M/s Sardar Finance Co., Patiala V. DCIT, Central Circle, Patiala

ITA 157/CHANDI/2023

AI Insights

The case involves M/s Sardar Finance Co., which appealed against the order of the Commissioner of Income Tax (Appeals) -5, Ludhiana, concerning the assessment year 2018-19. The primary contention was regarding the treatment of Rs. 45,00,000 surrendered during a survey under sections 69 and 69A of the Income Tax Act, 1961, which the Income Tax Department treated as unexplained income from other sources and taxed at a higher rate under section 115BBE. The assessee argued that this amount was business income, already declared in the books, and should not attract the higher tax rate. The Tribunal, referencing several precedents and the specific circumstances of the case, sided with the assessee, recognizing the surrendered amount as business income.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127517 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 15-08-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 19-03-2023
• Other Referred Cases: Fakir Mohammed Haji Hasan Vs. CIT, 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, M/s. Bhima Jewellers vs. PCIT Kozhikode, Shri Parmod Singla Vs ACIT, M/s Jain Plywood Vs DCIT, DCIT vs. Shree Ram Narayan Birla, M/s Gaurish Steels Pvt. Ltd. Vs ACIT, Famina Knit Fabs Vs ACIT, Chokshi Hiralaal Maganlal Vs DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Business income; Maximum Marginal Rate; Source of fund; Deemed to accrue or arise in india
• Section: 68; 69; 27; 6; 263; 28; 69C; 142(1); 133A; 234B; 69B; 201; 69A; 13; 22

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH ‘SMC’ CHANDIGARH BEFORE: SHRI A.D.JAIN, VICE PRESIDENT आयकर अपील सं./ ITA No. 157/CHD/2023 नधा रण वष / Assessment Year : 2018-19 M/s Sardar Finance Co., Chotti Baradari, Patiala-147001. बनाम VS The DCIT, Central Circle-1, Patiala. थायी लेखा सं./PAN /TAN No: AACFS7464E अपीलाथ /Appellant यथ /Respondent नधा रती क ओर से/Assessee by : Shri Tej Mohan Singh, Advocate राज व क ओर से/ Revenue by : Shri Dharam Vir, JCIT, Sr.DR तार"ख/Date of Hearing : 16.08.2023 उदघोषणा क तार"ख/Date of Pronouncement : 15.09.2023 आदेश/ORDER This i s assesse e's appeal for a ssessment yea r 2018 -19 against the or der dated 20.0 1.20 23 pa sse d by the l d. Com missioner of Income Tax(Ap peals) -5, Ludhi ana [in short ‘the CI T(A)] pe rtain in g to 2018-19 a s se ss ment ye ar. The f ollowing grounds ha ve be en ta ken : 1. That the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in upholding the invocation of provisions of section 69A of the Act on the surrendered amount of Rs.45,00,000/- treating the same to be income from other sources as against declared business income which is arbitrary and unjustified. 2. That the provisions of Section 69A are not attracted in as much as the entire business receipts including cash deposit of Rs.7,65,000/-, revocation to office of Rs. 2,35,000/- and Rs.35,00,000/- on account of loans and advances already stands declared in books as business ITA 157/CHD/2023 A.Y.2018-19 2 income and as such treating Rs.45,00,000/- to be unexplained and as income from other sources is illegal, arbitrary and unjustified. 3. That the order of the Ld. Commissioner of Income Tax (Appeals) has further erred in upholding that charging of tax at 60% applying the provisions section 115BBE which are not attracted in the instant case. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 2. The fa cts are th a t the asse ssee is a fir m an d runs busine ss unde r the na me and style of M/s Sa rda r F in ance Co. for prov idi ng s ma ll f ina nce to ind ivi d uals. A survey operation u/s 133A wa s cond ucted a t busi ness p remises of the a ssessee . Duri ng the cour se of survey, a total excess ca sh of Rs 7,6 5,0 00 /- was f ound. The AO ra ised querie s, in re sponse to whi ch, the asse ssee has conte nde d that the source of exces s cash foun d duri ng the sur vey is from bu siness rece ipts but the AO held tha t the asse ssee could not f urnish any sati sfa ctor y e xplana ti on regardi ng the source of e xcess cash found at the time of su rve y. There fore , ke eping in view hi s inabi lity to e xplai n the said disc repancy, the assesse e had vol unta ril y d isc lose d an ad diti on al income of Rs.7 ,65, 000 /- on a ccount of un re corde d and une xpla ine d ca sh. Moreover, the sales, if a ny, were not re cor de d by the asse ssee in his b ook s of acco unt. During the course of survey, the assesse e has ma de renova tions in hi s office for Rs. 2,35,00 0 /-. Al so, the asse ssee a cce pte d in hi s s tate ment tha t these e xpense s made on fur niture and fixtu res we re not booke d by it. I n order to explain the sai d discre pancies, the asse ssee ITA 157/CHD/2023 A.Y.2018-19 3 volunta ril y ca me forw ard with a di sclosure of income amou nti ng to Rs. 2 ,35 ,00 0. As per t he AO, th e assesse e has also conte nde d that the source of unexpla ined investment in renovation of buil ding foun d d uring t he sur ve y is f rom bus iness re ce ipts. The AO fu rther held that the asse ssee could no t furn ish a ny sati sfa ctory e xp la nat ion regar ding the sour ce of une xpl aine d investme nt f ou nd at the time o f surve y. Ke eping in view hi s ina b ili ty to expla in the sai d di screpan cy, the assesse e had volunta ril y disclosed a n ad dit iona l inc ome of R s. 2, 35,0 00 /-/- on account of unrecorded and u ne xpl aine d investme nt in renova ti on of bu ild ing. More ove r, the sales, if any, we re not recorded by the asse ssee in his books of accou nt . Hence , the con te ntion of the asse ssee wa s n ot ten able a nd is accor dingly 'e je cted. The addi tional inc ome of Rs. 2 ,35 ,00 0 /- was re moved fr om the profit & los s a ccount a nd ad ded to inco me u/s 6 9. D urin g the co urse of survey, d iscrepa ncie s were noticed by the survey team be twee n the advances ma de by the asse ssee and the advanc es re corde d by the a ssessee in h is books of acc ou nts. Thu s, as pe r the AO, the asse ssee ha d con te nde d that the s ource of une xpl aine d adva nces found durin g th e surve y is f rom bus iness re ce ipts and the asse ssee could not furnish any sati sfac tor y e xpla nat ion regar din g the source of une xpla ined adv ance s found at the ti me of su rve y. There fore , ke eping in view hi s inabi lity to e xplai n the said disc repancy, the assesse e had vol unta ril y d isclosed an ad diti on al ITA 157/CHD/2023 A.Y.2018-19 4 income of Rs. 3 5,00 ,00 0 /- on account of u nre corded an d une xpla ine d lo ans and a dv ance s. It is a lso sub mitted by the AO that the asse ss ee was not a bl e to f urn ish any sa tisfac tor y expla na tio n re gardi ng the sou rce of adv ances ma de an d accordi ngl y an ad diti ona l in come of Rs.35,0 0,0 00 /- was d isc lose d by t he assesse e. Acco rdi ngl y, the a dditi ona l income of Rs.35,0 0,0 00 /- w as re moved fr om the prof it & l oss acco unt and added to i ncome u/s 69 of the I nc ome Tax Act, 196 1. 3. Aggr ieve d, t he a ssesse e file d a ppe al before t he ld . CI T(A ) and sub mitted before the CI T( A) as follows : "Subject: Written Submissions in the case of SH. SARDAR FINANCE CO., CHOTTI BARADARI, PATIALA A.Y.: 2018-19 - Submission of - Regarding – This is with reference to the captioned appeal wherein the Ld. Assessing Officer as per its order dated 07.05.2021 has assessed the income at Rs.48,33,140/- after considering surrender income of Rs.45,00,000/- u/s 69 and u/s 69A r.w.s. 115BBE of the Income Tax Act, 1961 instead of normal business income for the assessment year 2018-19. The followings are the grounds of appeal: 1. That the respected Assessing Officer has erred on both facts and in law for considering Rs.45 lakh as unexplained income of the assessee under section 69A. As the amount of Rs. 45 lakh has been shown in Profit and loss account and due tax has been paid as per the normal provisions of the Income Tax Act, 1961. 2. On the facts and circumstances of the case, the Ld. Assessing Officer has erred on both facts and in law that the assessing officer has erred in framing the assessment under section 69A without following the mandatory procedure under Income Tax Act. The assessment may be hold as bad in law and additions made u/s 69A r.w.s. 115BBE of the Income Tax Act thereon may kindly be deleted and treated as normal business income. 3. The penalty proceedings u/s 271AAC(1) has been wrongly initiated. ITA 157/CHD/2023 A.Y.2018-19 5 4. The assessee denies its liability to pay interest charged u/s 234B and 234C of the Act, as per the notice of demand issued under section 156 of the Act. 5. The appellant prays for granting any consequential relief and/or legal claim arising out of this appeal before the disposal of the same. 6. The assessee craves the right to add, delete or amend any ground(s) of appeal before it is heard for final disposal. Brief facts: The brief facts of the case are that the assessee is a partnership firm and engaged in the business of providing small finance to individuals under the name and style as M/s SARDAR FINANCE CO., Patiala. The assessee has filed its return of income declaring Rs. 48,33,148/- income including surrendered income of Rs.45.00 Lacs on 30.10.2018 for the assessment year 2018-19. A survey operation was conducted u/s 133A of the act on 04.08.2017 at the business premises of the assessee at Patiala. During the survey operation, the assessee has surrendered the income amounting to Rs.45,00,000/- to buy peace of mind on its own without any detection and paid the due taxes in its return of income as normal business income accordingly. The learned assessing has made the assessment of Rs.48,33,140/- after considering the surrender income of Rs.7,65,000/- under the head cash in hand to income u/s 69A of Income Tax Act, 1961, surrender income of Rs.2,35,000/-under the head furniture and fixture to income u/s 69 of Income Tax Act, 1961 and surrender income of Rs.35,00,000/- under the head loan and advances to income u/s 69 of the Income Tax Act, 1961 totalling Rs.45,00,000/-. But the Ld. assessing officer without considering the facts of the case and treated surrendered business income of Rs.45,00,000/- as unaccounted income from other sources under section 69 and 69A of the Act and apply provisions of section 115BBE of the Act on this income. The Ld. assessing officer has made the additions on his own assumptions and presumptions without considering the established legal position and facts of the case. The assessee has submitted the appeal against the said additions. The detail discussion is as given below: Ground No. 1 & 2 In this connection, it is submitted that the order is bad, non-speaking and void-ab-initio. Further since beginning the appellant has contested that the additional income surrendered has source from the business carried by the appellant. It is a matter of fact that no other source of income was detected or observed by the departmental authorities at any point of time. The surrender was made to buy peace of mind and to end litigation. The appellant in all its correspondence has reiterated the same thing that additional income surrendered has source from the business carried by the appellant. The order records the assessee's contention that it had surrendered a sum of Rs.45,00,000/- which includes Rs.7,65,000/- on account of difference in cash in hand, Rs.2,35,000/- on account of furniture and fixtures and Rs.35,00,000/- on account of loan and advances which was claimed to be from business income and the Ld. ITA 157/CHD/2023 A.Y.2018-19 6 Assessing officer has failed to make enquiries to establish that the surrendered amount was not from business source. Further, we would like to bring it to your kind notice that appellant has submitted all the information/explanation to the Assessing Officer during the course of assessment proceedings and but the Assessing Officer without considering the facts of the case has made addition on mere assumptions and presumptions. So, it is requested that the assessment should be set-aside on this ground. It is further submitted that amount of surrender was made on estimated basis only to avoid the litigation. No documentary evidence was found to establish that the surrender amount was actually a part of income from other sources or from other unaccounted business. Even though during the survey proceedings, the survey team has not found any discrepancy in the documents maintained or documents impounded. The list of documents impounded at the time of survey is attached herewith. In the loans and advances register impounded, no such loan was there which was not recorded in the books of accounts. The department has not found any discrepancy in loans and advances register even during the course of survey operation or during the assessment proceedings. Surrender of Rs.45,00,000/- during survey on 04.08.2017. Survey u/s 133A of the Income Tax Act, 1961 was conducted on the business premises of M/s SARDAR FINANCE CO., Chotti Baradari, Patiala as on 04.08.2017 and surrender was made on account of cash in hand, furniture & fixtures and loans and advances which were given out of business receipts /income/ expenses of the firm. The assessee was in a business of finance activities and doing his business for last many years and he has no other sources of income except business income. Subsequently ITR for the A.Y 2018-19 has been filed and surrendered income was duly disclosed as business income generated out of trade regularly carried out by us in the normal course of business and profession. Accordingly, amount surrendered was declared in our ITR and the amount was recorded in our regular books of accounts duly maintained by us. Sir, on perusal of our books of account, submitted during the assessment proceedings, the AO has even failed to found any discrepancy in the books of account. SURRENDERED INCOME- BUSINESS INCOME In this regard, it is submitted that the assessee has already surrendered amounting to Rs.45,00,000/- which includes Rs.7,65,000/- under the head cash in hand, Rs.2,35,000/- under the head furniture and fixture and Rs.35,00,000/-under the head loan and advances at the time of survey operation u/s 133A of I.T. Act, 1961. The appellant has repeatedly told in its correspondence with the assessing officer that this additional income was from his business income. This fact is evident from 1. It is shown as business income in its computation of income but not as from any other head of income 2. It is claimed from normal business activity 3. The assets such as advances are realized and used for its business