of business or profession, or capital gains, nor is it income from "other sources" because the provisions of sections 69,69A, 69B and 69C treat unexplained investment, unexplained money, bullion, etc., and unexplained expenditure as deemed income where the nature and source of investment, acquisition or expenditure, as the case may be, have not been explained or satisfactorily explained, Therefore, in these cases, the source not being known, such deemed income will not fall even under the head 'Income from other sources". Therefore, the corresponding deductions which are applicable to the incomes under any of these various heads, will not be attracted in the case of deemed incomes which are covered under the provisions of sections 69,69A,69A and 69C of the Act in view of the scheme of those provisions." 6.14 Accordingly, the arguments of the assessee that the surrendered income is to be treated as business income of the assessee is not acceptable and the additions made u/s 69B, are to be treated separately and it would not be possible to classify such deemed income falling under Chapter-VI, under any of the heads including ‘income from other sources’ but they will be aggregated along with the incomes computed under Chapter IV. The AR has not been able to adduce documentary evidence to establish the nexus between the surrendered income and business and no source for the surrendered income could not related to. The judgments cited supra i.e.: ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 19 (1) Fakir Mohammed Haji HasanVs.CIT [2001] 247 ITR 290 (Guj.) (2) PCIT vs. M/s. Khushi Ram & Sons Pvt. Ltd., the Hon’ble High Court of Punjab & Haryana in ITA No. 126 of 2015 dated 21.07.2016 (3) SVS Oil Mills vs. ACIT, Chennai, the Hon'ble High Court of Madras in ITA No. 765 of 2018 dated 26.03.2019. (4) Kim Pharma Pvt. Ltd. vs. CIT in ITA No. 106 of 2011 dated 27.04.2011, (5) The Hon’ble Supreme Court in the cases of Roshan Di Hatti vs. CIT [1977] 107 ITR 938 (SC) (6) Hon’ble ITAT Cochin Bench, Cochin in the case of M/s. BhimaJewellers vs. PCIT Kozhikode in ITA No. 208/Coch/2018, Assessment Year 2013-14 7. Discussion of important Rulings: Before parting it will be relevant to refer to some important rulings of section 263 of the Act by the judicial authorities. The ratio of these rulings will be equally applicable in our case. Important cases laws laying down principles are discussed briefly: 7.1 In the case of Mahalakshmi Liquor Promoters (P) Ltd vs. Commissioner of Income Tax [2013] 29 taxmann.com 70, the Hon’ble Tribunal, found that there was no enquiry by the Assessing Officer on the issues raised by the CIT. It was held that the lack of enquiry or inadequate enquiry by the Assessing Officer was a valid reason for revision of the assessment order. The Hon’ble Tribunal further held that it can safely be said that an order passed by the Assessing Officer becomes erroneous and prejudicial to the interests of the Revenue under section 263 if it is a stereotype order which simply accepts what the assessee has stated in his return or where he fails to make the requisite enquiries or examine the genuineness of the claim called for The Hon'ble Tribunal, therefore, concluded that “an order becomes erroneous because inquiries, which ought to have been made on the facts of the case, were not made and not because there is anything wrong with the order if all the facts stated or the claims made in the return are assumed to be correct. Thus, it is mere failure on the part of the Assessing Officer to make the necessary inquiries or to examine the claim made by the assessee in accordance with law, which renders the resultant order erroneous and prejudicial to the interest of the revenue. Nothing more is required to be ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 20 established in such a case If the Assessing Officer passes an order mechanically without making the requisite inquiries or examining the claim of the assessee in accordance with law, such an order will clearly be erroneous in law as it would not be based on objective consideration of the relevant materials. It is therefore, the mere failure on the part of the Assessing Officer in not making the inquiries or not examining the claim of the assessee in accordance with law that per se renders the resultant order erroneous and prejudicial to the interest of the revenue. Nothing else is required to be established in such a case to show that the order sought to be revised is erroneous and prejudicial to the interests of the revenue. "(emphasis supplied) 7.2 In the case of Dr. Rabindra Kumar Singh vs. CIT (Central), Patna [2011] 131 ITD 39 (Ranchi), the Hon’ble Tribunal held as under: “Section 263 seeks to remove the prejudice caused to the revenue by the erroneous order passed by the Assessing Officer. It empowers the Commissioner to initiate suo motto proceedings either where the Assessing Officer takes a wrong decision without considering the materials available on record or he takes a decision without making an enquiry into the matters, where such inquiry was prima facie warranted. The Commissioner will be well within his powers to regard an order as erroneous and prejudicial to the interest of the revenue on the ground that, in the circumstances of the case, the Assessing Officer should have made further inquiries before accepting the claim made by the assessee in his return. ” 7.3 In the case of Rajalakshmi Mill Ltd vs. ITO, Coimbatore [2009] 31 SOT 353 (Chennai) (SB), the Hon’ble Tribunal held that “it is not necessary for the Commissioner to make further enquiries before cancelling the assessment order of the Assessing Officer. The Commissioner can regard the order as erroneous on the ground that in the circumstances of the case the Assessing Officer should have made further inquiries before accepting the statements made by the assessee in his return.” 