operations. ITA 157/CHD/2023 A.Y.2018-19 7 4. It has finance business as only source of activity, the same is admitted by the assessing officer also. So it is prayed that the additional income surrendered during survey should be treated as earned from normal business source and section 69 or 69A has no application. LEGAL According to Section 115 BBE "115BBE. [(1) Where the total income of an assessee,— (a) includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C, section 69D and reflected in the return of income furnished under section 139; or (b) determined by the Assessing Officer includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C, section 69D, if such income is not covered under clause (a), the income- tax payable shall be the aggregate of— (1) the amount of income-tax calculated on the income referred to in clause (a) and clause (b), at the rate of sixty per cent; and (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (i).] (2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance [or set off of any loss] shall be allowed to the assessee under any provision of this Act in computing his income referred to in clause (a) of sub-section (1)." The reason and purpose of the provision was explained by the explanatory memorandum to the Finance Bill 2012 as under: "1) Under the existing provisions of the Income-tax Act, certain unexplained amounts are deemed as income under section 68, section 69, section 69A, section 69B, section 69C and section 69D of the Act and are subject to tax as per the tax rate applicable to the assessee. In case of individuals, HUF, etc., no tax is levied up to the basic exemption limit. Therefore, in these cases, no tax can be levied on these deemed income if the amount of such deemed income is less than the amount of basic exemption limit and even if it is higher, it is levied at the lower slab rate. 2) In order to curb the practice of laundering of unaccounted money by taking advantage of basic exemption limit, it is proposed to tax the unexplained credits, money, investment, expenditure, etc., which has been deemed as income under section 68, section 69, section 69A, section 69B, section 69C or section 69D, at the rate of 30% (plus surcharge and cess as applicable). It is also proposed to provide that no deduction in respect of any expenditure or allowance shall be allowed to the assessee under any provision of the Act in computing deemed income under the said sections. This amendment will take effect from 1st April, 2013 and will, accordingly, apply 'in relation to the assessment year 2013-14 and subsequent assessment years." ITA 157/CHD/2023 A.Y.2018-19 8 The real purpose of introducing this provision was to charge higher tax at the maximum marginal rate in respect of income/expenditure/investment on the assessee who fails to explain the nature and source of said income/expenditure/investment. Section 115BBE was amended as on 15/12/2016 during demonetization period through Taxation Laws (Second Amendment) Act, 2016 and the main motive to amend this section was to curb the black money deposited in bank accounts during this period. The partner in his statement recorded at the time of survey, and to buy peace of mind agreed to surrender the amount subject to no penal action and prosecution. The relevant sections which enable the AO to assess such income/expenditure/investment are contained in sections 68, 69, 69A, 69B, 69C, 69D. The sections in question are reproduced as under: 69. Unexplained investments. Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded, in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year. 69A. Unexplained money, etc. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year. On perusal of above sections, these were applicable where the assessee has failed to substantiate the source of deposit, whereas in this case the assessee has already surrendered the amount at the time of survey operation and, therefore no question is arises for source of deposit in this case. So, the sections have not application at all. 1. The difference is not explainable at the time of survey but the documents and papers found in business premises and it is a settled law that the documents presumed to be related to person carrying on business and result of business carried on by the assessee and it is rebutted by corroborative evidences in the shape of receipt books, customer record/details, loan applications, Loan/Advance register seized during the survey operation. Whereas in our case there was no iota of any evidence leading to conclusion that these are not result of business carried on by us in normal. So there is no merit to treat the income in question as income from other sources. ITA 157/CHD/2023 A.Y.2018-19 9 2. Our firm has made surrender to buy peace of mind and to avoid dispute with the department which is utmost required by a prudent businessman but it was considered after taking into account overall cost to our unit. But the action of the Ld. Assessing Officer has doubled our overall burden, which is totally unjustified. 3. It is an established fact that the firm was in the business of financing which had been accepted by the officers at the time of survey and there was neither any change in the business nor was any such evidence found by the department to the contrary. Moreover the department has also never rebutted such facts in any manner. 3. The documents reflecting advances, furniture and fixtures and cash in hand etc. represents our business income from the normal transactions and source was our business and these were derived by the same business carried by the firm and the same was acknowledged by the authorities at the time of survey. In the light of above facts it is very much clear that taxation @ 60% u/s 115BBE is arbitrary and unjustified so amount surrendered was a business income to be taxed at normal business income only. You are prayed to pass the order accordingly. 4. In short, the submis sion of the asse ssee before the ld. CI T(A) w as t hat n one of the th ree addition s ma de by the assessee were susta inab le since the a mou nts of Rs.7, 65, 00 0 /- under the head “cash in h and” u/s 69A of the Income Tax Act, that of Rs.2,35 ,00 0 /- on account of furn iture and fixtu re s, i.e . renovation b y the assesse e to its off ice and tha t of Rs.35,0 0,0 00 /- o n account of loa ns an d a dva nces, u/s 69 of the Act, Rs.3 5 lac s on loans a nd a dvances u /s 6 9 of the Act, total a mou nti ng to Rs.45 lacs wa s income f rom th e asse ssee's busi ne ss; tha t busine ss of the as se ssee was that of fina nci ng to small pa rties; tha t the re wa s no other source of inco me; th at the income wa s, th us , from the a ssessee 's norm al b usi ness acti vity; that the a sse ssee ha d sh own the s aid inc ome in its computation of i nco me, as business income and not as fro m a ny other head of ITA 157/CHD/2023 A.Y.2018-19 10 income ; th at the asse ts, su ch as a dvan ces we re realized and used for b usine ss oper atio ns by the a sse ssee; and that the factum of the finan ce busin ess being the only sour ce of busine ss activ ity of the asse ssee, stood al so a dmitt ed by the Assessin g Off icer himself . The a sse ssee ha d thus c ontende d be fore the ld. CI T( A) that the pr ovis io ns of Se ction 69 or 69A of the Act h ad no appl ica tion to the facts of the ca se and tha t conseq ue ntly, the prov isi ons of Section 115 BB E also did not st and attr acted. 5. The ld. CI T( A) , however, di d no t a gree with the sta nd take n by the as se ssee and the addi tions made by the AO were conf ir med. W hile doing so, the l d. CI T(A) has held a s follo ws : “5 . 1 ... ... . . This ground relates to charging of AO of the surrendered income and addition of Rs. 45,00,000/- u/s 69 & 69A of the Act and taxing the same u/s 115BBE of the Income Tax Act, 1961. The said surrender was made during the course of survey on account of discrepancies noticed in the excess cash, investment in furniture & fixtures and loans & advances. The AR in his submissions has tried to justify the same as unexplained investment out of the business income of the assessee. The AR has claimed that the appellant is not having any other source of income, but income arising from business. The contentions of the assessee have been examined. In the case of the assessee, the AO gave an opportunity to the assessee to establish a linkage between the surrendered income under the head of excess cash, investment in furniture & fixtures and loans & advances and the business income but the assessee could not establish a direct nexus between the two. The same opportunity was provided during the appellate proceedings but no evidence was furnished. Merely having a known business activity will not, per se, render any unexplained asset/ income as business/profession income u/s 14, 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 ITA 157/CHD/2023 A.Y.2018-19 11 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. 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. Thus, for the unrecorded excess cash, investment in furniture & fixtures and loans & advances found during survey proceedings, there can be no presumption to treat the value representing such excess cash, investment in furniture & fixtures and loans & advances as application of business income in absence of any evidence of earning that income or details as to when, how and from whom such income was derived which has been invested in stock. The AR has contended that the nature of the income has been duly explained during the course of survey as well as assessment proceedings. This contention of the AR is not found correct as nowhere during the assessment proceedings, the AR has been able to establish nexus between the excess cash, investment in furniture & fixtures and loans & advances and normal business income. Further, the AR has contended that the assessee has carried out no activity other than business so there is no question of the excess cash, investment in furniture & fixtures and loans & advances being related to unexplained sources. In above context, it is important to see that the assessee has not been able to produce any documentary evidence, bills, vouchers, purchase & sale, documents to justify the additional income of Rs. 45,00,000/- which has been surrendered as excess cash, investment in furniture & fixtures and loans & advances. If the AR is sure about the business nature of the receipts invested in excess cash, investment in furniture & fixtures and loans & advances necessary documentary evidence should have been adduced.” 6. The l d. CI T( A) ha s placed re liance on the followi ng decisions: (1) Fakir Mohammed Haji Hasan Vs. 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 ITA 157/CHD/2023 A.Y.2018-19 12 (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 ) K al e K ha n Mo h d H a n if V s C I T [ 1 9 63 ] 5 0 I TR 1 (S . C . ) (6) The Hon'ble Supreme Court in the cases of Roshan Di Hatti vs. CIT [1977] 107 ITR 938 (SC) (7) 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 7. Before us, the l d. coun se l f or t he asse ssee has broadl y reiterate d the sta nd taken by the assesse e be fore the ld. CI T(A). I t has be en stres sed tha t b oth the taxing au thorities ha ve fai led to take into consi deratio n tha t ther e is nothin g on re cord to show that the asse sse e, during the ye ar, ha d no oth er sour ce of income , b ut for its b usi ne ss i ncome from t he bu siness of fina nci ng. Atte ntion h as bee n drawn to the Sur re nder Le tte r, copy a t p age 5 of the assesse e's Pape r B oo k ( “AP B ” f or short); copy of I ncome Tax Re tu rn for a sse ssment yea r 20 1 8-19 , APB -6, copy of B ala nce She et a nd Pr ofi t & Los s Account, e tc., a s on 31.03.2 018 , APB 7-11, c opy of N otice date d 01 .1 2.2020 issued unde r sect ion 14 2(1) of the Ac t al ongwith que st ionnaire, APB 12- 15, Cop y o f the r eply da ted 10 .12 . 2020 fi led be fore the AO , AP B 16-1 9, Copy of th e notice dated 16.01.202 1 iss ue d unde r se ctio n 142( 1) of the A ct alongw ith q uestionna ire , APB 2 0-27, C opy of the reply, da ted 24.01 .20 21 filed b efore the AO, APB 28-3 2, Copy of the notice date d 10.0 2.2 021 i ssued under se ction 142( 1) of the ITA 157/CHD/2023 A.Y.2018-19 13 Act alo ngw ith q ue stionn aire, APB 33-3 4, C opy of the reply da ted 20.02.2 021 file d before the AO, AP B 35, C opy of the notice da ted 25.02.2 021 issue d unde r section 142(1) of the Act alo ngwith questionna ire , APB 3 6-3 7,C opy of the re ply da ted 16.04 .2021 file d before the AO, APB 38 , C opy of the wri tte n sub mi ssi ons file d be fo re the CIT( A), Ludh iana -5 , APB 39 -49 . 8. The ld. C ounsel for the assesse e has pla ce d reliance on the decisions of t he Chand iga rh I TA T, Divi sio n Bench in Shri Pa r mod Sing la Vs A CI T, C ircle Patial a, or de r dated 24. 07.20 23, pa ssed in I TA 516 /C HD /20 22, for a ssessme nt ye ar 2017 -18 , on 24.07. 2023 and th at in “ M/s Jai n Ply wood Vs DCI T, Ce ntra l C ircle , Pa ti ala , & order, pa sse d in I TA N o. 588 /CHD /20 22 and I TA No . 589 /CHD /2022 f or a sse ss ment ye ars 201 8-1 9 d ated 27.07 .20 23. 9. On the other ha nd, the ld. DR ha s placed strong re liance on the i mp ugne d ord er. 10. I have heard the riva l su bmissi ons and pe rused the mate ria l avai lab le on recor d. I find that th e matter is covere d squa rely in favo ur of the a s se ssee by the d e cision s i n the cases of Shr i Par mod S ingla Vs ACI T, C irc le Pa tia la ( sup ra) an d “M/ s Ja in Plyw ood Vs D C I T, Ce ntral Cir cle , P atia la (sup ra) . The de cision in Shri P ar mod Si ng la Vs ACI T, C ircle Patiala ( sup ra) is the late st. There in , i t h as bee n held as fo llows : ITA 157/CHD/2023 A.Y.2018-19 14 “1 3 . W e h av e he a r d t h e r i v a l c o nt e n t i on s a n d pu r u s ed t h e m at e r ia l av a i l ab l e o n r e c or d . Th e ge n e s i s o f t h e pre s e n t c a s e li e s in t h e s ur v e y op e r a ti o n s u/ s 13 3A c o n du c t e d a t t he b us i ne s s pr e m i s e s of t he a s s e s s e e o n 8 /0 7 / 20 1 6 w h e r e i n t h e as s e s s e e s ur r e nd e r e d a s u m o f R s 84 . 80 l a c s , t h e r e af t e r t he r e tu r n o f in c o m e f i l e d b y t he a s s e s s e e on 2 3/ 0 3 / 2 0 18 w a s s e l ec t e d f or c o m p u l s or y m a n u a l s c r u t i ny a s p e r C B D T g ui d e l in e s pr e s u m ab l y to e x a m i n e w h e t he r th e a s s e s s e e ha s h o no ur e d t h e s ur r e n de r s o m ad e a t t h e t i m e o f s u r v e y w hi l e f i l i n g hi s r e t ur n o f i n c om e , a s al s o e v i de n t f r o m t h e c on d uc t o f t he a s s e s s m e n t pr oc e e d in g s b y th e A O in t e r m s o f i s s ui n g t he s h ow - c a u s e an d s e e k in g c o m m e nt s of t h e a s s e s s e e on t h e a m o u n t s o s u r r e n de r e d d u r i ng t h e c o ur s e of s u r v e y an d s u b s e q u e nt p as s i ng of t h e a s s e s s m e n t o r d e r . A s pe r th e A O , t he a m o un t s o s u r r e n d e r e d b y t h e as s e s s e e du r i n g t h e c o u r s e of s u r v e y t h o ug h h a s b e e n of f e r e d i n t he r e tu r n o f i n c om e an d t h u s , t h e a s s e s s e e ha s ho no u r e d t he s ur r e nd e r of i n c om e s o m ad e b u t a t t he s a m e t i m e , t he i nc o m e s o of f e r e d i n t he r e t u r n o f in c o m e f a l l s u n de r t h e d e e m i n g pr ov i s i o ns o f s e c ti on 6 9 a nd 6 9 A of t he A c t a nd t h u s , t he t a x li a b i l i t y t he r e o n ha s t o b e de t e r m in e d in t e r m s o f s e c t i on 11 5 B B E o f t he A c t . A s p e r t he l d A R , t h e as s e s s e e h as ho n o u r e d t he s u r r e n d e r s o m a d e at t h e t i m e o f s ur v e y n ot j u s t i n t e r m s o f t h e qu an t um of i nc o m e so s ur r e nd e r e d bu t al s o i n t e r m s o f na t u r e of i n c o m e s o s ur r e nd e r ed , an d th e r a t e of t a x a t w hi c h th e s u r r e n de r h a s b e e n m a d e a n d s u rr e n d e r s o m ad e h as b e e n a c c e pt e d by t h e s u r v e y te a m a nd t h u s , t h e de e m i n g pr o v i s i o ns o f s e c t i o n 69 a n d 6 9A r / w s e c t i o n 11 5 B B E a r e n o t at t r a c t e d i n t he i n s t a n t c as e . 14 . To a p pr e c ia t e t he af o r e s a i d r i v a l p o s i t i o n s , w e r e f e r t o t h e pr o v i s i o ns o f s e c ti o n 6 9 a nd 69 A of t he A c t . S e c t io n 6 9 p r o v i de s th a t w he r e i n t he f i n a n c i al y e ar i m m e d i at e l y p r e c e di ng t h e as s e s s m e n t y e a r , t h e a s s e s s e e h as m a d e i n v e s t m e n t s w h i c h ar e no t r e c o r d e d i n t h e b oo k s o f a c c ou n t, i f a ny , m a i n ta i n e d by hi m fo r a ny s o u r c e of i n c o m e , an d t h e a s s e s s e e o f f e r s no e x p l an a ti o n ab ou t t he n at u r e a nd s o ur c e o f t he i n v e s t m e nt s o r th e e x p l an a t io n of f e r e d by h i m i s n o t , i n t h e o p in i o n o f t h e A s s e s s in g O f f i c e r , s at i s f a c t or y , t he v a lu e o f t h e i nv e s tm e nt s m ay b e de e m e d t o be t h e in c o m e o f th e a s s e s s e e o f s uc h fi n a n c i a l y e ar . S e c ti o n 6 9 A pr o v i de s t h a t w h e r e in a ny f i n a n c ia l y e a r t h e as s e ss e e i s f ou n d t o be t h e o w n e r of a n y m o ne y , bu l l i on , j e w e l l e r y or o th e r v a l u ab l e ar t i c l e a n d s uc h m o n e y , b ul l i o n , je w e l l e r y o r v a l uab le ar ti c l e i s no t r e c o r d e d i n t h e b oo k s o f a c c ou n t, i f a ny , m a i n ta i n e d by hi m fo r a ny s o u r c e of i n c o m e , an d t h e a s s e s s e e o f f e r s no e x p l an a ti o n ab ou t t he na t ur e a n d s o ur c e o f a c q ui s i t i o n o f t h e mon e y , b u l l i o n , je w e l l e r y o r o t he r v a lu a b l e ar t i c l e , or t h e e x p l an at io n o f f e r e d b y hi m i s n o t , i n t h e o pi n i o n o f t h e A s s e s s i ng O f f i c e r, s at i s f a c t or y , th e m o ne y a n d t h e v a l ue of t h e b ul l i o n, j e w e l l e r y or o t he r v a l u ab l e a r t i c l e m a y b e d e e m e d t o b e t h e i n c om e o f t h e a s s e s s e e fo r s uc h f i na nc i a l y e ar . ITA 157/CHD/2023 A.Y.2018-19 15 15 . I n t h e i ns t an t c as e , fo r th e d e e m i n g p r o v i s i o n s o f s e c t io n 69 t o b e a t t r a c te d , t he r e h a s t o b e a f i nd i ng t ha t t he a s s e s s e e h as m ad e i n v e s t m e nt s d u r i n g t h e f i na nc i a l y e a r i n t h e st oc k a n d b y w a y o f a d v a n c e s , s u c h in v e s t m e n t s ar e n ot r e c or de d i n t he b o ok s of a c c ou nt s s o m ai n t ai n e d b y t he a s s e s s e e , a n d t he a s s e s s e e of f e r s n o e x p l a na t i o n a b o u t t h e n a t u r e a n d s o u r c e of t h e in v e s t m e n t s or t h e e x p l an a ti o n s o of f e r e d i s n o t f oun d s at i s f a c t or y i n t he o p i n io n o f t h e A O . Si m i la r l y , for t he de e m in g pr o v i s i o ns o f s e c t i o n 69 A t o be a t t r a c t e d , t h e r e h as t o b e a fi n d in g t h at t h e a s s e s s e e w as f o un d t o be ow n e r o f c as h s o f o un d at t he t i m e s ur v e y , s u c h c a s h h as n ot b e e n r e c or de d i n t h e b o ok s of a c c ou nt s s o m ai n t ai n e d b y t he a s s e s s e e , a n d t he a s s e s s e e of f e r s n o e x pl a n a t i o n ab ou t th e na t ur e a nd s ou r c e of t he c as h or th e e x pl a na t i on s o o f f e r e d i s n o t f o u n d s a t i s f a c t o ry i n t h e op i n i o n of t h e A O . 16 . R e c e nt l y , i n c as e o f S u r e nd e r K u m a r & o t he r s ( I T A N o . 39 8/ C hd / 2 02 2 ) , t h e C o or di n at e C h a nd i g ar h B e n c h e s h as he l d t ha t th e r e i s di f f e r e n c e b e t w e e n t h e u nd i s c l o s e d i nc o m e an d un e x pl a i ne d i n c o m e an d t he de e m i n g pr o v i s i o ns a r e at t r ac t e d i n r e s p e c t o f u n di s c l o s e d i n c om e h ow e v e r , t he c o nd i t ion b e f or e in v o k i n g t h e s a m e i s t ha t t h e a s s e s s e e h a s e i t h e r fai l e d t o di s c l o s e t h e na t ur e a nd s ou r c e of s u c h i nc o m e o r t he A O d o e s n’ t ge t s a t i s f i e d w i t h t h e e x p la n at i o n s o o f f e r e d by h im a n d t h e r e l e v a n t f in d in g s r e a d a s u n d e r : “ 1 0 . W e h a v e c o n s i d e re d t h e r i v a l c o n t e n t i o n s a n d ha v e g o n e t h r o u g h t h e r e c o rd . A s p e r t h e p ro v i s i o n s o f S e c t i on 1 1 5 B B E o f t h e A c t , t h e i n c o m e t a x o n i n c o m e r e f e r r e d t o i n S e c t i o n 6 8 o r S e c t i o n 6 9 o r S e c t i o n 6 9 A o r S e c t i o n 6 9 B o r S e c ti o n 6 9 C o r S e c t i o n 6 9 D a r e c h a rg e a b l e t o t a x a t a h i g h e r rat e . N o w a p e ru s a l o f t h e p ro v i s i o n s o f S e c t i o n 6 8 , 6 9 , 6 9 A , 69 B , 6 9 C a n d 6 9 D w o u l d r e v e a l t h a t t h o s e p ro v i s i o n s a r e a t t ra c t e d i n r e s p e c t o f t h e c r e d i t s , c a s h , e x p e n d i t u r e , i n v e s t m en t e t c . r e g a r d i n g w h i c h t h e a s s e s s e e o f f e r s n o e x p l a n a t i o n a b o u t t h e n a t u r e a n d so u r c e t h e r e o f . I t i s t o b e p o i n t e d o u t t h a t t h e i n c o m e i s t o b e a s s e ss e d u / s 6 8 w h e r e i n a n y s u m i s f o u n d c r e d i t e d i n t h e b o o k s , o f w h i c h t h e a ss e s s e e o f f e r s n o e x p l a n a t i o n a b o u t t h e ‘ n a t u r e a n d s o u r c e t h e r e o f ’ or t h e e x p l a n a t i o n o f f e r e d b y h i m i s n o t f o u n d s a t i s f a c t o ry b y t h e A O . S e c t i o n 6 9 i s a t t r a c t e d t o t h e u n e x p l a i n e d i n v es t m e n t s o f w h i c h t h e a s s e s s e e o f f e r s n o e x p l a n a t i o n a b o u t t h e ‘ n a t u r e a n d s o u r c e ’ t h e r e o f o r t h e e x p l a n a t i o n i s n o t f o u n d s a t i s f a c t o r y . S i m i l a r l y , S e c t i o n 6 9 A i s a t t r a c t e d in c a s e o f m o n e y , b u l l i o n , j e w e l l e r y o r o t h e r v a l u a b l e a r t i c l es , S e c t i o n 6 9 B r e f e r s t o t h e i n v e s t m e n t s , S e c t i o n 6 9 C r e f e r s to t h e e x p e n d i t u r e a n d S e c t i o n 6 9 D r e f e r s t o t h e a m o u n t b or ro w e d o r r e p a i d o n h u n d i . T h e p ro v i s i o n s o f t h e s e S e c t i o ns a r e a t t r a c t e d a n d t h e i n c o m e i s a s s e s s e d u n d e r t h e s e S ec t i o n s , i f , t h e a s s e s s e e f a i l s t o g i v e t h e e x p l a n a t i o n a b o u t t he ‘ n a t u r e a n d s o u r c e ’ o f s u c h u n d i s c l o s e d i n c o m e . T h e l d . P C IT i n o u r ITA 157/CHD/2023 A.Y.2018-19 16 v i e w , i n t h i s c a s e h a s c o n f u s e d h i m s e l f b e t w e e n t h e ‘ u n d i s c l o s e d i n c o m e ’ a n d t h e w o rd ‘ u n e x p l a i n e d i n c om e ’ . A s p e r p ro v i s i o n s o f S e c t i o n 6 8 t o 6 9 D a r e a t t r a c t e d in r e s p e c t o f t h e u n d i s c l o s e d i n c o m e b u t t h e c o n d i t i o n f o r a s se s s i n g s u c h i n c o m e u n d e r t h e s a i d p r o v i s i o n s i s t h a t t h e as s e s s e e h a s e i t h e r f a i l e d t o d i s c l o s e t h e n a t u r e a n d so u r c e o f s u c h i n c o m e o r t h e A O d o e s n o t g e t s a t i s f i e d w i t h t h e e xp l a n a t i o n o f f e r e d b y h i m . 1 5 . T h e p e r u s a l o f t h e a b o v e r e l e v a n t p a r t o f t h e Au d i t R e p o r t p r o p o s a l o f t h e A O a n d S h o w C a u s e N o t i c e i s su e d b y t h e l d . PC I T u / s 2 6 3 o f t h e A c t , w o u l d s h o w t h a t a l l t h e a f o r e s a i d a u t h o r i t i e s h a v e b e e n s w a y e d b y t h e no t i o n t h a t t h e i n c o m e su r r e n d e r e d b y t h e a s s e s s e e w a s u n d i s c l o s e d i n c o m e o f t h e a s s e s s e e a n d th e r e f o r e , th e s a m e h a s t o b e a s s e s se d u / s 6 8 t o 6 9 D , a s t h e c a s e m a y b e , o f t h e In c o m e T a x A c t a n d t h e r e b y w o u l d b e c h a rg e d t o h i g h e r ra t e o f t a x u / s 1 1 5 B B E o f t h e A c t . H o w e v er , a s n o t e d a b o v e , f o r a n i n c o m e t o b e t a x e d u / s 6 8 t o 6 9D , a s t h e c a s e m a y b e , i t s h o u ld n o t o n l y b e t h e u n d i s c l os e d i n c o m e b u t t h e e s s e n t i a l c o n d i t i o n i s t h a t t h e a s s es s e e h a s f a i l e d t o d i s c l o s e t h e ‘ n a t u r e a n d s o u r c e ’ o f su c h u n d i s c l o s e d i n c o m e o r t h a t t h e e x p l a n a t i o n o f f e r e d b y t h e a s s e s s e e i s n o t f o u n d s a t i s f a c t o r y b y t h e A O . I n t he c a s e i n h a n d , a s n o t e d a b o v e , t h e A O d u l y m a d e e n q u i r i e s f r o m t h e a s s e s s e e a s t o t h e n a t u r e a n d t h e so u r c e of t h e a f o r e s a i d s u r r e n d e r e d i n c o m e a n d h a s a l s o s h o w c a u se d t h e a s s e s s e e a s t o w h y t h e s a m e s h o u l d n o t b e c h a rge d a t a h i g h e r ra t e o f t a x a s p e r p r o v i s i o n s o f S e c t i o n 11 5 B B E o f t h e A c t . T h e l d . A O a f t e r c o n s i d e r i n g t h e s u b m i ss i o n s a n d e x p l a n a t i o n s o f t h e a s s e s s e e a c c e p t e d t h e c o n t en t i o n o f t h e a s s e s s e e t h a t t h e s u r r e n d e r e d i n c o m e w a s o u t o f t h e b u s i n e s s i n c o m e o f t h e a s s e s s e e . T h e p e r u s a l o f t h e i m p u g n e d o r d e r o f t h e l d . P C I T w o u l d sh o w t h a t t h e l d . P C I T h a s n o t p o i n t e d o u t a s t o w h y t h e e x p l a n a t i o n o f f e r e d b y t h e a s s e s se e t o t h e A O w a s n o t s a t i s f a c to r y a n d f u r t h e r w h a t m o r e e n q u i r i e s a r e r e q u i r e d t o b e c o n d u c t e d i n t h i s c a s e , w h i c h t h e A O h a d f a i l e d to c o n d u c t . T h e l d . P C I T h a s s i m p l y b a s e d h i s o p i n i o n a n d o rd e r o n t h e A u d i t O b j e c t i o n s / R e p o r t a s p o in t e d o u t e v e n i n t h e A u d i t R e p o r t t h a t s i n c e t h e s a m e w a s u n d i s c lo s e d i n c o m e o f t h e a s s e s se e w h i c h wa s s u r r e n d e r e d b y t h e a s s e s s e e d u r i n g t h e s u r v e y a c t i o n a n d t h e r e f o r e , t he s a m e w a s t o b e a s s e s s e d u n d e r t h e p ro v i s i o n s o f S e ct i o n 6 8 t o 6 9 D o f t h e A c t . T h e a b o v e r e a s o n i n g o f t h e s ur v e y p a r t y i s n o t i n a c c o rd a n c e w i t h t h e r e l e v a n t p r o v i si o n s o f t h e A c t . T h e r e f o r e , w e d o n o t f i n d a n y j u s t i f i c a t i on o n t h e p a r t o f t h e l d . P C I T i n i n v o k i n g t h e R e v i s i o n a ry j u r i s d i c t i o n i n t h i s c a s e . ” 17 . Th e r e f o r e , t he f o u n d at i o na l r e q ui r e m e n t b e f or e i nv o k in g th e d e e m i ng p r o v i s i o n s i s n o t t h a t t he r e w e r e c e r tai n s u r v e y op e r a ti o n s u / s 1 3 3 A a n d s o m e un di s c l o s e d i n c om e h a s be e n ITA 157/CHD/2023 A.Y.2018-19 17 de t e c t e d an d s ur r e n d e r e d b y t he as s e s s e e a nd t h u s , t h e de e m in g pr o v i s i o ns a r e a ut o m at i c a l l y a t t r a c te d . R at h e r t he f o un d at i on a l r e qu i r e m e n t i s w he t h e r t he as s e s s e e ha s m a de t h e i nv e s t m e n t / h as be e n f ou nd t o be o w n e r o f c a s h a n d t he e x p l an a t i o n of f e r e d by t h e as s e s s e e e x p l a i n i n g t he n at u r e an d s o u r c e o f s uc h un di s c l o s e d in c o m e an d t h e r e as o n ab i l it y o f t h e e x p l an a t i o n s o o f fe r e d b y t h e as s e s s e e k e e p i ng i n t o a c c o u nt t he f ac t s an d c i r c u m st a n c e s o f t h e r e l e v a n t c a s e . I n f a c t, i f w e lo o k a t t h e p r o v i s i o ns o f s e c ti o n 13 3A , c l au s e (i i i ) o f s u b- s e c t i on ( 3 ) pr o v i d e s t h at an i n c o m e t a x au t ho r i t y a c t i ng u nd e r t h i s s e c t io n s h a l l r e c or d t he s t a t e m e n t o f an y p e r s o n w hi c h m ay b e u s e f ul f or o r r e l e v an t t o an y pr o c e e di n gs u n d e r t h i s A c t . T h e r e f or e , w h a t e x pl a na t i on h as be e n o f f e r e d b y t he as s e s s e e as p a r t of h i s s t at e m en t r e c o r de d u/ s 13 3A ne e d s t o b e a na l y s e d a n d e x a m i ne d b e f or e d r aw in g a n y c o n c lu s i o ns i n t h i s r e g ar d. 18 . I n t he i ns ta n t c a s e , i n t h e s t a t e m e n t s o r e c or de d o f t h e as s e s s e e du r i n g t h e c o u r s e of s u r v e y , i n Q ue s t i o n No. 3 r a is e d b y th e s ur v e y te a m , t he a s s e s s e e w as a s k e d ab ou t t h e so u r c e o f hi s in c o m e a nd i n r e s po n s e , t h e a s s e s s e e s u b m i t t e d t h a t h e w a s s o l e P r op r i e t o r o f M/ s Si n g la W i r e a n d A l l i e d P r o d u c t s , P a t ia l a an d e x c e p t t he s ai d bu s i n e s s , h e h a s n o o t h e r s o u r c e of i n c o m e . F ur t h e r , he s t a t e d t h a t h e w a s no t p a r t ne r /D i r e c t or i n a ny o f t h e fi r m or c o m p a ny . I n Q u e s t i o n N o . 