7.4 In the case of Ambika Agro Suppliers vs. ITO, Jalgaon [2005] 95 ITD 326 (Pune), the Hon’ble Tribunal held that “ On a perusal of the assessment order, it was clear that the Assessing Officer had not discussed nor even examined the above issues keeping in view the relevant provisions of law However, the Assessing Officer had not conducted any enquiry. Mere filing of an explanation was not sufficient and at the same time, it could not be inferred that the Assessing Officer had applied his mind. There was also no proper verification in respect of creditors from whom the assessee had accepted ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 21 unsecured loans. No specific enquiries to prove the genuineness of these loans had been conducted by the Assessing Officer. The Assessing Officer had simply obtained account extracts of these parties as appearing in the books of the assessee and accepted the loan as genuine. No confirmation letters were filed from these parties. The assessment order was also silent as to whether the Assessing Officer had made enquiries for verifying the identity of the creditors, their capacity to advance the loan and genuineness of the transactions. Failure to make enquiries in that regard rendered the assessment order passed by the Assessing Officer as erroneous and prejudicial to the interests of the revenue.” 7.5 In the case of RameshchandraMaleramVarma vs. DCIT [2002] 121 Taxman 29 (Ahd.) (Mag.) it was held that the Commissioner was justified in passing order under section 263 of the Act where the Assessing Officer had not examined the above issues or had not conducted any enquiry. It was held that mere filing of an explanation was not sufficient given that there was also no proper verification in respect of creditors from whom the assessee had accepted unsecured loans and no specific enquiries to prove the genuineness of these loans had been conducted by the Assessing Officer where he had simply obtained account extracts of these parties as appearing in the books of the assessee and accepted the loan as genuine. 7.6 Malabar Industrial Co. Ltd. Vs CIT [2000] 109 Taxman 66 (SC)/[2000] 243 ITR 83 (SC)/[2000] 159 CTR 1 (SC) - Where Assessing Officer had accepted entry in statement of account filed by assessee, in absence of any supporting material without making any enquiry, exercise of jurisdiction by Commissioner under section 263(1) was justified. 7.7 Deniel Merchants Pvt. Ltd. vs. ITO (2017-TIOL-455-SC-IT) Dismissed SLPs in cases where AO did not make any proper inquiry while making the assessment and accepting the explanation of the assessee(s) insofar as receipt of share application money is concerned. On that basis the Commissioner of Income Tax had, after setting aside the order of the Assessing Officer, simply directed the Assessing Officer to carry thorough and detailed inquiry. ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 22 7.8 Deniel Merchants Pvt. Ltd. vs. ITO (2017-TIOL-2526-HC-KOL-IT) Law laid down in SubhlakshmiVanijya Pvt. Ltd vs. CIT 155 ITD 171 (Kol), Rajmandir Estates 386 ITR 162 (Cal) etc that the CIT is entitled to revise the assessment order u/s 263 on the ground that the AO did not make any proper inquiry while accepting the explanation of the assessee insofar as receipt of share application money is concerned cannot be interfered with 7.9 Lakshmi Vilas Bank Vs JCIT (2018-TIOL-2284-HC-MAD-IT) A show cause notice is not mandated to be issued by CIT prior to passing of his revisional order u/s 263 7.10 PCIT VS SHRI BRAHAM DEV GUPTA (2018-TIOL-1547-HC-DEL- IT) When the AO fails to examine certain aspects in the assessment order and the CIT invokes revisionary powers u/s 263, the Tribunal is not right in supplying reasons to AO's order. AO is obliged to record some reasons when accepting or rejecting an argument made by the assessee. 8. In view of the reasoning elaborated above, it is evident that the Assessing Officer has not examined vital facts highlighted above having significant bearing on taxability of additional income declared in survey and claim that these represented regular business incomes. Therefore, the assessment order dated 15.03.2021 passed by the AO is held to be erroneous and prejudicial to the interest of the revenue within the meaning of section 263 of the Act read with its explanation 1(c) below section 263. Accordingly, the assessment order passed by the AO is set aside to the extent as mentioned in the foregoing paragraphs and restored to the Assessing Officer who will pass a fresh order of assessment, keeping in mind the observations made. In doing so, it is iterated that he will observe the principles of natural justice by affording adequate opportunity to the assessee to file details and explain its case, and in arriving at a lawful conclusion.” 7. The assesse being aggrieved with the order of the PCIT, Ludhiana, is in appeal before the Tribunal. The Ld. AR for the appellant submitted that the Ld. Pr. CIT (Central), Ludhiana, erred in law as well as on the facts of ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 23 the case in invoking the provision of section 263 of the Income Tax Act; that he has erred in law in invoking the provision of section 263 of the Income Tax Act for imposing the tax rate u/s 115BBE, although Onus proved by the assessee i.e., assessee having explained and disclosed the nature and source of income and cash in hand at the time of survey as well as during assessment proceedings; that he has erred both in Law and on facts by invoking the provisions of section 115BBE read with section 69B and making an estimation of income surrendered cash amounting to Rs. 2,37,99,081/- without any adverse material on record, without verifying the fact that there is no surrender of income at the time of survey, that the Ld. Pr. CIT (Central), Ludhiana has erred both in Law and on Facts by invoking the provisions of section 115BBE read with section 69B, whereas the provisions of Section 69B relates to, amount, of investments, not fully disclosed in books of accounts of a taxpayer; that the PCIT has erred both in Law and on facts at calculation of undisclosed income however there are no undisclosed income and no surrender of income, all the income correctly reported in the regular financial books of account which are impounded by the department at the time of survey and are not rejected by the Ld. AO as well as Ld. Pr. CIT (Central); that the Ld. Pr. CIT (Central), ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 24 Ludhiana has erred both in Law and on facts and not appreciating the fact that cash in hand has been generated from regular receipts accounted for in the regular books of accounts and the cash in hand was reported in the statement u/s 133A on the day of survey as well, and explained during assessment proceedings as well; that the PCIT has erred both in Law and on facts in wrongly setting aside the assessment order dated 15.03.2021 despite there being complete application of mind by the Ld. AO and it was nothing but a case of change of opinion, based on which, assumption of jurisdiction u/s 263 is not permissible. The impugned order dated 31.03.2023, therefore, lacks valid jurisdiction u/s 263 of the Act, and hence the same kindly be quashed and that the Ld. PCIT (Central), Ludhiana has erred both in Law and on facts at the time of passing the order u/s 263 however order passed by AO was not erroneous and prejudicial to the interests of the Revenue as the PCIT himself is also not clear in which section the income is taxable than how the order of the Ld. AO is erroneous and prejudicial to the interest of revenue and liable to be quashed. In support of its contentions, the Ld. AR filed the brief note which reads as under: “Most Respectfully, it submitted that I am in receipt of Notice bearing Din and Notice No. ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 25 ITBA/REV/F/REVl/2022-23/1050849517(l) dated 16.03.2023 on the subject matter stated above. 2. In this regard, I am submitting my submissions as under: - 1. In this regard it is respectfully submitted that as per notice for the hearing for revision proceedings u/s 263 of the Income Tax Act, 1961, it is stated that figure of Rs. 2,37,99,081.00 has been surrendered during the course of survey action, it is submitted here that no income such as Rs. 2,37,99,081.00 has never been surrendered. 2. At the time of survey, the Income tax department has impounded Trial Balance and books of accounts for the year ended 31.03.2018, which clearly reflects the professional receipts, and the Income Tax return has also been filed on the basis of that Trial Balance. 3. It is submitted during the course of survey my statement was recorded (placed on record). As per statement tendered at the time of survey, nothing has been submitted regarding surrendering of any kind of Income. At page no 5 of my statement Income tax authorities have called for the explanation on the Trial Balance for the year ending 31.03.2018 (placed on record), that they have impounded during the course of survey action, which has been duly explained at the time of Assessment proceedings and the Income tax return for the A.Y 2018-2019, has been filed on the basis of that Trial Balance. 4. I have explained all the documents which were impounded during the course of survey proceedings as per reply dated 02.03.2021. There is no document from which it could be ascertained that there are unaccounted professional receipts, as all the entries mentioned in the impounded documents were already in the regular books of accounts. Further it is humbly requested that if the department is in possession of any kind of details or documents from where the figure of Rs. 7025449.00 has been taken, and if the above said income is surrendered by me at the time of survey action, kindly provide the same, so that it can be explained, further my books of account were impounded and in the receipt account there is no single entry of Rs.2,37,99,081/-. The entries of professional receipt in the receipt account were normal day to day entries. Hence, there is no question of unaccounted receipts. It is further submitted that as per point ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 26 no 26 of my first reply dated 22.02.2021, it is submitted that total professional receipts are duly entered in the books of accounts which is reproduced here under: - "Total receipt has been entered in the books of accounts, duly reflected in the Profit and Loss