4 r a i s e d b y t h e s ur v e y t e a m , h e w a s as k e d t o s t at e t h e da t e o f c o m m e n c e m e n t o f h i s c o n c e r n an d th e na t ur e o f a c t iv i t y c ar r i e d o u t a l o n g w i t h d e t ai ls o f m an u f ac t u r e d p r od u c ts . I n r e s p o ns e , t h e a s s e s s e e su b m i t t e d t ha t th e c o nc e r n s t a r t e d b us i ne s s i n t h e y e ar 2 0 08 an d it is i nv o l v e d i n m an u f ac t u r i ng o f a l u m i n um a n d c o p p e r w i r e s an d t h e re a f t e r , h e ha s g i v e n t he d e t ai l s of m an u f ac t u r i ng p r o c e s s . I n Q u e s t i on N o. 10 , he w a s a s k e d b y t h e s u r v e y t e a m t ha t as p e r as se s s e e ’ s b o ok s of a c c ou n t , t h e r e w as c as h i n ha n d o f R s . 6 6, 4 00 / - h o w e v e r o n ph y s i c al v e r i f i c at i o n , R s . 1 0 , 46 , 00 0 / - i s f ou n d f r om y o u r b us i ne s s pr e m i s e s t h us t he r e i s e x c e s s c a s h o f R s . 9, 8 0 , 0 0 0 /- a nd t h e as s e s s e e w a s a s k e d t o e x p la i n t he d i s c r e p an c y . I n re s p o n s e , t h e as s e s s e e s ub m i t t e d t h at a t t h i s p o i nt i n t i m e , he wa s n ot i n a po s i t i on to e x p l a in t he s a id di s c r e p a nc y f ou nd i n ca s h an d of f e r e d t h e d i f fe r e n c e o f R s . 9 , 8 0, 0 00 / - f or t a x at io n . I n Q ue s ti o n N o . 11 , t he s u r v e y te a m n ot e d th a t o n e n ot e p ad (k at c ha ) w as fo u nd du r i n g t h e c o u r s e o f s u r v e y an d a d v a n c e to v ar i ou s p e r s o ns to t h e t u ne o f R s . 5 5 , 0 0 , 0 0 0 / - ha s be e n f ou n d n o t e d t h e r e i n an d th e a s s e s s e e w a s as k e d t o e x pl a i n t he n a tu r e o f t h es e a dv a n c e s . In r e s p on s e , t h e a s s e s s e e s u b m i t t e d t h a t t h e s e a dv anc e s r e l a t e s t o hi s bu s i n e s s a c t i v i t y , h o w e v e r he i s no t i n a po s i ti o n t o e x p l a i n th e s a m e a t t h is m o m e n t of ti m e a n d t o b u y pe a c e of m i n d , h e of f e r e d t hi s a m o u nt o f R s . 5 5 , 0 0 , 00 0/ - f or t ax a t i o n f or t he F . Y . 20 16 - 1 7 pe r t a i ni n g t o A . Y 2 0 1 7 - 1 8. I n Q u e s t i o n N o . 1 2, t h e s ur v e y t e a m s t at e d t h at s t oc k t o t he t un e of R s . 1 7, 3 8 , 4 0 0/ - h as be e n f o un d a s pe r t h e b oo k s of ac c o un t m ai n t ai n e d by t h e ITA 157/CHD/2023 A.Y.2018-19 18 as s e s s e e , h ow e v e r o n p hy s ic a l v e r i f i c at i o n, s to c k to t h e t u n e o f R s . 3 7 , 3 8 , 2 1 0 / - h a s b e e n d e te r m i ne d a n d t he as s e s s ee w a s a s k e d to e x pl a i n t he d i f f e r e n c e of e x c e s s s t oc k v al u e d at R s . 20 , 0 0 , 0 00 / -. I n r e s po n s e , t h e as s e s s e e s u b m i t te d t ha t at t h i s m om e nt o f t i m e , h e is no t i n a p os i t i o n t o e x p l a i n t he s ai d di f f e r e n c e o f R s . 2 0 , 00 , 00 0 / - h ow e v e r t o bu y p e a c e o f m i n d , h e of f e r e d t hi s a m o u nt o f R s . 2 0 , 0 0 , 00 0/ - f or t ax a t i o n f or t he F . Y . 20 16 - 1 7 p e r t ai n i ng t o A . Y . 2 0 17 - 18 . T he r e a f t e r , i n t h e s t at e m e n t s o r e c o r d e d, i t i s m e n t i on e d t h a t t a x e s o n to t a l a dd i t i o n a l i n c om e of R s . 8 4 , 8 0 , 00 0 /- s o s u r r e n de r e d b y t h e as s e s s e e we r e w o r k e d ou t an d t hr e e po s t d at e d c h e q u e s w e r e g i v e n b y t he a s s e s s e e t o th e s u r v e y t e a m f or s e c u r i n g t he p ay m e n t of du e t axe s a m ou n t in g to R s . 2 6, 2 0 , 00 0 / - . T h e r e a ft e r , in t e r m s o f s u r r e n de r l e t t e r d t . 08 - 09 / 07 / 20 1 6 ad d r e s s e d t o t h e A dd i ti o n al C I T, P at i a l a R a n g e , P at i a l a , t he a s s e s s e e h as r e i te r at e d th e am ou nt s u rr e n d e r e d o f R s . 84 , 8 0 , 0 0 0/ - w h i c h w e r e o f fe r e d a s a dd i t i on a l i nc om e a t t h e ti m e o f s u r v e y o n a c c o u nt of c e r t ai n d i s c r e p an c i e s n ot i c e d i n te r m s o f ad v a n c e s t o v a r i o us pe r s on s a m o un t i ng t o Rs . 55 , 0 0 , 0 00 / -, c a s h i n ha nd o f R s . 9 , 8 0 , 0 00 / - , e x c e s s s t o c k of R s . 20 , 0 0 , 0 00 / - an d t h e t a x l i ab i l i t y o f R s . 26 , 2 0 , 0 0 0 /- w hi c h h as be e n w o r k e d o u t a t t h e t i m e o f s u r v e y a nd t he d e t a il s an d pa r t i c ul a r s o f t he c h e qu e i s s u e d w e r e m e n t i o ne d . 19 . W e t he r e fo r e fi n d t ha t t h r o ug h v ar i o u s q ue s ti o ns r a i s e d du r i n g t h e c ou r s e o f s u r v e y , t h e as s e s s e e h as be e n a s k e d a b ou t th e na t u r e an d s o u r c e of h is in c o m e an d v a r i o us d i sc r e p an c i e s s o fo u nd du r i n g t he c o u r s e o f s ur v e y . In r e s p on s e , t he a s s e s s e e h as s t at e d t h at he i s r u n n i ng a s ol e p r o p r i e t o r s hi p b usi n e s s c on c e r n in n a m e of M / s S i ng l a w i r e s an d al l i e d pr o d uc t s s i nc e 2 00 8 w h e r e i n h e m a n u f ac t u r e s an d s e l l s al u m i n u m a n d c op pe r w i r e s an d a ll al o n g , t he s a m e i s h i s o n ly s o ur c e o f i n c o me an d th e r e a f t e r , he h a s b e e n c on f r o nt e d w i t h d i s c r e p an c ie s i n t e r m s o f c a s h fo u n d e x c e s s a s c om pa r e d t o w h at h a s be e n r e c or d e d i n t h e bo ok s o f a c c o u nt s , c e r t a i n a dv a n c e s r e l at i n g t o h i s b u s i ne s s w r i t t e n i n a r o ug h d i ar y an d e x c e s s v a l u e o f s t o c k as c o m p ar e d t o w h at h a s b e e n r e c or d e d i n t h e b o ok s o f a c c o u nt s . Th e r e f or e , w e fi n d t h a t t he a s s e s s e e ha s b e e n c o n f r on t e d w i t h n o t j u s t t h e di s c r e p a nc y s o f ou n d d u r i ng t h e c o ur s e o f s u r v e y b ut t he na t ur e an d s ou r c e t he r e of d ur i n g th e c ou r s e o f s u r v e y pr oce e d i ng s a nd i t is c le a r l y e m e r g i n g t h at t he s ou r c e of s uc h i nc o m e i s f r o m hi s bu s i n e s s o pe r a t i o n s . Th e r e i s a c l e a r s ta t e m e n t of t h e a s s e s s e e th a t t he ad v an c e s ar e r e l at e d t o h i s b us i ne s s , h ow ev e r s i n c e t h e s am e h a v e n o t b e e n r e c o r d e d i n t he b o o k s o f a c c ou n ts , he h as of f e r e d t he s a m e t o ta x a t i o n . S i m i l ar l y , t he s t o c k p hy s ic a l l y fo u nd ha s b e e n v a l ue d an d t h e n, c o m p a r e d w i t h s t o c k as r e c or d e d in t he b o ok s o f a c c o u n ts , t h u s , t h e r e i s c l e a r n e x us o f s t oc k w i t h th e as s e s s e e ’ s b u s i ne s s . T he s t at e m e n t o f th e as s e ss e e i s av a i la b l e o n r e c o r d a n d r e la t e d do c u m e n t s s o f o un d d u r i n g t h e c o u r s e o f s ur v e y a r e s t a t e d t o be i n po s s e s s i o n of t h e R e v e n u e ITA 157/CHD/2023 A.Y.2018-19 19 au t ho r i t i e s . A pp a r e nt l y , t he A O h as f a i l e d t o t a k e in t o c o n s i de r a t i o n t h e s t a t e m e nt o f t h e a s s e s s e e r e c o r d ed d u r i ng t h e c o u r s e o f s u r v e y ho l i s t i c al l y , a nd o t he r do c um e nt s a n d f i n di n g s of t h e s ur v e y te a m w h i c h a r e v e r y m uc h p a r t o f t he r e c or ds . F ol l o w i n g t h e s ur r e n d e r s o m a d e d u r i n g t h e c ou r s e of s ur v e y , t h e as s e s s e e h as ho no r e d t he s ur r e nd e r s o m ad e a n d o ff er e d t h e ad di t i o na l i nc o m e as b u s i ne s s i nc o m e i n h i s r e t u r n o f i nc o m e an d pa i d d u e t a x e s t h e r e on . 20 . I n ou r v i e w , w ha t i s r e l e v an t b e f o r e i nv o k in g the de e m in g pr o v i s i o ns i s n o t j us t t h e f ac t u m o f s u r v e y a c t i on b ut b e s i de s t h a t , w h at i s t he e x pl a na t i on s o o f fe r e d by t he a s s e s s e e e x pl a i ni n g t h e na t ur e a n d s o u r c e of i nc o m e s o f ou n d d ur i n g t h e c our s e o f s u r v e y pr o c e e di n gs a n d w h i c h h a s n ot b e e n r e c or d e d i n t h e b o ok s o f ac c o un t s a n d t he s a m e i s th e e s s e nc e of th e s t at u t or y pr ov i s i o n s as du l y r e c o g ni z e d b y t h e C ou r t s an d v a r i ou s B e n c h es o f t h e Tr i b un al an d w h i c h h a s b e e n r e i te r at e d f r o m t i m e t o t i m e . Th e s t at e m e n t o f t he a s s e s s e e ha s t o b e r e a d a s a w ho l e a n d n o t i n pi e c e m e a l e s pe c i a l ly w h e r e th e R e v e nu e i s r e l y i ng on t h e s am e s t at e m e n t a n d i n s u c h c i r c um s t a nc e s , t h e d e f e nc e a va i l a bl e t o t h e as s e s s e e i n t e r m s o f p a r t of t he s t a t e m e nt n ot b e e n c on s i d e r e d b y th e R e v e nu e c an no t be i g n o r e d . T he m e r e f a c t t h a t s ur v e y / s e a r c h pr o c e e di n gs ha v e b e e n i n i ti a t e d at t h e b u s i n e s s p r em i s e s o f t h e as s e s s e e d oe s n ’ t m a n d at e t h e A s s e s s i ng of f i c e r t o aut o m a t ic a l l y in v o k e t h e d e e m i ng p r ov i s io n s a n d be f o r e i n v o k i n g th e de e m i n g pr o v i s i o ns , h e h a s t o c al l f or t h e e x p l an a t io n o f the a s s e s s e e an d on l y w h e r e t h e e x pl a na t i on s o o f f e r e d i s no t f o un d s at i s f a c t or y , he c a n p r o c e e d a nd i n v o k e t he d e e m i n g p r o v i s i on s . 21 . I n c a s e of G a nd hi R am (I T A N o . 12 1 / C H D / 20 21 d a t e d 04 / 08 / 20 2 2 ) , s p e a k i n g t hr o u gh o ne o f u s , i t w a s h e ld t h at i t i s l i k e la y i ng a g e ne r al r u l e w h ic h i s be y o nd t he m a n d a t e of la w t h a t w h e r e v e r th e r e i s a s u r v e y a n d s o m e i n c o m e i s d e t e ct e d or s ur r e nd e r e d b y t he as s e s s e e , t h e d e e m i ng pr ov i s i o n s a r e at t r a c t e d by d e fa u l t a n d b y v i r t ue o f t he s a m e , p r o v i s i on s o f s e c t i o n 1 1 5 B BE ar e a t t r a c te d a nd t he r e l e v a nt f i n di n gs r e ad a s u nde r : 5. “Firstly, how the ld PCIT has arrived at a conclusive finding that the discrepancies found, confronted and accepted by the assessee during the course of survey attract the deeming provisions of section 68, 69, 69A, 69B & 69C is not apparent from the impugned order. Merely stating that excess cash is clearly covered u/s 68 or 69A, excess stock is covered u/s 69 or 69B, construction of Shed/Godown is covered u/s 69B or 69C and advances made to Sundry Parties is covered u/s 69, 69B or 69D is like an open ended hypothesis which is not supported by any specific finding that the matter shall fall under which of the specific sections and how the conditions stated therein are satisfied before the said provisions are invoked. It is like laying a general rule, which to our mind is beyond the mandate of law, that wherever there is a survey and some income is detected or surrendered ITA 157/CHD/2023 A.Y.2018-19 20 by the assessee, the deeming provisions are attracted by default and by virtue of the same, provisions of section 115BBE are attracted. The ld PCIT has to record his specific findings as to the applicability of the relevant provisions and how the explanation called for and offered by the assessee is not acceptable in the facts of the present case which is clearly absent in the instant case. Therefore, where the ld PCIT himself is not clear about the applicability of relevant provisions and in the same breath holding the Assessing officer to task by not invoking the said provisions is clearly shooting in the dark which cannot be sustained in the eyes of law and the order so passed therefore cannot be held as erroneous in the eyes of law.” 22 . I n c a s e o f C h o ks hi H i r al a l M a ga nl a l V s . D C I T ( Su p r a ) , br i e f l y t h e f ac t s of t h e c a s e w e r e t ha t d ur in g t he c o u r s e o f s ur v e y u n de r s e c t i o n 1 3 3A w hi c h w a s c a r r i e d ou t at t h e p r e m i s e s of t h e a s s e s s e e , e x c e s s s t o c k of g o l d a n d s i l v e r orna m e n ts w e r e fo u nd a nd i n t h e r e t ur n o f i n c o m e s u bs e q u e n t l y f i l ed by t h e as s e s s e e , h e h a d i n c l ud e d t h e v al u e of e x c e s s s t oc k a s p ar t o f c l o s i n g s t o c k i nv e n t or y . H o w e v e r t h e A O o b s e r v e d t hat t he s ai d di s c l o s u r e w a s no t c o n s i s t e n t w it h t he p r ov i s i o ns of S e c t i on 6 9 B of t h e A c t a nd s a m e w a s a c c or di n gl y b r o u g h t t o ta x un d e r s e c t io n 6 9B . Th e L d . C I T ( A ) c o n f i r m e d t h e o r d e r o f t h e A O a nd th e r e a f t e r o n f u r t h e r ap p e al , t h e C oo r d i na t e A h m e dab a d B e nc h he l d t h at th e e x c e s s s t o c k f o un d d u r i n g t he s u r v e y i s no t s e pa r a t e l y a nd c l e ar l y i d e n t i f i ab l e b u t i s p a r t o f m i x l ot o f s t o c k fo u nd a t th e p r e m i s e s w h i c h i n c l u d e d de c l ar e d s to c k a s p e r bo ok s a n d al s o t h e e x c e s s s t o c k as c om p u t e d b y t h e Su r v e y O f f i c e r s a n d t h e r e f o r e th e p r o v is i o n s o f Se c t i o n 69B c an n ot b e m ad e a pp l i c a b l e a s p r i m a r y c on d i ti o n f o r i n v ok i n g th e s ai d pr o v i s i o n i s t h at t he as s e t s h o ul d b e s e p a r a t e l y i de n t i f ia b l e a nd it s h ou l d h av e i n d e p e n de n t p hy s ic a l e x i s t e n c e o f i ts ow n a nd s i nc e e x c e s s s t oc k a s a r e s ul t o f s u p p r e s s io n of pro f i t f r o m bu s i n e s s o v e r t he y e a r s a nd h a s n o t k e pt i de n t i f i a bl e s e p ar a t e l y bu t as p ar t o f ov e r a l l ph y s i c al s t o c k fo u n d , t he i nv e s t m e nt i n t h e e x c e s s s t oc k ha s t o b e tr e at e d a s b us i n e s s i n c om e an d t he r e a f t e r ha s r e fe r r e d t o t he d e c i s i o n of t h e T r i b u na l i n c a se o f F a s hi o n F a s hi o n W o r l d V s . A C I T (I T A p pe a l N o . 