account and is included in the Total receipt of Rs. 35834028.00. and there has not been any kind of suppression of receipts and all the receipts are fully declared in the Trial Balance submitted to the department and Profit and Loss account for the financial year 31.03.2018 and accepted by the Revenue department, and also Tax on additional Income has been paid and the details of the which is duly reflected in the Computation of Income and Tax paid has been duly reflected in the Form 26AS attached as per point No. 1 Total Tax of Rs. 10269130.00 on total Income of Rs. 30027735.00 before claiming the deduction under section 80C has been paid by me for the A. Y 2018-2019 which is also reflected in the Trial Balance available with the Revenue Department. The above version has been duly accepted by the learned AO during the assessment proceedings as well." In this regard it is submitted that copy of account of professional receipt was duly submitted at the time of assessment proceedings, inquired into by the learned AO and are placed on record and fully explained and nothing has been kept hidden. e. In this regard it is submitted that since there has not been any kind of surrender during the course of survey action and complete detail of professional receipts has been submitted, explained and inquired into by the learned AO during the assessment proceedings, therefore the order passed on 15.03.2021 u/s 143 (3) of the Income Tax Act, 1961, cannot be apparently considered erroneous and prejudicial to the interest of revenue within the meaning of Section 263 of the Income Tax Act, 1961 and the since all the professional receipts are part of regular books of accounts, therefore section 115BBE of the Act is also not applicable on me. Further It is humbly, brought to your kind notice that the Hon'ble ITAT, Amritsar ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 27 Bench, Amritsar (Jurisdictional ITAT) in the case of Shri Avtar Singh Kalsi Vs. Pr.CIT, Ludhiana (ITA No.94& 95 /ASR/2022 dated 21.09.2022) has allowed relief on the bases that "During the notice u/s 142(1) the assessee submitted the relevant documents before the revenue authorities. On the basis of these documents the order was passed by the Ld. AO. In cannot be said that issue was untouched and unverified by the assessing authority. Mere change of opinion cannot be called as erroneous" The requisite information required as per point no 6 is submitted hereunder: - 1. It is submitted that by profession I have done diploma in Orthopaedics and during the year under consideration I was doing the practice of Hair Transplant and Orthopaedics. In this regard it is submitted earlier in my carrier I started doing practice of orthopaedics with not much of a success, than from year 2014-15 onwards I started doing practice of hair transplant, and when I established my practice in hair transplant than I started doing the practice of orthopaedics again in the year under consideration as well, and got good success in it as well which is duly reflected in the receipts which forms part of regular books of accounts as well, which has resulted in the increase of my revenue during the year under consideration, secondly year 2016-2017 was hit by demonetization and our patients who were supposed to get their hair transplant during the year 2016-2017 could not visit the hospital due to money crunch because of demonetization, and those patients came for their hair transplants procedure during the year under consideration which resulted in the increase of professional receipts during the year under consideration which duly forms part of the regular books of accounts. In this regard is further submitted that during the subsequent year i.e., financial year 2018-2019, due to' some family circumstances I could not concentrate on my profession and due to that my employee and OT staff also left the service during the year 2018-2019, the above facts are placed on records and submitted at the time of assessment proceedings for thefinancial year 2018-2019 at point no. 25(i) which is again reproduced here under: My Brother Dr. Vishal Garg who is residing with my father alone and nobody is there to take care of him was seriously infected from CLD/PHT DECOMENSATED WITH ASCITES/JAUNDICE ACUTE UGI BLEED (EVL DONE) and was required to be admitted in the Max ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 28 Super specialty Hospital, Bathinda on 29.04.2018 and was remain admitted to the hospital till 06.05.2018, after that he was on complete bed rest at house for more than one and half a month and got suffered from bed Sore, he was taken care of by me and my wife Shweta Garg, therefore I could not visit the hospital frequently enough, which has seriously affected the workings of hospital for more than 2 months. Further thereafter on 01.09.2018 I got my hand fractured and got plaster on my hand for one and half of month, due to that I could not work in the hospital for long time and was taken care of by my wife Shweta Garg. Which has also affected the working of the hospital for long time. The working of the hospital has to be managed by my wife Dr Shweta Garg, in Liew of that she was paid salary of Rs. 1650000.00 Further, because I could not work in the hospital for such a long period of time, the OT staff has left the job, which has resulted in the decrease in the revenue for the financial year 2018-2019, therefore there is decrease in the receipts as compared to the previous year, Whereas the total receipts are entered in the books of account. Copy of ledger account of all the head of Income were attached at the time of assessment proceedings are placed on record. It is also brought to your kind notice that I am in a profession of Hair Transplant and Orthopaedics, in this field the patients vary drastically, therefore fluctuations in the receipts are very common in my field. Photo Copy of the reports of brother as well as mine are attached herewith for your kind pursual, and copy of CT scan and other x-rays of my fractured hand and my brother's reports were produced at the time assessment proceedings and are placed on record. Further it also submitted that practice of orthopaedics needs extra physical efforts, and since I suffered fracture on my hand as stated above, I was advised by doctor not to put that extra physical effort, therefore I have to reduce the practice of orthopaedics as well, which has resulted in decrease in the revenue during the year 2018-2019 ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 29 2. In this regard it is submitted that normally the receipts in the hospital professions generates in cash, and my clinic is no exception to it as well, further it is submitted that we receive professional fee from the patient on package basis as well as on per sitting basis in case of which is duly negotiated by the patient, hence no single criteria is followed and there is no specific package rate and per sitting fee charged from the patient, since the patient negotiate so much, and due to competition in the market we have to reduce our fee structure in both package as well as per sitting fee. Further fee structure varies from patient to patient and the nature of treatment to be provided as well as peculiarities of the treatment, area to be covered in case of hair transplant. In hair transplant we provide the treatment for hair fall treatment, hair transplant by removing the hair from one part of the head and placing it on the bald part of the head, which is very time consuming and tedious procedure., and in case of orthopaedics I provide services of Epidural Injections, Intraarticular injections, Diagnostics arthroscopy, POP Applications, Slab applications and reduction of dislocation etc. In this regard it is again submitted that the professional receipts which are received during the year are dully accounted for in the regular books of accounts and submitted at the time of assessment proceedings and duly inquired into by the learned AO as well. 3. In this regard monthly chart of cash flow and income recognized during the year under consideration is attached herewith. Year 2017-2018 MONTH MONTH OPENING BALANCE RECEIPTS WITHDWRALS MONTH END CLOSING BALANCE APRIL 2017 49665.67 2021068.00 740776.00 1329957.67 MAY 2017 1329957.67 2085575.00 1770014.00 1645518.67 JUNE 2017 1645518.67 1863500.00 1101980.00 2407038.67 JULY 2017 2407038.67 3544060.00 507038.00 5444060.67 AUG. 2017 5444060.67 3107915.00 814079.00 7737896.67 SEPT. 2017 7737896.67 3272900.00 735525.00 10275271.67 OCT. 2017 10275271.67 3211390.00 571550.00 12915111.67 NOV. 2017 12915111.67 3017921.00 577123.00 15355909.67 ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 30 DEC. 2017 15355909.67 3924090.00 809220.00 18470779.67 JAN.2018 18470779.67 3402460.00 994120.00 20879119.67 FEB 2018 20879119.67 3258280.00 1342185.00 22795214.67 MARCH 2018 22795214.67 | 3078689.00 638672.00 25235231.67 In view of above, it is submitted that as no income has been surrendered during the course of survey action and further no discrepancy of unaccounted receipts have been pointed out by the deptt (Survey team as well as the AO who completed the assessment) and moreover, the fact that the professional receipts were duly part of regular books accounts, therefore on the basis of above submission I humbly request that provisions of section 115BBE are not applicable on my case hence, I request your good self to accept my submission and kindly drop the proceedings initiated for considering the case u/s 263 of the I.T. Act, 1961.” 8. Per contra, the Ld. DR although defended the impugned order. He contended that the AO has neither examined the proper books of account as claimed to be produced by assessee before him nor scrutinize the documents and papers with reference to unaccounted professional receipts found during the course of survey as per statement recorded and surrender of income made, which were available on survey record of the department. He argued that the Assessing Officer did not apply mind to correctness of books of account produced before him except to note that books of account were produced and test checked. Therefore, impugned revisional order passed under section 263 was justified and he pleaded that the same may be upheld. In support, he placed reliance on following judgement: ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 31 1. Mattewal Labour and Construction Co-operative Society Ltd. vs. Commissioner of Income-Tax [2015] 60 taxmann.com 348 (Punjab & Haryana) 2. Principal Commissioner of Income-tax, Ludhiana vs. Venus Woollen Mills, Ludhiana. [2019] 105 taxmann.com 287 (Punjab & Haryana). 