16 3 4 ( A h d . ) o f 20 0 6 , d t . 12 / 02 / 20 1 0 ) w h e r e i n t he Tr i b u n a l h a d ob s e r v e d as und e r : “ 1 1 . Bu t t h i s d o e s n o t m e a n t h a t l o s s c o m p u t e d u n d er a n y o f t h e f i v e h e a d s m e n t i o n e d i n s e c t i o n 1 4 – ( i ) ‘ s al a r y ’ , ( i i ) ‘ i n c o m e f r o m h o u s e p r o p e r t y ’ , ( i i i ) ‘ p r o f i t s a n d g ai n s f r o m b u s i n e s s o r p ro f e s s i o n ’ , ( i v ) ‘ a d j u s t e d a g a i n s t u ne x p l a i n e d i n v e s t m e n t o r e x p e n d i t u r e . W h a t i s n e c e s s a r y a s p e r H o n . G u j a r a t H i g h C o u r t i s t h a t s o u r c e o f a c q u i s i t i o n o f a s s e t o r e x p e n d i t u r e s h o u l d b e c l e a r l y i d e n t i f i a b l e . I n t h e c a s e b e f o r e H o n . G u j a ra t H i g h C o u r t t h e s o u r c e o f g o l d c o n f i s c a t e d w a s n o t i d e n t i f i a b l e a n d h e n c e a d j u s t m en t w a s n o t p e r m i t t e d . ITA 157/CHD/2023 A.Y.2018-19 21 1 2 . T h u s t h e i m p o r t a n t a s p e c t t h a t e m e r g e s f r o m t h e e n t i r e d i s c u s s i o n i s t h a t f o r i n v o k i n g d e e m i n g p r o v i s i o n s u n d e r s e c t i o n s 6 9 , 6 9 A , 6 9 B & 6 9 C t h e r e s h o u l d b e c l e a r l y i d e n t i f i a b l e a s s e t o r e x p e n d i t u r e . I n t h e p r e s e n t ca s e w e f i n d t h a t e n t i r e p h y s i c a l s t o c k o f R s . 2 5 , 1 4 ,3 0 6 / - wa s p a r t o f t h e s a m e b u s i n e s s . B o t h k i n d o f s t o c k i . e . w h a t i s r e c o r d e d i n t h e b o o k s a n d w h a t w a s f o u n d o v e r a n d a b o v e t h e s t o c k r e c o rd e d i n t h e b o o k s , w e r e h e l d a n d d e a l t u n i f o r m ly b y t h e a s s e s s e e . T h e r e w a s n o p h y s i c a l d i s t i n c t i o n b e t w e e n t h e a c c o u n t e d s t o c k o r u n a c c o u n t e d s t o c k . N o s u c h p h y s ic a l d i s t i n c t i o n w a s f o u n d b y t h e R e v e n u e e i t h e r . T h e a ss e s s e e h a s r e p e a t e d l y c l a i m e d t h a t u n a c c o u n t e d b u s i n e s s i nc o m e i s i n v e s t e d i n s t o c k a n d t h e r e i s n o a m o u n t s e p a r a t e l y t a x a b l e u n d e r s e c t i o n 6 9 . T h e d e p a r t m e n t h a s i g n o r e d t h i s cl a i m o f t h e a s s e s s e e a n d s o u g h t t o t a x t h e d i f f e r e n c e b e t w ee n b o o k - s t o c k a n d p h y s i c a l - s t o c k a s u n a c c o u n t e d i n v e s t m e n t u n d e r s e c t i o n 6 9 w i t h o u t c o n s i d e r i n g t h e c l a i m o f t h e a s se s s e e t h a t f i r s t t h e b u s i n e s s r e c e i p t h a s t o b e c o n s i d e r ed a n d t h e n i n v e s t m e n t s h o u l d b e t r e a t e d a s c o m i n g o u t o f s u c h u n a c c o u n t e d i n c o m e . T h e d i f f e r e n c e i n s t o c k s o w o r ke d o u t b y t h e a u t h o r i t i e s b e l o w h a d n o i n d e p e n d e n t i d e n t i ty o f i t s o w n a n d i t i s p a r t a n d p a r c e l o f e n t i r e l o t o f s t o ck . T h e d i f f e r e n c e b e t w e e n d e c l a r e d s t o c k i n t h e b o o k s a n d w h a t i s p h y s i c a l l y f o u n d w o u l d o n l y b e a m a t h e m a t i c a l e x p r es s i o n i n t e r m s o f v a l u e a n d n o t a s e p a r a t e i n d e p e n d e n t i d e n t i f i a b l e a s s e t . T h e r e f o r e , i t c a n n o t b e s a i d t ha t t h e r e i s a n u n d i s c l o s e d a s s e t e x i s t e d i n d e p e n d e n t l y . O n c e t hi s i s s o t h e n w h a t i s n o t d e c l a r e d t o t h e d e p a r t m e n t i s r e c ei p t f r o m b u s i n e s s a n d n o t a n y i n v e s t m e n t a s i t c a n n o t b e c o -r e l a t e d w i t h a n y sp e c i f i c a s s e t . 1 3 . T h u s i n a c a s e w h e r e s o u r c e o f i n v e s t m e n t / e x p e nd i t u r e i s c l e a r l y i d e n t i f i a b l e a n d a l l e g e d u n d i s c l o s e d a s se t h a s n o i n d e p e n d e n t e x i s t e n c e o f i t s o w n o r t h e r e i s n o s e pa r a t e p h y s i c a l i d e n t i t y o f s u c h i n v e s t m e n t / e x p e n d i t u r e t he n f i r s t w h a t i s t o b e t a x e d i s t h e u n d i s c l o s e d b u s i n e s s r e ce i p t i n v e s t e d i n u n i d e n t i f i a b l e u n a c c o u n t e d a s s e t a n d o nl y o n f a i l u r e i t s h o u l d b e c o n s i d e r e d t o b e t a x e d u n d e r se c t i o n 6 9 o n t h e p r e m i s e s t h a t s u c h e x c e s s i n v e s t m e n t i s n o t r e c o r d e d i n t h e b o o k s o f a c c o u n t a n d i t s n a t u r e a n d s o u r c e is n o t i d e n t i f i a b l e . O n c e s u c h e x c e s s i n v e s t m e n t i s t a x e d a s u n d e c l a r e d b u s i n e s s r e c e i p t t h e n t a x i n g i t f u r t h e r a s d e e m e d i n c o m e u n d e r s e c t i o n 6 9 w o u l d n o t b e n e c e s s ar y . T h e r e f o r e , t h e f i r s t a t t e m p t o f t h e a s s e s s i n g a u t h or i t y s h o u ld b e t o f i n d o u t l i n k o f u n d e c l a r e d i n v e s t m e n t / e x p e n d i t u r e w i t h t h e k n o w n h e a d , g i v e o p p o r t u n i t y t o t h e a s s e s s e e t o e s t a b l i s h n e x u s a n d i f i t i s s a t i s f a c t o r i l y e s t a b l i s h e d t h e n f i r s t s u c h i n v e s t m en t s h o u l d b e c o n s i d e r e d a s u n d e c l a r e d r e c e i p t u n d e r t h a t p a r ti c u l a r h e a d . I t i s o n l y w h e r e n o n e x u s i s e s t a b l i s h e d w i t h a n y h e a d t h e n i t s h o u l d b e c o n s i d e r e d a s d e e m e d i n c o m e u n d e r s e c t i o n 6 9 , 6 9 A , 6 9 B & 6 9 C a s t h e c a s e m a y b e . I t is b e c a u s e w h e n a s s e s s e e f a i l s t o e x p l a i n s a t i s f a c t o r il y t h e ITA 157/CHD/2023 A.Y.2018-19 22 s o u r c e o f s u c h i n v e s t m e n t t h e n i t s h o u l d b e t a x e d un d e r s e c t i o n 6 9 , 6 9 A , 6 9 B & 6 9 C a s t h e c a s e m a y b e . I t sh o u l d n o t b e d o n e a t t h e f i r s t i n s t a n c e w i t h o u t g i v i n g o pp o r t u n i t y t o t h e a s s e s s e e t o e s t a b l i s h n e x u s . T h e r e f o r e , t h e re i s n o c o n f l i c t w i t h t h e d e c i s i o n o f H o n . G u j a ra t H i g h C o ur t i n t h e c a s e o f F a k i r M o h m e d H a j i H a s a n ( s u p r a ) w h e r e i n v e s t m e n t i n a n a s s e t o r e x p e n d i t u r e i s n o t i d e n t if i a b l e a n d n o n e x u s w a s e s t a b l i s h e d t h e n w i t h a n y h e a d o f i n c o m e a n d t h u s w a s n o t a v a i l a b l e f o r s e t o f f a g a i n s t a n y l o s s u n d e r a n y o t h e r h e a d . T h e r e f o r e , w e h o l d th a t w h e r e a s s e t i n w h i c h u n d e c l a r e d i n v e s t m e n t i s s o u g h t t o b e t a x ed i s n o t c l e a r l y i d e n t i f i a b l e o r d o e s n o t h a v e i n d e p e n d e n t id e n t i t y b u t i s i n t e g r a l a n d in s e p a r a b l e ( m i x e d ) p a r t o f d e cl a r e d a s s e t , f a l l i n g u n d e r a p a r t i c u l a r h e a d , t h e n t h e d if f e r e n c e s h o u ld b e t r e a t e d a s u n d e c l a r e d b u s in e s s i n c o m e e x pl a in i n g t h e i n v e s t m e n t . 1 4 . T o c o n c l u d e s u m o f R s . 8 , 1 0 ,0 1 1 / - b e i n g d i f f e r e nc e i n s t o c k i s r e p r e s e n t e d b y u n d e c l a r e d b u s i n e s s i n c o m e . I t d o e s n o t h a v e a s e p a r a t e p h y s i c a l i d e n t i t y . I t i s t o b e o n l y t a x e d u n d e r t h e h e a d ‘ b u si n e s s ’ . O t h e r a s s e t s h a v e s e p a rat e p h y s i c a l i d e n t i t y b e i n g f u r n i t u r e a n d f i x t u r e s , a i r c o n d i t i o n e r s e t c . T h e y c a n n o t h a v e a d i r e c t n e x u s wi t h b u s i n e s s a n d t h e r e f o r e i n v e s t m e n t t h e r e i n h a s t o b e c o n s i d e r e d u n d e r s e c t i o n 6 9 o n l y . ” 1 5 . I n v i e w o f t h e a b o v e , A O i s d i r e c t e d t o c o n s i d er t h e s u m o f R s . 8 , 1 0 , 0 1 1 / - a s u n d i s c l o s e d b u s i n e s s i n c o m e a s se s s a b l e u n d e r t h e h e a d ‘ b u s i n e s s ’ a n d o t h e r t w o s u m s u n d e r s e c t i o n 6 9 . T h e b u s i n e s s i n c o m e in c l u d i n g a p p l i c a t i o n o f s ec t i o n 4 0 (b ) h a s t o b e c o n s i d e r e d a c c o r d i n g l y . F o r c a l c u l at i o n o f i n c o m e i n v i e w o f o u r a b o v e o b s e r v a t i o n s , w e r e s t o re t h e m a t t e r t o t h e f i l e o f A O . 23 . I n t he i n s t a nt c a s e as w e l l , w e fi n d t ha t t h e di ff e r e n c e i n s t oc k s o f ou nd o ut b y t h e au t ho r i t i e s ha s n o i n de p en d e nt i d e n t i t y an d i s p a r t an d p a r c e l of e n ti r e s t oc k , t h e r e f or e , i t c a nn ot b e s ai d t h a t t he r e i s an u nd i s c l o s e d as s e t w hi c h e x i s te d in d e pe n de n t l y an d t hu s , w h a t i s n ot de c l a r e d t o t h e d e pa r t m e n t is r e c e i p t f r o m b u s i ne s s a n d n o t a ny i n v e s t m e n t a s i t c a n no t b e c o - r e l at e d w i t h a ny s p e c i f i c a s s e t an d t h e di f f e r e nc e s h o ul d t h u s be t r e a t e d a s u nd e c l ar e d b us in e s s in c o m e . 24 . F o l lo w i ng t h e s ai d d e c i s i on of t he C o o r d i n a t e Ah m e da b ad B e n c h , th e J ai p ur B e n c h i n c as e o f D C I T Vs . S hr i R am N a r a y a n B i r l a ( Su p r a ) ha s t a k e n a s i m i l a r v i e w h ol d i ng t h a t t h e e x c e s s s t oc k s o f o u n d d u r i n g th e c o u r s e o f s u r v e y w a s p a r t of t h e s t o c k an d t h e R e v e n u e ha s n ot p o i n t e d o ut t h e e x c e s s s t ock h as an y ne x u s w i th a ny ot h e r r e c e i pt s ot h e r t h an t h e b u s i n es s b e in g c a r r ie d o n b y t he as s e s s e e . T h e r e l e v an t f i n di n gs ar e c o nt a i ne d at p a r a 4 . 3 w h i c h r e a d a s u n de r : ITA 157/CHD/2023 A.Y.2018-19 23 “ 4 . 3 . W e h a v e h e a r d r i v a l c o n t e n t i o n s a n d p e r u s e d th e m a t e r i a l a v a i l a b l e o n r e c o rd . U n d i s p u t e d f a c t s e m e rg e d f r o m t h e r e c o rd t h a t a t t h e t i m e o f s u r v e y e x c e s s st o c k w a s f o u n d . I t i s a l s o n o t d i s p u t e d t h a t t h e a s s e s s e e i s e n g a g e d i n t h e b u s i n e s s o f j e w e l l e r y . D u r i n g t h e c o u r s e o f s u r v e y e x c e s s s t o c k v a l u i n g R s . 7 7 , 6 6 ,8 8 7 / - w a s f o u n d i n re s p e c t o f g o l d a n d s i l v e r j e w e l l e r y . T h e C o o r d i n a t e B e n c h i n t h e c a s e o f C h o k s h i H i r a l a l M a g a n l a l v s . D C I T , 1 3 1 T T J ( A h d . ) 1 h a s h e l d t h a t i n a c a s e s w h e r e s o u r c e o f i n v e s t m e n t / e x p e n d i t u r e i s c l e a r l y i d e n t i f i a b l e a n d a l l e g e d u n d i s c l o s e d a s s e t h a s n o i n d e p e n d e n t e x i s t e n c e o f it s o w n o r t h e r e i s n o s e p a r a t e p h y s i c a l i d e n t i t y o f s u c h i n v e s t m e n t / e x p e n d i t u r e t h e n f i r s t w h a t i s t o b e t a xe d i s t h e u n d i s c l o s e d b u s i n e s s r e c e i p t i n v e s t e d i n u n i d e n t i f ia b l e u n a c c o u n t e d a s s e t a n d o n l y o n f a i l u r e i t s h o u l d b e c o n s i d e r e d t o b e t a x e d u n d e r s e c t i o n 6 9 o n t h e p r e mi s e s t h a t s u c h e x c e s s i n v e st m e n t i s n o t r e c o r d e d i n t h e b o o k s o f a c c o u n t a n d i t s n a t u r e a n d so u r c e i s n o t i d e n t i f i a bl e . O n c e s u c h e x c e s s i n v e s t m e n t i s t a x e d a s u n d e c l a r e d b u s i ne s s r e c e i p t t h e n t a x i n g i t f u r t h e r a s d e e m e d i n c o m e u n de r s e c t i o n 6 9 w o u l d n o t b e n e c e s s a r y . T h e r e f o r e , t h e fi r s t a t t e m p t o f t h e a s s e s s i n g a u th o r i t y s h o u l d b e t o f i nd o u t l i n k o f u n d e c l a r e d i n v e s t m e n t / e x p e n d i t u r e w i t h t h e k n o w n h e a d , g i v e o p p o r t u n i t y t o t h e a s s e s s e e t o e s t a b l i s h n e x u s a n d i f i t i s s a t i s f a c t o r i l y e s t a b l i s h e d t h e n f i r s t s u c h i n v e s t m e n t s h o u l d b e c o n s i d e r e d a s u n d e c l a r e d r e c e ip t u n d e r t h a t p a r t i c u l a r h e a d . I t i s o b s e r v e d t h a t t h er e i s n o c o n f l i c t w i t h t h e d e c i s i o n o f H o n ’b l e G u j a r a t H i g h C o u r t i n t h e c a s e o f F a k i r M o h d . H a j i H a s a n ( s u p r a ) w h e r e i n v e s t m e n t i n a n a s s e t o r e x p e n d i t u r e i s n o t i d e n t if i a b l e a n d n o n e x u s w a s e s t a b l i s h e d t h e n w i t h a n y h e a d o f i n c o m e a n d t h u s w a s n o t a v a i l a b l e f o r s e t o f f a g a i n s t a n y l o s s u n d e r a n y o t h e r h e a d . T h e r e f o r e , t h e H o n ’b l e C o o r d in a t e B e n c h h e l d t h a t w h e r e a s s e t i n w h i c h u n d e c l a r e d i n d e p e n d e n t i d e n t i t y b u t i s i n t e g r a l a n d i n s e p a r a b le ( m i x e d ) p a r t o f d e c l a r e d a s s e t , f a l l i n g u n d e r a p a rt i c u l a r h e a d , t h e n t h e d i f f e r e n c e sh o u l d b e t r e a t e d a s u n d ec l a r e d b u s i n e s s i n c o m e e x p l a i n i n g t h e i n v e s t m e n t . I n t h e pr e s e n t c a s e t h e e x c e s s s t o c k w a s p a r t o f t h e s t o c k . T h e r ev e n u e h a s n o t p o i n t e d o u t t h a t t h e e x c e s s s t o c k h a s a n y ne x u s w i t h a n y o th e r r e c e i p t s . T h e r e f o r e , w e d o n o t f i n d a n y f a u l t w i t h t h e d e c i s i o n o f t h e l d . C I T ( A ) d i r e c t i ng t h e A O t o t r e a t t h e s u r r e n d e r e d a m o u n t a s e x c e s s s t o c k q u a t h e e x c e s s s t o c k f o u n d . ” 25 . Th e r e a f te r , t h e C o or d i n a t e J a i p ur B e nc h e s i n c as e o f B a j ar g a n T r a de r s V s . A C I T ( S u p r a ) h as s i m i l a r l y he l d as un d e r : “ 2 . 