9. We have heard the rival contentions, perused the material on record, impugned order, written submission and case law cited before us. Admittedly, during the survey on 26.04.2018, the assessee has offered to pay tax on the income of about Rs.3.00 crore for the A.Y. 2018-19. The PCIT has stated that on the date of survey i.e. on 26.04.2018, cash at the business premises inventorized, showed cash balance of Rs. 51,120/- only whereas, the assessee claimed that balance as per books of accounts as on 25.04.2018 was Rs.2,53,94,706/- and claimed that he carries excess cash at home because of security reasons and not kept at business premises. 10. The Ld. PCIT has examined the monthwise cash flow statement for the period April, 2017 to March, 2018 relevant for the assessment year under consideration which reveals that cash balance at the beginning of April, 2017 was Rs. 49,665/-. However, thereafter it has shown steady increase and as on 31.03.2018, it was Rs.2,52,35,231/- at the closing of ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 32 the financial year. Thus, the steady increase in the cash balance is unusual and particularly, in the case of a professional Doctor in Orthopaedics and Hair Transplanting which is much more unconventional. It is also improbable that assessee would have to carry heavy cash of Rs. 13.30 lac to 102.75 lac in the first half of the Financial Year and 102.75 lac to 252.35 lac in the later half of the Financial Year. Thus, the observation of the Ld. PCIT that this aspect has not at all been examined by the AO is made in logical and scientific manner. 11. The Ld. PCIT has further discussed that assessee had paid advance tax during the F.Y. 2017-18 of Rs.7,85,000/- only which was sufficient only to cover an income of Rs.25 lacs to 30 lacs. However, it had paid self- assessment tax of Rs. 1,02,69,130/- for the year under consideration. All these facts do not indicate usual business/professional phenomenon which raise concerns and doubts about the correctness of books of accounts of the assessee and which has not been examined by the AO. Since, the AO has not conducted any enquiries in relation of the aforesaid facts and circumstances having bearing on the assessment, the assessment order passed by the AO suffers from the error as well as prejudice. In this way, twin conditions get satisfied. The Assessing Officer has accepted the ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 33 assessee’s version without application of mind and ascertaining the actual income in consonance to the impounded documents, unaccounted professional receipts, bank statement, books of account, past history of professional receipts, ITR Trends and the statement recorded during the course of survey. 12. From the above, it is evident that the AO has passed the order, without making enquiries or verification which should have been made. In this regard, the Ld. PCIT placed reliance on explanation (2) to section 263(1). Although, explanation would be applicable retrospectively, however, in the present case, this issue of retrospectivity would not stand in a way, as the relevant year under consideration is A.Y. 2018-19 and explanation was inserted by Finance Act, 2015 w.e.f. 01.06.2015. Therefore, in our view, invoking of jurisdiction is justified and the case laws relied by the appellant prior to insertion of explanation (2) will not be applicable even if explanation is treated as perspective in nature. In view of that matter, it is evident that the Assessing Officer has not examined vital facts having significant bearing on taxability of additional income declared in survey and claims those represented regular business income. ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 34 13. Next is the treatment and taxation of surrendered income under section 115BBE. The Assessing Officer was required to examine the treatment of large income offered in the form of additional income from unaccounted professional receipts at the time of filing of return of income. The issue to be examined by the Assessing Officer was whether the nature of the income was regular business/professional income or income from other sources, hither to not disclosed and to be subjected to taxed at higher rates. 13.1 It is evident that the Assessing Officer has not examined vital facts highlighted above having significant bearing on taxability of additional income declared in survey and claims that these represented regular business incomes. Thus, there would no question of Assessing Officer taking possible view. Legal position with regard to onus is clear that a particular income is from a particular source is on the assessee and not on the department. Therefore, the twin conditions of section 263 of the Act, get satisfied and therefore, the assessment would fall in the category of erroneous and in so far as prejudicial to the interest of the revenue. 13.2 That the Ld. PCIT has categorically mentioned that merely having a known business activity will not, per se, render any unexplained asset/ ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 35 income as business/profession income u/s 28, unless the burden of proving the source u/s 68 to 69D is also discharged. The onus of proving that such receipts are from an activity other than disclosed business activities is not upon the AO. Therefore, there can be no presumption against the deeming fiction u/s 68 to 69D to hold that income/investment, whose source is not explained, will still be classified as income under any head u/s 14. It would be, therefore, impermissible to attempt and classify such incomes under any of specific heads, even if there is any activity which can be remotely/indirectly linked to such deemed income. The