1 0 . W e h a v e h e a r d t h e r i v a l c o n t e n t i o n s a n d p e rus e d t h e m a t e r i a l a v a i l a b le o n r e c o r d . D u r i n g t h e c o u r s e o f s u r v e y , t h e a s s e s s e e h a s s u r r e n d e r e d a n a m o u n t o f Rs . 7 0 , 0 4 ,8 1 4 / - t o w a r d s i n v e s t m e n t i n s t o c k o f r i c e w h ic h h a d n o t b e e n r e c o rd e d i n t h e b o o k s o f a c c o u n t s . S u b s e q ue n t l y , ITA 157/CHD/2023 A.Y.2018-19 24 i n t h e b o o k s o f a c c o u n t s , t h e a s s e s s e e h a s i n c o r p o ra t e d t h i s t r a n s a c t i o n b y d e b i t i n g t h e p u r c h a se a c c o u n t an d c r e d i t i n g t h e i n c o m e f r o m u n d i s c l o s e d so u r c e s . I n th e a n n u a l a c c o u n t s , t h e p u r c h a s e s o f R s . 7 0 , 0 4 ,8 1 4 / - w er e f i n a l l y r e f l e c t e d a s p a r t o f t o t a l p u r c h a s e s a m o u n ti n g t o R s . 3 3 ,4 7 , 1 9 ,6 5 8 / - i n t h e p ro f i t a n d l o s s a c c o u n t an d t h e s a m e a l s o f o u n d i n c l u d e d a s p a r t o f t h e c l o s i n g s t oc k a m o u n t t o R s . 1 , 9 4 , 4 2 ,5 6 9 / - i n t h e p r o f i t / l o s s a c c o un t s i n c e t h e s a i d s t o c k o f r i c e w a s n o t so l d o u t . I n a d d i t i on t o t h e p u r c h a s e a n d t h e c l o s i n g s t o c k , t h e a m o u n t o f R S . 7 0 , 0 4 ,8 1 4 / - a l s o f o u n d c r e d i t e d i n t h e p r o f i t a n d lo s s a c c o u n t a s i n c o m e f r o m u n d i s c l o s e d so u r c e s. T h e n e t e f f e c t o f t h i s d o u b l e e n t r y a c c o u n t i n g t r e a t m e n t i s t h a t fi r s t l y t h e u n r e c o r d e d s t o c k o f r i c e h a s b e e n b ro u g h t o n t h e b oo k s a n d n o w f o rm s p a r t o f t h e r e c o r d e d s t o c k w h i c h c a n b e s u b s e q u e n t l y s o l d o u t a n d t h e p r o f i t / l o s s t h e r e f r o m w o u l d b e s u b j e c t t o t a x a s a n y o t h e r n o r m a l b u s i n e s s t r a ns a c t i o n . S e c o n d l y , t h e u n r e c o r d e d i n v e s t m e n t w h i c h h a s g o n e i n p u r c h a s e o f s u c h u n r e c o r d e d s t o c k o f r i c e h a s b e e n r e c o rd e d i n t h e b o o k s o f a c c o u n t s a n d o f f e r e d t o t ax b y c r e d i t i n g t h e s a i d a m o u n t i n t h e p r o f i t a n d l o s s a cc o u n t . H a d t h i s i n v e s t m e n t b e e n m a d e o u t o f k n o w n s o u r c e , t h e r e w a s n o n e c e s s i t y f o r a s s e s s e e t o c r e d i t t h e p ro f i t /l o s s a c c o u n t a n d o f f e r t h e s a m e t o t a x . A c c o rd i n g l y , w e d o n o t s e e a n y i n f i r m i t y i n a s s e s s e e ' s b r i n g i n g su c h t r a n sa c t i o n i n i t s b o o k s o f a c c o u n t s a n d t h e a c c o u n t i n g t r e a t m e n t t h e r e o f s o a s t o r e g u l a r i s e i t s b o o k s o f a c c o u n t s . I n f a c t , t h e s a m e p ro v i d e s a c r e d i b l e b a s e f o r R e v e n u e t o b r i n g t o t ax s u b s e q u e n t p ro f i t / l o s s o n s a l e o f s u c h s t o c k o f r i ce i n f u t u r e . 2 . 1 1 . H a v i n g s a i d t h a t , t h e n e x t i s s u e t h a t a r i s e s f o r c o n s i d e r a t i o n i s w h e t h e r t h e a m o u n t su r r e n d e r e d b y w a y o f i n v e s t m e n t i n t h e u n r e c o r d e d s t o c k o f r i c e h a s t o be b ro u g h t t o t a x u n d e r t h e h e a d " b u s i n e s s i n c o m e " o r " i n c o m e f r o m o t h e r s o u r c e s " . I n t h e p r e s e n t c a s e , th e a s s e s s e e i s d e a l i n g i n sa l e o f f o o d g r a i n s , r i c e a n d o i l s e e d s , a n d t h e e x c e s s s t o c k w h i c h h a s b e e n f o u n d d ur i n g t h e c o u r s e o f s u r v e y i s s t o c k o f r i c e . T h e r e f o r e , th e i n v e s t m e n t i n p r o c u r e m e n t o f s u c h s t o c k o f r i c e i s c l e a r l y i d e n t i f i a b l e a n d r e l a t e d t o t h e r e g u l a r b u si n e s s s to c k o f t h e a s s e s s e e . T h e d e c i s i o n o f t h e C o -o r d i n a t e B e n c h i n c a s e o f S h r i R a m n a r a y a n B i r l a (s u p r a ) su p p o r t s t h e c a s e o f t h e a s s e s s e e i n t h i s r e g a r d . T h e r e f o r e , t h e i n v es t m e n t i n t h e e x c e s s s t o c k h a s t o b e b r o u g h t t o t a x u n d e r t h e h e a d " b u s i n e s s i n c o m e " a n d n o t u n d e r t h e h e a d i n c o m e f r om o t h e r s o u r c e s " . I n t h e r e s u l t , g r o u n d N o . 1 o f t h e a s s e s s e e i s a l l o w e d . ” 26 . Th e s ai d d e c i s i on o f C o o r di n a te J ai p u r B e n c he s h as s i n c e be e n c o nf i r m e d by t he H o n’ b le R aj a s t h a n H i gh C o u r t i n c a s e o f P C I T v s B aj a r g a n T r a de r s (D B A p p e a l N o . 2 5 8/ 2 01 7 d t. 12 / 09 / 20 1 7 ) . ITA 157/CHD/2023 A.Y.2018-19 25 27 . S i m i l ar l y , t h e C o o r d i na t e C h a nd i g ar h B e n c he s i n c a s e o f M / s G a u r i s h S t e e l s P v t . L t d. Vs . A C I T (S u p r a ) h a s he l d as un de r : “ 1 0 . W e h a v e h e a r d t h e r i v a l c o n t e n t i o n s a n d p e r u s ed t h e m a t e r i a l a v a i l a b l e o n r e c o r d . T h i s i s a f a c t o n r e co r d t h a t t h e a s s e s s e e s u r r e n d e r e d a n a m o u n t o f R s . 7 0 l a c s a s a d di t i o n a l i n c o m e d u r i n g t h e c o u r s e o f s u r v e y c o n d u c t e d a t i t s p r e m i s e s o n a c c o u n t o f f o l l o w i n g h e a d s : ( i ) D i s c r e p a n c y o n a c c o u n t o f c a s h f o u n d R s . 9 l a c s ( i i ) D i s c r e p a n c y o n c o s t o f c o n s t r u c t i o n o f b u i l d i n g R s . 2 1 l a c s ( i i i ) D i s c r e p a n c y i n s t o c k R s . 1 0 l a c s ( i v ) D i s c r e p a n c y i n a d v a n c e s a n d r e c e i v a b l e R s . 3 0 l a c s 1 1 . T h e s e f a c t s h a v e n o t b e e n d i s p u t e d b y a n y o n e at a n y s t a g e . T h e o n l y i s s u e t o b e c o n s i d e r e d b y u s i s w h et h e r t h e i n c o m e o f R s . 7 0 l a c s s u r r e n d e r e d i s t o b e t a x a b l e as b u s i n e s s i n c o m e o r i n c o m e f r o m o t h e r s o u r c e s o r a s d e e m e d i nc o m e u n d e r s e c t i o n s 6 9 A, 6 9 B a n d 6 9 C o f t h e A c t a s h e l d b y t h e A s s e s s i n g O f f i c e r . A n u m b e r o f j u d i c i a l p r o n o u n c e m en t s h a v e b e e n c i t e d d u r i n g t h e c o u r s e o f h e a r i n g , h o w e v e r , we h a v e t o b o w d o w n t o t h e p r o p o s i t i o n l a i d d o w n b y t h e J u r i s di c t i o n a l P u n j a b & H a r y a n a H i g h C o u r t i n t h e c a s e o f M / s K i m P h a r m a P v t . L t d . ( s u p r a ) s i n c e t h i s i s t h e o n l y j u d g m e n t o f t h e J u r i s d i c t i o n a l H i g h C o u r t w h i c h w e r e b r o u g h t t o o u r n o t i c e . 1 2 . O n p e r u s a l o f t h e s a i d j u d g m e n t , w e f i n d o u r s e lv e s i n a g r e e m e n t w i t h t h e s u b m i s s i o n o f t h e l e a r n e d c o u n s el f o r t h e a s s e s s e e , t h a t t h e o n l y i s s u e i n t h a t c a s e w a s t h e t a x a b i l i t y o f c a s h s u r r e n d e r e d d u r i n g t h e c o u r s e o f s u r v e y , a s t he a s s e s s e e h a d a l s o s u r r e n d e r e d i n c o m e o f R s . 1 0 l a c s i n a s s e s sm e n t y e a r 2 0 0 5 - 0 6 o n a c c o u n t o f s u n d r y c r e d i t s , r e p a i r s t o b ui l d i n g a n d a d v a n c e s t o s t a f f , w h i c h b e i n g r e l a t a b l e t o b u s i n e ss c a r r i e d o n b y t h e a s s e s s e e w a s a l r e a d y i n c l u d e d a s i n c o m e f r o m b u s i n e s s . 1 3 . I n t h e p r e s e n t c a s e , w e s e e t h a t t h e A s s e s s i n g O f f i c e r h a s n o w h e r e d i s p u t e d t h e b u s i n e s s l o s s e s i n c u r r e d b y t he a s s e s s e e . T h e b o o k s h a v e n o t b e e n r e j e c t e d . I t w a s s t a t e d a t t h e B a r t h a t e v e n a t t h e t i m e o f s u r v e y , i n t h e t r a d i n g a c c o u n t p r e p a r e d b y t h e s u r v e y t e a m , t h e r e w e r e l o s s e s i n c u r r e d b y t h e a s s e s s e e . A l l t h e s e f a c t s h a v e n o t b e e n d i s p u t e d b y t h e A s s e ss i n g O f f i c e r . F u r t h e r , t h e s u r r e n d e r m a d e b y t h e a s s e s s ee w a s o n a c c o u n t o f c a s h f o u n d d u r i n g t h e c o u r s e o f s u r v e y , d i s c r e p a n c y i n t h e c o s t o f c o n s t r u c t i o n o f b u i l d i n g, d i s c r e p a n c y i n s t o c k a n d d i s c r e p a n c y i n a d v a n c e s a nd r e c e i v a b l e s . B y n o s t r e t c h o f i m a g i n a t i o n , a n y o f th e s e i n c o m e s a p a r t f r o m c a s h c a n b e c o n s i d e r e d a s i n c o m e u n d e r a n y h e a d o t h e r t h a t t h e ' b u s i n e s s i n c o m e ' . 1 4 . N o w h e r e i n h i s o r d e r t h e A s s e s s i n g O f f i c e r h a s b e e n a b l e t o b r i n g o n r e c o r d t h e f a c t t h a t t h e i n c o m e s u r r e n de r e d d u r i n g ITA 157/CHD/2023 A.Y.2018-19 26 t h e c o u r s e o f s u r v e y w a s n o t o u t o f t h e b u s i n e s s o f t h e a s s e s s e e . A l s o n o w h e r e h e h a s o b j e c t e d t o t h e h e a d s u n d e r w h i c h t h e a s s e s s e e h a d s u r r e n d e r e d t h e s e a m o u n t s , i. e . c a s h , c o n s t r u c t i o n o f b u i l d i n g , d i s c r e p a n c y i n s t o c k a n d d i s c r e p a n c y i n a d v a n c e s a n d r e c e i v a b l e . F u r t h e r , e v e n t h e s u r v ey t e a m h a s n o t f o u n d a n y s o u r c e o f i n c o m e e x c e p t t h e b u s i n e s s i n c o m e . N o w , f o l l o w i n g t h e j u d g m e n t o f J u r i s d i c t i o n a l H i g h C o u r t , i n t h e b a c k g r o u n d o f t h e f a c t s o f t h e p r e s e n t c a s e , w e c a n s a f e l y i n f e r t h a t a p a r t f r o m c a s h a l l o t h e r i n c o m e s u r r e n de r e d m a y b e b r o u g h t t o t a x u n d e r t h e h e a d ' b u s i n e s s i n c o m e ' w h i l e t h e c a s h h a s t o b e t a x e d u n d e r t h e h e a d d e e m e d i n c o m e u n d e r s e c t i o n 6 9 A o f t h e A c t . ” 28 . S i m i l ar l y , t h e C o o r d i na t e C h an d i ga r h B e n c h i n ca s e o f F am i na K n it F a bs V s . A C I T (S u pr a ) ha s h e l d a s u n d e r : “ 1 9 . I n t h e f a c t s o f t h e c a s e i n I T A N o . 4 0 8 / C h d / 2 0 18 , t h e i n c o m e s u r r e n d e r e d w a s o n a c c o u n t o f u n a c c o u n t e d r e c e i v a b l e s o f t h e b u s i n e s s o f t h e a s s e s s e e a m o u n t in g t o R s . 1 . 2 5 c r o r e s . T h e L d . C I T ( A ) i n p a r a 9 o f t h e o r d er h a s o u t l i n e d t h e f a c t s r e l a t i n g t o t h e s u r r e n d e r m a d e by t h e a s s e s s e e s t a t i n g t h a t d u r i n g s u r v e y a p o c k e t d i a r y w a s f o u n d f r o m t h e a c c o u n t s e c t i o n o f t h e a s s e s s e e c o m p a n y w hi c h c o n t a i n e d e n t r y o f r e c e i v a b l e s a m o u n t i n g t o R s . 1 . 2 5 c r o r e s o n p a g e s 2 7 , 2 8 , 3 1 a n d 3 3 , w h i c h w e r e n o t r e c o r d e d i n t h e r e g u l a r b o o k s o f t h e a s s e s s e e a n d w e r e s u b s e q u e n t l y s u r r e n d e r e d s t a t i n g t h a t t h e s e e n t r i e s w e r e u n a c c o un t e d s u n d r y r e c e i v a b l e s b e i n g s u r r e n d e r e d a s i n c o m e u n d er t h e h e a d b u s i n e s s , t o b u y p i e c e o f m i n d a n d s u b j e c t e d to n o p e n a l t y a n d f u r t h e r t h a t t h e l o s s e s i n c u r r e d b y t h e a s s e s s e e i n t h e i m p u g n e d y e a r w i l l b e a d j u s t e d a g a i n s t t h i s s u rr e n d e r e d i n c o m e . T h e r e l e v a n t f a c t s a s s t a t e d b y t h e C I T ( A ) i n p a r a 9 o f h i s o r d e r a n d w h i c h a r e n o t d i s p u t e d , a r e r e p r o d u c ed h e r e u n d e r : “ 9 . A d v e r t i n g n o w t o t h e f a c t s o f t h e i n s t a n t c a s e , i t i s s e e n t h a t w h e n s u r v e y p r o c e e d i n g s w e r e c o n d u c t e d a t t h e b u s i n e s s p r e m i s e s o f t h e a p p e l l a n t c o m p a n y , a p o c k e t d i a r y wa s f o u n d f r o m t h e a c c o u n t s s e c t i o n w h i c h c o n t a i n e d e n t r i e s of r e c e i v a b l e s a m o u n t i n g t o R s . 1 . 2 5 c r o r e s o n p a g e n o s. 2 7 , 2 8 , 3 1 a n d 3 3 , w h i c h w e r e n o t r e c o r d e d i n t h e r e g u l a r bo o k s o f a c c o u n t s . W h e n t h e s e e n t r i e s w e r e c o n f r o n t e d t o t h e a p p e l l a n t c o m p a n y w h i l e r e c o r d i n g t h e s t a t e m e n t o n 1 5 / 0 9 / 2 0 1 2, i t w a s s t a t e d : " t h a t t h e s e e n t r i e s a r e s u n d r y r e c e i v a b l e s w h i c h h a s n o t b e e n a c c o u n t e d f o r i n t h e b o o k s o f a c c o u n t s a n d i n o r d e r t o b u y p e a c e o f m i n d , t h e s a m e i s s u r r e n d e r e d a s i nc o m e u n d e r t h e h e a d b u s i n e s s f o r F . Y . 2 0 1 2 - 1 3 r e l e v a n t t o a s s t t. Y e a r 2 0 1 3 - 1 4 s u b j e c t t o n o p e n a l t y a n d p r o s e c u t i o n u n d e r t h e I . T . A c t , 1 9 6 1 . S i n c e t h e c o m p a n y i s i n c u r r i n g l o s s e s i n c u r r e n t F . Y . 2 0 1 2 - 1 3 , t h e s u r r e n d e r e d i n c o m e w i l l b e a d j u s t ed a g a i n s t t h e s e l o s s e s . " [ E x t r a c t e d f r o m t h e i m p u g n e d a s s e s s me n t o r d e r ; p a g e s 5 & 6 ] . ” 2 0 . C l e a r l y , i t i s e v i d e n t f r o m t h e a b o v e t h a t t h e s u r r e n d e r w a s o n a c c o u n t o f d e b t o r s / r e c e i v a b l e s r e l a t i n g t o th e b u s i n e s s o f t h e a s s e s s e e o n l y . T h e R e v e n u e h a s a c c e p t e d t h e s u r r e n d e r a s s u c h , a s b e i n g o n a c c o u n t o f r e c e i v a b l e s . I t f o ll o w s t h a t t h e d e b t o r s w e r e g e n e r a t e d f r o m t h e s a l e s m a d e b y t h e as s e s s e e d u r i n g t h e c o u r s e o f c a r r y i n g o n t h e b u s i n e s s o f t he a s s e s s e e , w h i c h w a s n o t r e c o r d e d i n t h e b o o k s o f t h e a s s e s s e e. T h o u g h ITA 157/CHD/2023 A.Y.2018-19 27 t h e s a i d i n c o m e w a s n o t r e c o r d e d i n t h e b o o k s o f t he a s s e s s e e b u t t h e s o u r c e o f t h e s a m e s t o o d d u l y e x p l a i n e d b y t h e a s s e s s e e a s b e i n g f r o m t h e b u s i n e s s o f t h e a s s e s s e e. E v e n o t h e r w i s e n o o t h e r s o u r c e o f i n c o m e o f t h e a s s e s s e e i s t h e r e o n r e c o r d e i t h e r d i s c l o s e d b y t h e a s s e s s e e o r u n e a r t h ed b y t h e R e v e n u e . T h e p r e p o n d e r a n c e o f p r o b a b i l i t y t h e r e f o r e i s t h a t t h e d e b t o r s w e r e s o u r c e d f r o m t h e b u s i n e s s o f t h e as s e s s e e . T h e r e f o r e , t h e r e i s n o q u e s t i o n o f t r e a t i n g i t a s de e m e d i n c o m e f r o m u n d i s c l o s e d s o u r c e s u / s 6 9 , 6 9 A , 6 9 B a n d 6 9 C of t h e A c t a n d t h e s a m e i s h e l d t o b e i n t h e n a t u r e o f B u s i n e ss I n c o m e o f t h e a s s e s s e e . H a v i n g h e l d s o , t h e s a m e w a s a s s e s s a bl e u n d e r t h e h e a d ‘ b u s i n e s s a n d p r o f e s s i o n ’ a n d a s s t a t e d a bo v e , t h e b e n e f i t o f s e t o f f o f l o s s e s b o t h c u r r e n t a n d b r o u gh t f o r w a r d w a s a l l o w a b l e t o t h e a s s e s s e e i n a c c o r d a n c e w i t h l aw . 2 1 . T h e c o n t e n t i o n o f t h e R e v e n u e t h e r e f o r e t h a t t he i n c o m e b e t r e a t e d a s d e e m e d i n c o m e u / s 6 9 , 6 9 A / B / C o f t h e A c t i s a c c o r d i n g l y r e j e c t e d a n d a s a c o n s e q u e n c e t h e r e t o th e p l e a t h a t n o s e t o f f o f l o s s e s b e a l l o w e d a g a i n s t t h e s am e u / s 1 1 5 B B E o f t h e A c t a l s o i s r e j e c t e d . 2 2 . T h e r e f o r e , a s p e r t h e f a c t s o f t h e c a s e i n I T A N o . 4 0 8 / C h d / 2 0 1 8 a n d a s p e r t h e p r o v i s i o n s o f l a w r el a t i n g t o t h e i s s u e , t h e s u r r e n d e r e d i n c o m e , w e h o l d , w a s a s se s s a b l e a s b u s i n e s s i n c o m e o f t h e a s s e s s e e a n d s e t o f f o f l o s se s w a s t o b e a l l o w e d a g a i n s t t h e s a m e a s r i g h t l y c l a i m e d b y t h e a s s e s s e e . T h e a p p e a l o f t h e R e v e n u e , t h e r e f o r e , i n I T A N o . 4 0 8/ C h d / 2 0 1 8 i s d i s m i s s e d . 2 3 . N o w c o m i n g t o t h e f a c t s o f t h e c a s e i n I T A N o / 1 4 9 4 / C h d / 2 0 1 7 , t h e i n c o m e s u r r e n d e r e d w a s o n a c co u n t o f t h e f o l l o w i n g a s n a r r a t e d a b o v e i n e a r l i e r p a r t o f o u r o r d e r : ( i ) i n v e s t m e n t o f R s . 6 0 l a c s i n K o t h i a t S u k h m a n i E n c l a v e i n t h e n a m e o f S m t . R e k h a M i g l a n i ; ( i i ) S u n d r y c r e d i t o r s a n d a d v a n c e s r e c e i v e d f r o m c us t o m e r s a m o u n t i n g t o R s . 1 3 2 l a c s ; ( i i i ) G r o s s p r o f i t o n s a l e o u t o f b o o k s a m o u n t i n g to R s . 1 9 8 l a c s a n d ; ( i v ) s u r r e n d e r t o c o v e r m i s c e l l a n e o u s d i s c r e p a n c i e s i n l o o s e p a p e r s e t c . a m o u n t i n g t o R s . 1 0 l a c s . 2 4 . A s f a r a s t h e s u r r e n d e r m a d e o n a c c o u n t o f i n v es t m e n t i n K o t h i o f R s . 6 0 l a c s , n e i t h e r i s t h e s a m e d i s c l o s e d i n t h e b o o k s o f t h e a s s e s s e e n o r s o u r c e o f t h e s a m e d i s c l o s e d . Th e r e f o r e , t h e s a m e i s t o b e a s s e s s e d a s d e e m e d i n c o m e u / s 6 9 o f t h e A c t . T h e s a m e a p p l i e s t o t h e s u r r e n d e r o f R s . 1 0 l a c s m a de t o c o v e r t h e m i s c e l l a n e o u s d i s c r e p a n c i e s i n l o o s e p a p e r o f Rs . 1 0 l a c s . N e i t h e r t h e n a t u r e o f t h e d i s c r e p a n c i e s , n o r a n y s ou r c e r e l a t i n g t o t h e s a m e h a s b e e n d i s c l o s e d a n d , t h e r e fo r e , t h e s a m e i s a l s o t o b e a s s e s s e d a s d e e m e d i n c o m e u / s s 69 , 6 9 A , 6 9 B a n d 6 9 C o f t h e A c t . 2 5 . A s f a r a s t h e s u r r e n d e r o f R s . 1 3 2 l a c s m a d e o n a c c o u n t o f s u n d r y c r e d i t o r s a n d a d v a n c e s r e c e i v e d f r o m c u s t o m er s a n d R s . 1 9 8 l a c s o n a c c o u n t o f g r o s s p r o f i t o n s a l e o u t o f t h e b o o k s , b o t h o f t h e m c l e a r l y a r e i n r e l a t i o n t o t h e b u s i n e s s c a r r i e d o n b y t h e a s s e s s e e a n d a r e t h u s i n t h e n a t ur e o f ITA 157/CHD/2023 A.Y.2018-19 28 b u s i n e s s i n c o m e . T h e r e f o r e , t h e s e t o f f o f b u s i n e s s l o s s e s , b o t h c u r r e n t a n d b r o u g h t f o r w a r d a r e t o b e a l l o w e d a s p er t h e p r o v i s i o n s o f l a w . A s f a r a s t h e i n c o m e s u r r e n d e r e d a n d t o b e a s s e s s e d u / s 6 9 , 6 9 A , 6 9 B a n d 6 9 C o f t h e A c t , a s h el d a b o v e b e f o r e u s , t h e s a m e i s t o b e s u b j e c t e d t o t a x a s p er t h e p r o v i s i o n s o f s e c t i o n 1 1 5 B B E o f t h e A c t . ” 29 . I n t h e i n s t a nt c a s e as w e l l , t h e s ur r e n d e r o n ac c ou n t o f ad v an c e s w e r e r e l a t i ng t o t h e b u s i n e s s b e i ng c a r r i ed o n by t h e as s e s s e e . T he l d C I T ( A ) ha s a l s o r e t u r ne d a f i n di n g t ha t t h e ad v an c e s w e r e a d m i t t e d as be i n g r e l a te d t o b us i ne s s a c ti v i t y o f th e as s e s s e e . W h e r e th e s am e h a s be e n f o un d u n r e c or d e d i n t h e bo ok s o f ac c o u n t s , t he s am e h as t o be b r ou g h t t o t ax u nd e r t h e he a d “ b u s i n e s s i n c o m e ” . 30 . S i m i l ar l y , t he C o or di n at e C h a n d i g a r h B e nc h i n ca s e o f M / s S h am J e w e l l e r s Vs . T he D C I T ( Su pr a ) ha s h e l d a s u nd e r : “ 1 0 . 1 7 G r o u n d N o s . 8 & 9 c h a l l e n g e t h e a c t i o n o f t he l o w e r a u t h o r i t i e s i n a p p l y i n g t h e p r o v i s i o n s o f s e c t i o n 11 5 B B E a n d t h e r e b y c h a r g i n g t a x a t t h e r a t e o f 6 0 % . T h e m a i n th r u s t o f t h e a r g u m e n t s o f t h e L d . A R h a s b e e n t h a t a l l t h e a d d i ti o n s m a d e o r s u s t a i n e d r e l a t e o n l y t o t h e b u s i n e s s i n c o m e o f t h e a s s e s s e e a n d t h a t n o w h e r e i n t h e a s s e s s m e n t o r d e r h a s i t b e en a l l e g e d t h a t s o m e o t h e r s o u r c e o f i n c o m e h a d b e e n d e t e c t e d w h i c h g a v e r i s e t o a d d i t i o n a l i n c o m e . I t i s s e e n t h a t d u ri n g t h e c o u r s e o f a s s e s s m e n t p r o c e e d i n g s , t h e v a r i o u s e x p l an a t i o n s s u b m i t t e d b y t h e a s s e s s e e h a v e d u l y m e n t i o n e d t h a t t h e s u r r e n d e r e d i n c o m e w a s d e r i v e d f r o m t h e b u s i n e s s . A p e r u s a l o f t h e a s s e s s m e n t o r d e r w o u l d a l s o s h o w t h a t n o w h e re i n t h e b o d y o f t h e a s s e s s m e n t o r d e r , t h e A O h a s e v e n c o n t ra d i c t e d t h i s e x p l a n a t i o n o f t h e a s s e s s e e . T h e A O h a s n o t b ro u g h t o n r e c o r d a n y i o t a o f e v i d e n c e t o d e m o n s t r a t e t h a t t h e a s s e s s e e h a d a n y o t h e r s o u r c e o f i n c o m e e x c e p t i n c o m e f r o m bu s i n e s s a n d , t h e r e f o r e , i t i s o u r c o n s i d e r e d v i e w t h a t d e e mi n g s u c h i n c o m e u n d e r t h e p r o v i s i o n s o f s e c t i o n s 6 8 o r 6 9 w ou l d n o t h o l d g o o d . I n o u r v i e w , i n s u c h a s i t u a t i o n , t h e A O c o u l d n o t h a v e l e g a l l y a n d v a l i d l y r e s o r t e d t o t a x i n g t h e i n co m e o f t h e a s s e s s e e a t t h e r a t e o f 6 0 % i n t e r m s o f p r o v i s i o n s o f s e c t i o n 1 1 5 B B E o f t h e A c t . 1 0 . 1 8 T h e H o n ' b l e A n d h r a P r a d e s h H i g h C o u r t i n t h e c a s e o f P r i n c i p a l C o m m i s s i o n e r o f I n c o m e T a x V s . D e c c a n J e we l l e r s L t d . r e p o r t e d i n ( 2 0 2 1 ) 4 3 8 I T R 1 3 1 ( A P ) h e l d t h a t w h e r e t h e a s s e s s e e w a s e n g a g e d i n t h e b u s i n e s s o f G o l d a n d D ia m o n d j e w e l l e r y a n d S i l v e r a r t i c l e s a n d d u r i n g t h e s e a r c h a n d s e i z u r e o p e r a t i o n u / s 1 3 2 , e x c e s s s t o c k w a s f o u n d t o b e d e cl a r e d a n d t h e a s s e s s e e h a d s u b m i t t e d t h a t e x c e s s s t o c k w a s r es u l t o f s u p p r e s s i o n o f p r o f i t f r o m b u s i n e s s o v e r t h e y e a r s a n d t h e s a m e h a d n o t b e e n k e p t i d e n t i f i e d s e p a r a t e l y a n d t he A O h a d d u l y c o n s i d e r e d a n d a c c e p t e d t h e a s s e s s e e ’ s e x p l a n at i o n t h a t i n v e s t m e n t i n e x c e s s s t o c k w a s t o b e t r e a t e d a s b u si n e s s i n c o m e , t h e r e v i s i o n a l p o w e r s i n v o k e d b y t h e P r i n c ip a l C o m m i s s i o n e r u / s 2 6 3 o f t h e A c t w e r e n o t c o r r e c t i n t h e e y e s o f l a w . ITA 157/CHD/2023 A.Y.2018-19 29 1 0 . 1 9 T h e I T A T C h a n d i g a r h B e n c h i n t h e c a s e o f F a m in a K n i t F a b s V s . A C I T r e p o r t e d i n ( 2 0 1 9 ) 1 7 6 I T D 2 4 6 ( C h d - Tr i b ) h a s h e l d t h a t , w h e r e i n d u r i n g t h e c o u r s e o f s u r v e y , a su r r e n d e r w a s m a d e b y t h e a s s e s s e e o n a c c o u n t o f d e b t o r s / r ec e i v a b l e s w h i c h w a s b a s e d o n a d i a r y f o u n d d u r i n g t h e c o u r s e o f s u r v e y a n d t h e R e v e n u e h a d a c c e p t e d t h a t t h e s u r r e n d e r w a s o n a c c o u n t o f r e c e i v a b l e s , i t f o l l o w e d t h a t t h e d e b t o rs w e r e g e n e r a t e d f r o m t h e s a l e s m a d e b y t h e a s s e s s e e d u r i ng t h e c o u r s e o f c a r r y i n g o n t h e b u s i n e s s o f t h e a s s e s s e e w h i c h w a s n o t r e c o r d e d i n t h e b o o k s o f t h e a s s e s s e e . T h e C o o rd i n a t e B e n c h o f t h e I T A T w e n t o n t o f u r t h e r h o l d t h a t t h o ug h t h e s a i d i n c o m e w a s n o t r e c o r d e d i n t h e b o o k s o f t h e a s s e s s ee b u t t h e s o u r c e o f t h e s a m e s t o o d d u l y e x p l a i n e d b y t h e a s s es s e e a s b e i n g f r o m t h e b u s i n e s s o f t h e a s s e s s e e a n d e v e n o th e r w i s e n o o t h e r s o u r c e o f i n c o m e o f t h e a s s e s s e e w a s o n r e c o rd e i t h e r d i s c l o s e d b y t h e a s s e s s e e o r u n e a r t h e d b y t h e R e v e nu e . T h e B e n c h f u r t h e r h e l d t h a t t h e p r e p o n d e r a n c e o f p r o b a bi l i t y , t h e r e f o r e , i s t h a t t h e d e b t o r s w e r e s o u r c e d f r o m t he b u s i n e s s o f t h e a s s e s s e e . T h e r e f o r e , t h e r e w a s n o q u e s t i o n of t r e a t i n g i t a s d e e m e d i n c o m e f r o m u n d i s c l o s e d s o u r c e s u / s 6 9 , 69 A , 6 9 B , o r 6 9 C o f t h e A c t a n d t h e s a m e w a s h e l d t o b e i n t he n a t u r e o f b u s i n e s s i n c o m e o f t h e a s s e s s e e . 1 0 . 2 0 T h u s , a s i n t h e p r e s e n t c a s e , w h e r e t h e s o u r ce o f i n v e s t m e n t o r e x p e n d i t u r e i s c l e a r l y i d e n t i f i a b l e an d t h e a l l e g e d u n d i s c l o s e d a s s e t h a s n o i n d e p e n d e n t e x i s t en c e o f i t s o w n o r t h e r e i s n o s e p a r a t e p h y s i c a l i d e n t i t y o f s uc h i n v e s t m e n t o r e x p e n d i t u r e , t h e n , f i r s t , w h a t i s t o b e t a x e d i s t h e u n d i s c l o s e d b u s i n e s s r e c e i p t i n v e s t e d i n u n i d e nt i f i a b l e u n a c c o u n t e d a s s e t a n d o n l y o n f a i l u r e c a n i t b e c o ns i d e r e d t o b e t a x e d u / s 6 9 o f t h e A c t a n d f u r t h e r w h e r e o n c e su c h i n v e s t m e n t o r e x p e n d i t u r e i s b r o u g h t w i t h i n t h e p u rv i e w o f t a x a s u n d e c l a r e d b u s i n e s s r e c e i p t , t h e n t a x i n g i t f u r th e r a s d e e m e d i n c o m e u / s 6 9 w o u l d b e c o m p l e t e l y o u t o f p l ac e . 1 0 . 2 1 S i m i l a r v i e w w a s t a k e n b y t h e C o o r d i n a t e B e n ch o f I T A T A h m e d a b a d i n t h e c a s e o f C h o k s h i H i r a l a l M a g a n l a l Vs . D C I T r e p o r t e d i n 1 3 1 T T J 1 ( A h d . ) 1 0 . 2 2 I t i s a l s o s e e n t h a t t h e L d . C I T ( A ) h a s r e l i ed o n t h e j u d g e m e n t o f t h e H o n ' b l e P u n j a b & H a r y a n a H i g h C o u rt i n t h e c a s e o f K i m P h a r m a L t d . V s . C I T i n I T A N o . 1 0 6 o f 20 1 1 ( O & M ) a n d t h e L d . C I T D R h a s a l s o q u o t e d t h e s a m e in h i s a r g u m e n t s b e f o r e u s . H o w e v e r , a f t e r g o i n g t h r o u g h th e a f o r e s a i d j u d g e m e n t o f t h e H o n ' b l e P u n j a b & H a r y a n a H i g h C o u r t , i t i s s e e n t h a t i n t h a t p a r t i c u l a r c a s e , t h e o n l y i s s u e w a s w i t h r e g a r d t o t h e c a s h s u r r e n d e r e d a t t h e t i m e o f s u r v e y a n d n o o t h e r i n c o m e . T h e c a s h f o u n d c o u l d n o t b e r el a t e d t o t h e a l r e a d y d i s c l o s e d a n d a c c e p t e d s o u r c e o f i n c o m e o f t h e a s s e s s e e a n d , t h e r e f o r e , t h e H o n ' b l e P u n j a b & H a r y an a H i g h C o u r t h e l d t h a t s u c h s u r r e n d e r e d c a s h w a s t o b e t r ea t e d a s d e e m e d i n c o m e u / s 6 9 o f t h e A c t . H o w e v e r , i n t h e p re s e n t c a s e b e f o r e u s , t h e a s s e s s e e h a s o n l y o n e s o u r c e o f i n c om e i . e . b u s i n e s s i n c o m e a n d n o w h e r e h a s i t b e e n b r o u g h t o n r e c o r d t h a t t h e a s s e s s e e h a d a n y o t h e r s o u r c e o f i n c o m e e xc e p t b u s i n e s s i n c o m e a n d , t h e r e f o r e , w e r e s p e c t f u l l y s t at e t h a t j u d g e m e n t o f t h e H o n ’ b l e P u n j a b a n d H a r y a n a H i g h C ou r t i n t h e c a s e o f K i m P h a r m a P v t . L t d ( s u p r a ) w o u l d n o t ap p l y o n t h e f a c t s o f t h e p r e s e n t c a s e . ITA 157/CHD/2023 A.Y.2018-19 30 1 0 . 