word 'source' in the same context would refer to nexus of such income generating activity/transaction with name and identity, creditworthiness of person with whom such activity/transaction was done along with proving the genuineness of transaction. In our view, the conjoint burden of proving the 'nature and source' is therefore, not restricted to merely claiming the nexus of any activity/transaction to a particular credit/income/asset but also requires to establish with cogent evidence the nexus of such activity/transaction with source also by providing the name and identity, creditworthiness of person with whom the activity/ transaction was done along with proving the genuineness of transaction. In support, the Ld. PCIT ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 36 has placed reliance on the various judgements of jurisdictional High Court and other higher judicial forums as above. 14. The Ld. PCIT after considering the arguments of the assessee that the surrendered income is to be treated as business income of the assessee rightly held as not acceptable and the additions made u/s 69B, are to be treated separately and it would not be possible to classify such deemed income falling under Chapter-VI, under any of the heads including ‘income from other sources’ but they will be aggregated along with the incomes computed under Chapter IV. The AR has not been able to adduce documentary evidence to establish the nexus between the surrendered income and business either before the PCIT or before us and therefore, no source for the surrendered income could not related to or considered explained. 15. The Hon’ble Apex Court in case of “Malabar Industrial Co. Ltd. Vs CIT” (Supra) observed that Where Assessing Officer had accepted entry in statement of account filed by assessee, in absence of any supporting material without making any enquiry, exercise of jurisdiction by Commissioner under section 263(1) was justified. ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 37 16. The Hon’ble Delhi High Court in the case of “PCIT VS Shri Braham Dev Gupta (Supra) has observed that when the AO fails to examine certain aspects in the assessment order and the CIT invokes revisionary powers u/s 263, the Tribunal is not right in supplying reasons to AO's order. AO is obliged to record some reasons when accepting or rejecting an argument made by the assessee. 17. The Hon’ble Jurisdictional High Court in the case of “Principal Commissioner of Income-tax, Ludhiana vs. Venus Woollen Mills”, (Supra) vide para 9 has observed that where Assessing Officer did not apply mind to correctness of books of account produced before her except to note that books of account were produced and test checked, impugned revisional order passed under section 263 was to be upheld vide para 9, 11 and 16 as under: 9. The Assessing Officer vide assessment order dated 08.12.2010 passed under Section 143(3) of the Act after recording that surrender of Rs. 2,15,00,000/-was made during survey under Section 133A of the Act on 28.2.2008 assessed the taxable income at Rs. 1,35,52,050/- after making an addition of only Rs. 15,752/-under Section 40(a)(ia) of the Act to the returned income of Rs. 1,35,36,300/-. A perusal of the assessment order does not show that the Assessing Officer applied its mind to the correctness of the books of account produced before her except to note that the books of accounts were produced and test checked. The Assessing Officer was required to have carefully dealt with the present case especially where the assessee had surrendered Rs. 2,15,00,000/- during survey under Section 133A of the Act carried out on 28.2.2008 where huge amount of Rs. 1,31,00,000/- was surrendered on account of undisclosed investment in construction of ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 38 building in 424 IA-Area, Ludhiana and Rs. 70,00,000/- on account of unexplained investment in stock. From the narration of facts noticed hereinabove, it is clear that the assessee has attempted to off set the surrender made by him by claiming loss figure in the business otherwise the taxable income could not have been Rs. 1,35,52,050/- against a surrender of Rs. 2,15,00,000/- made by it. The Tribunal has also made certain observations in that behalf but proceeded to cancel the revisional order passed by CIT under Section 263 of the Act. The relevant observations read thus:— "26. Before parting, we would like to observe that Assessing Officer may have called for certain details which have been filed but no discussion at all has been made in the assessment order and in our opinion the Assessing Officer in general should be more cautious and vigilant and discuss the various aspects of the case at least briefly in the body of the assessment order. xxxxxx" 11. In such circumstances, it cannot be concluded that the assessment order dated 08.12.2010 passed under Section 143(3) of the Act was not erroneous and prejudicial to the interests of the revenue. Accordingly, it is held that the Tribunal erred in setting aside order dated 28.3.2013 passed by CIT under Section 263 of the Act. 16. Before parting, it is considered appropriate to direct the Registry of this Court to forward a copy of this order to the Central Board of Direct Taxes (CBDT) to issue necessary instructions to all the Assessing Officers that in cases of search and seizure or where survey operations have been carried out by the Department and surrender made or concealed income detected, to ensure proper scrutiny of such cases and discuss reasons for rejecting or accepting the books of account of the assessee and not to merely record in slipshod or cursory manner that 'the books of account produced and test checked' as done by the Assessing Officer in the present case. 18. Again, Hon’ble Jurisdictional High Court in another case of “Mattewal Labour and Construction Co-operative Society Ltd. vs. Commissioner of Income-Tax”,) (Supra) has observed that where neither proper books of account had been produced by assessee-society before Assessing Officer nor examination and scrutiny of documents and papers which were ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 39 available, was done by Assessing Officer, initiation of revision proceedings was justified. 19. In the present case, the AO has passed a cryptic and non-speaking order by way of merely writing that notices issued, response filed and test checked while accepting the return income of the assesse, in a compulsory scrutiny case of survey without any reference to the income of Rs.3.00 crore being surrendered to pay tax for the Assessment year 2018-19, on account of unaccounted professional receipt found as per impounded document. Thus, the AO has not examined and scrutinised the documents and papers which were impounded during the course of survey pertaining to unaccounted professional receipts or other income/expenditure, boks of account and submission claimed to be furnished incompliance to questionnaire enclosed with notice issued u/s 142(1) of the act with specific quarry on the vital issues and facts as discussed above by the Ld. PCIT, on unaccounted professional receipt worth crores and chargeability of the surrendered income would not be treated as business income of the assessee and the additions made u/s 69B, are to be treated separately as it would not be possible to classify such deemed income falling under Chapter-VI, under any of the heads including ‘income from other sources’ ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 40 but they will be aggregated along with the incomes computed under Chapter IV. The AR has not been able to adduce documentary evidence to establish the nexus between the surrendered income and business and how the source for the surrendered income could be related to as deemed income u/s 115BBE. The Ld. AR for the assessee failed to furnish any citation of Jurisdiction High Court or higher judicial forum in rebuttal to the contention of the Ld. DR raised in support of the facts and law as discussed by the Ld. PCIT in the impugned distinguishing the contentions of the appellant assessee. Merely submitting that there was adverse circumstance of medical sufferings in family such suffered farcture, extra psyciacal efforts in professional limitation, demonetization, Covid viz~a~viz fee structure without being supported with the corroborative evidences either being produced before the PCIT or the AO in particular is of no help to the assessee at this stage in challenging revisional order of the Ld. PCIT. 20. It is evident from the above that that there was surrender of income at the time of survey, on account of unaccounted professional receipts in the form of offer of income and therefore the allegation of the appellant that there was no surrender of income was factually incorrect and accordingly, ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 41 the Ld. Pr. CIT (Central), Ludhiana has been justified in invoking the provisions of section 115BBE read with section 69B. We are of the considered view that Ld. Pr. CIT (Central), Ludhiana has appreciated the facts of the case and while setting aside the assessment orders in holding that there was no application of mind by the Assessing Officer in accepting the return income of the assesse by merely mentioning passing remarks that books of accounts produced and test checked. We hold that Ld. PCIT has recorded finding of facts which is duly supported with corroborative material on record and judicial pronouncement of higher jurisdiction forums and therefore, the allegation of the appellant that it was a case of change of opinion is held to be devoid of merits. Accordingly, the assumption of jurisdiction u/s 263 is approved under mandate and so the impugned orders dated 31.03.2023, is upheld valid jurisdiction u/s 263 of the Act. 21. Respectfully following the Hon’ble Jurisdictional High Court in the case of “Principal Commissioner of Income-tax, Ludhiana vs. Venus Woollen Mills”, (Supra) on identical facts, we hold that the AO did not apply mind to correctness of books of account produced before accepting returned income by observing that books of account were produced and ITA Nos. 151 & 152/Asr/2023 Divakar & Shweta Garg v. Pr.CIT 42 test checked and Accordingly, the impugned revisional order passed under section 263 of the Act, is upheld. 22. The facts and issues in I.T.A. No. 152/Asr/2023 are exactly similar to the facts and issue involved in that of I.T.A. No. 151/Asr/2023 and therefore, our observation and finding given in ITA No. 151/Asr/2023 shall apply to the appeal in I.T.A. No. 152/Asr/2023 in mutatis mutandis. Ordered accordingly. 23. In the result, both the captioned appeals of the assesse’s are dismissed. Order pronounced in the open court on 12.07.2023 Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr.PS*/DOC* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T. True Copy By Order