2 3 A c c o r d i n g l y , k e e p i n g i n v i e w t h e v a r i o u s j u d ic i a l p r e c e d e n t s a s c i t e d a b o v e a n d r e s p e c t f u l l y f o l l o w i ng t h e s a m e , w e h o l d t h a t t h e A O c o u l d n o t h a v e l e g a l l y i n v o k e d t h e p r o v i s i o n s o f s e c t i o n 1 1 5 B B E o f t h e A c t i n t h e p r e se n t c a s e a n d f u r t h e r t h e L d . C I T ( A ) w a s a l s o n o t l e g a l l y c o rr e c t i n u p h o l d i n g o f t h e a p p l i c a t i o n o f p r o v i s i o n s o f s e c t io n 1 1 5 B B E o f t h e A c t . A c c o r d i n g l y , g r o u n d N o s . 8 a n d 9 a r e a ls o a l l o w e d . ” 31 . N ow , c o m i n g t o t he d e c i s i o n o f K i m P h a rm a ( P ) L t d. V s . C I T [ 2 0 13 ] 35 t ax m an n. c o m 4 56 (P &H ). B r i e f l y t h e f ac ts o f t h e c a s e w e r e t ha t t h e s u r v e y u n de r s e c t i o n 1 33 A w a s c ond u c t e d a t th e b us i ne s s pr e m i s e s o f t h e as s e s s e e a n d d ur i ng t he c ou r s e o f s ur v e y , c as h a m o un t i ng t o R s . 5 , 00 , 0 00 / - w a s f o un d w h i c h w a s s ur r e nd e r e d by t h e as s e s s e e f or A . Y 20 0 6 - 07 a nd an oth e r a m o un t of R s . 1 0 , 0 0 , 0 00 / - w a s s u r r e n de r e d f or A . Y . 2 00 5- 0 6 on ac c o un t of s u nd r y c r e di t s , r e p ai r t o b ui l d i ng an d a dv a nc e s t o s t a f f . Th e m at t e r pe r t a i ni n g t o A . Y 20 0 6 - 07 c a m e up f o r c o ns ide r a t i on be f o r e t he C o o r d i n a t e C h an d i g a r h B e n c he s a n d t a k i n g n o t e o f th e s t a t e m e n t o f t h e G e n e r a l M a n a g e r o f t h e as s e s s ee c o m p an y r e c or d e d d u r i n g t h e c ou r s e o f s u r v e y w h e r e i n he h ad a d m i t t e d th e s a i d c a s h h as be e n ge n e r a t e d o ut o f i nc o m e f r o m o t h e r s ou r c e s a nd i n t h e a b s e nc e o f n a t u r e o f s ou r c e of ca s h b e i ng pr o v e d, i t u ph ol d t he o r de r of t he C I T (A ) in i nc l u di n g t h e ad di t i o na l i n c o m e a s d e e m e d i nc o m e u / s 69 A o f t he Ac t a nd r e l e v a n t f in d in g s r e a d a s u n d e r : “ 9 . I n t h e f a c t s o f t h e p r e s e n t c a s e b e f o r e u s , w e f i n d t h a t u n a c c o u n t e d c a s h w a s f o u n d d u r i n g t h e c o u r s e o f s u rv e y o p e r a t i o n i n t h e p o s s e s s i o n o f t h e a s s e s s e e c o m p a n y a n d t h e s a m e w a s s u r r e n d e r e d a s a d d i t i o n a l i n c o m e f o r t h e ye a r u n d e r a p p e a l . T h e a s s e s s e e h a s f a i l e d t o e x p l a i n t h e n a t ur e a n d s o u r c e o f t h e s a i d c a s h f o u n d w h i c h w a s n o t r e c o r d ed i n t h e b o o k s o f a c c o u n t , t h o u g h w h i l e s u r r e n d e r i n g t h e a d di t i o n a l i n c o m e i t w a s a d m i t t e d b y t h e M a n a g e r o f t h e a s s e s se e c o m p a n y , i n t h e s t a t e m e n t r e c o r d e d d u r i n g t h e c o u r se o f s u r v e y t h a t t h e s a i d a d d i t i o n a l i n c o m e i s i t s i n c o m e f r o m o t h e r s o u r c e s . T h e H o n ' b l e G u j r a t H i g h C o u r t i n F a k i r M o hm e d H a j H u s s a i n V s C I T h a d h e l d a s u n d e r : " T h e s c h e m e o f s e c t i o n s 6 9 , 6 9 A , 6 9 B , a n d 6 9 C o f t he I n c o m e - t a x A c t , 1 9 6 1 , w o u l d s h o w t h a t i n c a s e s w h e re t h e n a t u r e a n d s o u r c e o f a c q u i s i t i o n o f M o n e y , b u l l i o n , e t c . , o w n e d b y t h e a s s e s s e e o r t h e s o u r c e o f e x p e n d i t u r e i n c u r r e d b y t h e a s s e s s e e a r e n o t e x p l a i n e d a t a l l , o r n o t s a t i s f a c t o r i l y e x p l a i n e d , t h e n t h e v a l u e o f s u c h i nv e s t m e n t s a n d m o n e y o r t h e v a l u e o f a r t i c l e s n o t r e c o r d e d i n t h e b o o k s o f a c c o u n t o r t h e u n e x p l a i n e d e x p e n d i t u r e m a y b e d ee m e d t o b e t h e i n c o m e o f s u c h a s s e s s e e . " I n t h e a b s e n c e o f t h e e x p l a n a t i o n / e v i d e n c e r e g a r di n g t h e s o u r c e s o f t h e a d d i t i o n a l i n c o m e b e i n g s a t i s f a c t o r il y e x p l a i n e d b y t h e a s s e s s e e a n d a p p l y i n g t h e r a t i o o f t h e H o n ' bl e G u j r a t H i g h C o u r t i n F a k i r M o h m e d H a j i H a s a n V s . C I T ( s u pr a ) , w e h o l d t h a t t h e a d d i t i o n a l i n c o m e o f f e r e d i s d e e m e d in c o m e ITA 157/CHD/2023 A.Y.2018-19 31 a s s e s s a b l e u / s 6 9 A o f t h e A c t a n d n o d e d u c t i o n i s al l o w a b l e a g a i n s t s u c h d e e m e d i n c o m e a s s e s s e d u / s 6 9 A o f t h e A c t i n t h e h a n d s o f t h e a s s e s s e e . F o l l o w i n g t h e r a t i o l a i d d o wn b y t h e G u j r a t H i g h C o u r t i n F a k i r M o h m e d H a j i H a s a n V s . C IT ( s u p r a ) , o n c e t h e a s s e s s e e h a s f a i l e d t o e x p l a i n t he n a t u r e a n d s o u r c e o f c a s h f o u n d a v a i l a b l e w i t h i t a n d t h e s a m e i s a s s e s s e d a s d e e m e d i n c o m e u / s 6 9 A o f t h e A c t , t h e r e f o r e , t h e c o r r e s p o n d i n g d e d u c t i o n s u n d e r t h e h e a d P r o f i t s a n d g a i n s a r e n o t a v a i l a b l e t o t h e a s s e s s e e . T h e b u s i n e s s l o s s d et e r m i n e d f o r t h e y e a r i s n o t a l l o w e d t o b e s e t o f f a g a i n s t s u c h de e m e d i n c o m e i n c l u d e d i n t h e b o o k s o f a c c o u n t . T h e a l t e r n a t i v e pl e a o f t h e a s s e s s e e o f a s s e s s i n g t h e i n c o m e u n d e r t h e h e a d i n co m e f r o m o t h e r s o u r c e s a n d a l l o w i n g s e t o f f o f l o s s e s u / s 7 1 o f t h e A c t a l s o f a i l i n v i e w o f t h e a b o v e . 9 . T h e l e a r n e d A R f o r t h e a s s e s s e e h a d p l a c e d r e l i an c e i n C I T & A n o t h e r V s . S . K . S r i g i r i & B r o s . ( s u p r a ) f o r t h e pr o p o s i t i o n t h a t e v e n i n c a s e s o f s u r v e y , t h e a d d i t i o n a l i n c o m e s u r r e n d e r e d i s i n c l u d i b l e a s i n c o m e f r o m b u s i n e s s . I n t h e f a c t s o f t h a t c a s e , w e f i n d t h a t t h e T r i b u n a l a f t e r c o n s i d e r i n g t h e r e co r d s a n d s t a t e m e n t g i v e n b y t h e p a r t n e r s o f t h e a s s e s s e e f i rm , o n f a c t s , c a m e t o t h e c o n c l u s i o n t h a t a s s e s s e e h a d r e c e i v e d ad d i t i o n a l i n c o m e f r o m b u s i n e s s o n l y a n d n o t f r o m o t h e r s o u r ce s . T h e s a i d c o n c l u s i o n o f t h e T r i b u n a l w a s u p h e l d b y t h e Ho n ' b l e K a r n a t a k a H i g h C o u r t i n C I T & a n o t h e r v s . S . K . S r i g ir i & B r o s . ( s u p r a ) a n d t h e r e m u n e r a t i o n p a i d t o t h e p a r t n e r s wa s h e l d a l l o w a b l e a g a i n s t t h e a d d i t i o n a l i n c o m e f o r m b u s i n es s . T h e s a i d p r e c e d e n t h a s b e e n t a k e n n o t e o f b y t h e H o n ' b le G u j r a t H i g h C o u r t . 1 0 . I n t h e f a c t s o f t h e p r e s e n t c a s e , w e f i n d t h a t a s s e s s e e d u r i n g t h e c o u r s e o f s u r v e y h a d s u r r e n d e r e d t h e i n co m e a s i n c o m e f r o m o t h e r s o u r c e s t h o u g h a p l e a h a s b e e n r ai s e d b y t h e a s s e s s e e t h a t t h e i n c o m e w a s s u r r e n d e r e d a s i n c o m e f r o m j o b w o r k b u t n o e v i d e n c e t o p r o v e t h e s t a n d o f t h e a s s es s e e h a s b e e n b r o u g h t o n r e c o r d . T h e a s s e s s e e h a d a l s o s u r r en d e r e d a d d i t i o n a l i n c o m e o f R s . 1 0 l a c s i n A s s e s s m e n t Y e a r 2 0 0 5 - 0 6 o n a c c o u n t o f s u n d r y c r e d i t s , r e p a i r s t o b u i l d i n g a n d a d v a n c e s t o s t a f f , w h i c h b e i n g r e l a t a b l e t o b u s i n e s s c a r r i e d o n b y a s s e s s e e w a s i n c l u d e d a s i n c o m e f r o m b u s i n e s s . H o w e v e r , i n re s p e c t o f c a s h f o u n d d u r i n g s u r v e y , w h i c h w a s n o t r e f l e c t e d in t h e b o o k s o f a c c o u n t , n o s o u r c e w a s d e c l a r e d b y t h e a s s e s s e e a n d i n t h e a b s e n c e o f n a t u r e o f s o u r c e o f c a s h b e i n g p r o v e d , th e s a m e i s n o t a s s e s s a b l e a s i n c o m e f r o m b u s i n e s s . I n t h e c i r cu m s t a n c e s , w e u p h o l d t h e o r d e r o f t h e C I T ( A ) i n i n c l u d i n g t h e a d d i t i o n a l i n c o m e a s d e e m e d i n c o m e u / s 6 9 A o f t h e A c t a n d n o t a l l o w i n g t h e b e n e f i t o f t h e b u s i n e s s l o s s e s d e t e r m i n e d a g a i ns t t h e s a i d d e e m e d i n c o m e . T h e g r o u n d s o f a p p e a l r a i s e d b y t h e a s s e s s e e a r e d i s m i s s e d . ” 32 . Th e r e a f te r , t h e m a t t e r c a m e up f or c o n s id e r a t i on be f o r e th e H o n ’ b l e P u n j a b & H ar y a n a H i g h C ou r t an d t h e H on ’ b l e H i gh C o u r t h a s s t a t e d t h at t he A O , t h e L d. C I T ( A ) an d t h e Tr i b un al af t e r c o ns i d e r i n g t he f ac t u al a s pe c t no t i ce d t ha t t h e am o u nt s ur r e n d e r e d du r i ng t h e s u r v e y w a s n ot r e fl e ct e d i n t h e bo ok s o f a c c ou n ts a nd no s ou r c e fr o m w he r e i t w a s de r i v e d w a s de c l ar e d by t h e a s s e s s e e a nd t h e r e f or e i t w a s de e m ed i n c o m e o f th e a s s e s s e e u n de r s e c t i o n 6 9 A of t h e A c t an d ac c o rdi n g l y t h e ITA 157/CHD/2023 A.Y.2018-19 32 fi n d in g s o f t he T r i b u n al w e r e a f f ir m e d an d i t w a s he l d t h a t no s ub s t a nt i a l q u e s t i on of l aw a r i s e s a n d th e ap p e al of t h e a s s e s s e e w a s d i s m i s s e d . W e t h e r e f or e fi n d t h a t t he s ta t e m e nt of t h e G e ne r al M an a ge r a s r e c o r d e d d ur i ng t he c o ur s e of s ur v e y p l a y e d a d e c i s iv e r o l e an d w as ta k e n i n t o c o ns i d e r a t i o n by t he Tr i b u na l w h e r e i n h e h a d a d m it t e d t h a t c a s h h a s be e n g e n e r at ed o u t o f in c o m e f r o m o th e r s ou r c e s a nd i n th e a bs e n c e of n a tur e o f s ou r c e o f c a s h be i n g pr ov e d , i t u ph o l d t h e or de r of th e C IT (A ) an d t h e r e af t e r , on f u r t h e r ap pe a l , th e or d e r of t he Tr ib u na l w a s up he l d b y t h e H o n ’ b l e H i gh C o ur t . U n l i k e t he s a i d c as e , i n t h e in s t a nt c as e , a s w e ha v e n o t e d ab ov e , t h e a s s e s s e e i n h i s s t at e m e n t r e c or de d d u r i ng t he c o ur s e o f s ur v e y h as c l e a r l y s t at e d t h at h e i s r u n n i ng a s o l e p r o pr ie t o r s h i p b usi n e s s c o nc e r n in n a m e of M/ s S i n g la Wi r e s a n d A l l i e d p r od u c t s s i nc e 2 0 08 w h e r e i n he m a n uf a c t ur e s an d s e l l s a l um i n u m a nd c o p pe r w i r e s an d a l l a l on g , t h e s am e i s h i s o n l y s ou r c e of i n c o me a nd th e r e a f t e r , he h a s be e n c on f r o nt e d w i t h d i s c r e p a nc ie s i n t e r m s o f c a s h f o u nd e x c e s s a s c o m p a r e d t o w h at h as b e e n r e c or d e d i n t h e bo ok s of a c c ou n t s , c e r t a i n a d v a n c e s r e l a t in g t o hi s b u s i n e s s w r i t t e n i n a r o u gh d i ar y a nd e x c e s s v a l u e of s t oc k as c om pa r e d to w h a t h as b e e n r e c or de d i n t he b o ok s o f a c c ou n t s . Th e r e f o r e , w e f i n d t ha t t h e as s e s s e e h a s b e e n c o n f r on t e d w i t h n ot j u s t t h e di s c r e p a nc y s o f o un d d u r in g t h e c o ur s e o f s u r v e y b ut t he n a t u r e an d s o ur c e t h e r e of d u r i n g t he c ou r s e of s u r v e y p r o ce e d i n gs a nd it i s c l e ar ly e m e r g i n g t ha t t he s o u r c e o f s uc h i n c om e i s f r o m h i s bu s i n e s s o pe r a t i on s . T hu s , t h e de c i s i o n of t h e H o n ’b le H i gh C o ur t , b e i ng r e nd e r e d i n t h e s pe c i f i c f a c t s an d c i rc u m s t a n c e s o f th e s a i d c as e , d o e s n’ t s u pp or t t h e c a s e o f t h e R e v en ue i n t h e in s t a nt c a s e . 33 . I n l i g ht of a f o r e s ai d di s c u s s i o n a n d i n t h e e nti r e t y o f f a c t s an d c i r c u m s t a n c e s of t h e c a s e a nd f ol l o w i n g t h e de ci s i o ns s u p r a , th e i n c o m e o f R s 8 4 , 80 , 00 0 / - s ur r e nd e r e d du r i ng t h e c ou r s e o f s ur v e y c a nn o t b e br o u gh t to t ax u nd e r t h e d e e m i ng pr ov i s i o n s o f s e c ti o n 6 9 a n d 6 9A o f t h e A c t a n d th e s a m e ha s b e e n r i g h t l y of f e r e d t o t a x un de r t h e h e ad “ b us i n e s s i nc o m e ” . In a b s e n c e o f de e m i n g p r o v i s i on s , t h e q ue s t i o n o f a pp l i c a t i on o f s e c t i on 11 5B B E d oe s n’ t ar i s e f or c o n s i de r a t i on . 11. As in S hri P ar mod Singla Vs AC I T, Ci rcle Patiala , he rein also , I find tha t the Depar t ment has not bee n able to br ing anyt hin g on re cord to show th at the a mounts cu mula tively a mou nti ng to Rs. 45 l acs are an ything but the bu sin ess inc ome of ITA 157/CHD/2023 A.Y.2018-19 33 the a ssessee . It has be en show n as such by the a sse ssee in its Prof it & Loss Accoun t. The De p artment ha s not bee n able to disp rove the stan d taken b y the a sse ssee that ther e is no othe r sour ce of inc ome to the assesse e but for it s business inc ome by way of fin ancing a cti vit y to sma ll parties. 12. The refore, findin g merit therein, the grie van ce sought to be raise d by the a sse ssee by way of Ground Nos. 1 to 3 is accepted. The ld . CI T( A)’ s orde r is, ac cordi ngly, reversed. The a d ditions made are , as suc h, deleted. 13. In the re sult, t he a ppe al is all owe d. Orde r p ron oun ced in the O pen Court on 15 t h Se pt.,2023 . Sd /- (A.D.JAIN ) VICE PRESIDENT “Poonam” आदेश क琉 灹ितिलिप अ灡ेिषत/ Copy of the order forwarded to : 1. अपीलाथ牸/ The Appellant 2. 灹瀄यथ牸/ The Respondent 3. आयकर आयु猴/ CIT 4. िवभागीय 灹ितिनिध, आयकर अपीलीय आिधकरण, च瀃डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड榁 फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar