Rajesh Bajaj, Burhanpur V. The ACIT , Khandwa

ITA 16/Ind/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3366 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 11-01-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Business income; Salary income; Capital Gains; CHAPTER IV
• Section: 68; 69; 2; 69C; 15; 143(3); 133A; 69B; 143(2); 69A; 13

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.16/IND/2019 ASSESSMENT YEAR: 2015-16 APPELLANT BY SHRI S.S. SHEETAL, AR REVENUE BY SHRI ASHISHPORWAL, DR DATE OF HEARING 0 8 .01.2020 DATE OF PRONOUNCEMENT 09 .0 3 .2020 O R D E R PER MANISH BORAD, AM. THE ABOVE CAPTIONED APPEAL FILED AT THE INSTANCE OF ASSESSEE PERTAINING TO ASSESSMENT YEAR 2015-16 IS DIRECTED A GAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS)- II (IN SHORT LD.CIT(A)], INDORE DATED 23.10.2018 WHICH IS ARIS ING OUT OF THE SHRI RAJESH KUMAR BAJAJ 13, RAJESH INDUSTRIES, INDUSTRIAL ESTATE INDORE VS. ACIT KHANDWA (APPELLANT) (REVENUE ) PAN NO. AHNPB0036F ITANO.16/IND/2019 RAJESH KUMAR BAJAJ 2 ORDER U/S 143(3) OF THE INCOME TAX ACT 1961(IN SHOR T THE ACT) DATED 30.11.2017 FRAMED BY ACIT, KHANDWA. 2. ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL; ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND, IN LAW, THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS)-2, INDORE ERRED INCONFIRMING THE ACTION OF THE ASSESSING OFFI CER IN COMPUTING THE INCOME DECLARED BY THE ASSESSEE IN SU RVEY PROCEEDINGS BY APPLYING THE PROVISIONS OF SECTION 1 15BBE(1) OF THE INCOME TAX ACT 1961 AND THUS TAXING THE INCOME DECLARED AT THE MAXIMUM RATE. 2. THE APPELLATE ORDER BEING NOT BASED ON FACTS, AN D IN LAW, IS ILLEGAL & WRONG. 3. THE APPELLANT CRAVES LEAVE TO ADD/ALTER/AMEND TH E ABOVE GROUNDS OF APPEAL ARE AND WHEN, NECESSITY OR OCCASI ON ARISES. 3. BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE R ECORDS ARE THAT THE ASSESSEE IS PROPRIETOR OF TWO CONCERNS NAMELY M /S. RAJESH INDUSTRIES AND M/S. R.R. TEXTILE MILLS WHICH ARE EN GAGED IN THE BUSINESS OF TEXTILES, HAND LOOM AND POWER LOOM. RET URN OF INCOME DECLARING INCOME OF RS.1,02,17,110/- FOR THE ASSESS MENT YEAR 2015-16 WAS FILED ON 30.09.2013. CASE SELECTED UND ER SCRUTINY FOLLOWED BY SERVING VALID NOTICE U/S 143(2) OF THE ACT. A SURVEY U/S 133A WAS CONDUCTED ON 12.12.2014 AT THE BUSINESS PR EMISES OF M/S. RAJESH INDUSTRIES AND M/S. R.R. TEXTILE MILLS. DURING THE COURSE OF SURVEY VARIOUS ANOMALIES WERE FOUND WHICH INCLUDED ITANO.16/IND/2019 RAJESH KUMAR BAJAJ 3 EXCESS STOCK, EXCESS CASH AND RECEIVABLE FROM SUNDR Y PARTIES NOT SHOWN IN THE BOOKS. THE ASSESSEE SURRENDERED FOLLO WING INCOME STATING THAT HE IS UNABLE TO EXPLAIN THE SOURCE FOR THE FOLLOWING :- A) EXCESS STOCK RS.75,46,114/- B) EXCESS CASH RS. 9,60,036/- C) RECEIVABLE FROM SUNDRY PARTIES NOT SHOWN IN BOOKS RS. 7,75,000/- TOTAL RS.92,81,150/- SUBSEQUENT TO SURVEY WHEN THE ASSESSEE FILED RETUR N OF INCOME ON 30.09.2015 THE ABOVE SAID SURRENDERED INC OME DURING THE SURVEY PROCEEDINGS WERE OFFERED TO TAX AS BUSIN ESS INCOME. THE ASSESSMENT WAS COMPLETED ACCEPTING THE RETURNED INC OME BUT CALCULATING THE TAX @60% ON THE SURRENDERED INCOME AS PER THE PROVISIONS OF SECTION 115BBE OF THE ACT. 4. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE LD. C IT(A) BUT FAILED TO SUCCEED WHO CONFIRMED THE ACTION OF THE L D. A.O OBSERVING AS FOLLOWS:- GROUND NO. 2 5.0 THIS GROUND OF APPEAL IS WITH REGARD TO COMPUTING T HE INCOME DECLARED BY THE ASSESSEE IN SURVEY PROCEEDI NGS BY ITANO.16/IND/2019 RAJESH KUMAR BAJAJ 4 APPLYING THE PROVISIONS OF SECTION 115 BBE OF THE INCOME TAX ACT 1961. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AS WELL AS SUBMISSION OF THE APPELLANT IN THIS REGARD . 5.1 THE APPELLANT HAS TAKEN THE PLEA THAT HE DID NOT HA VE ANY OTHER INCOME EXCEPT BUSINESS INCOME. THE APPELLANT HAS ALSO SUBMITTED THAT SECTION 115BBE DID NOT APPLY IN THE APPELLANT'S CASE AS THE APPELLANT DIDN'T HAVE ANY INCOME EXCEP T BUSINESS INCOME. FURTHER, THE APPELLANT HAS STATED THAT THE MATERIAL SO FOUND ON THE BUSINESS PREMISES OF THE APPELLANT CL EARLY HAD NEXUS WITH BUSINESS. FURTHER, THE APPELLANT HAS ST ATED THAT EXCESS STOCK, AND THE EXCESS CASH RECEIVABLE FROM SUNDRY PARTIES NOT SHOWN IN BOOKS WAS BUSINESS STOCK/INVESTMENT W HICH HAD ARISEN OUT OF THE UNRECORDED BUSINESS. ACTIV ITY OF THE ASSESSE AND THEREFORE, THE SAME NEED TO BE ASSESSED THE HE AD PROFIT AND GAIN OF BUSINESS. 5.2 AFTER CAREFUL ANALYSIS OF THE FACTS, IT IS C LEAR THAT THESE AMOUNTS BEING UNRECORDED FALL IN THE NATURE OF IN COME CLASSIFIED IN SECTION 115BBE AND HENCE, IN MY CONSIDERED OPI NION, THE AO HAS RIGHTLY MADE THE ADDITION AND IS ACCORDINGLY CONFIRMED. THIS GROUND OF APPEAL IS DISMISSED. 5. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L. 6. LD. COUNSEL FOR THE ASSESSEE REFERRING TO THE WR ITTEN SUBMISSIONS MADE BEFORE LD. CIT(A) SUBMITTED THAT T HE ALLEGED SURRENDERED INCOME OF RS.92,81,150/- IS IN THE NATU RE OF BUSINESS INCOME DULY OFFERED TO TAX AND THE ASSESSEE DO NOT HAVE ANY OTHER SOURCE OF INCOME EXCEPT BUSINESS INCOME. HE ALSO SUBMITTED THAT ITANO.16/IND/2019 RAJESH KUMAR BAJAJ 5 IF THE LD. A.O WANTED TO ATTRACT THE PROVISIONS UND ER SECTION 115BBE THEN HE SHOULD HAVE RECOMPUTED THE COMPUTATI ON OF INCOME BY EXCLUDING THE SURRENDERED INCOME FROM INC OME UNDER THE HEAD BUSINESS/PROFESSION AND INCLUDING THE SAME UNDER INCOME FROM OTHER SOURCES SINCE SECTION 115BBE OF THE ACT IS APPLICABLE ONLY TO INCOME REFERRED TO IN SECTION 68 , SECTION 69, SECTION 69A, 69B, 69C & 69D OF THE ACT. HE ALSO SU BMITTED THAT THE REVENUE AUTHORITIES HAS NOT POINTED OUT THAT TH E EXCESS STOCK HAS ANY NEXUS WITH ANY OTHER RECEIPTS. THE EXCESS STOCK FOUND DURING THE SURVEY OPERATION IS NOT SEPARATELY AND C LEARLY IDENTIFIABLE BUT IS PART OF MIXED LOTS OF STOCK FOU ND AT THE PREMISES WHICH INCLUDED DECLARED STOCK AS PER BOOKS AND ALSO THE EXCESS STOCK AS COMPUTED BY THE AUTHORISED OFFICERS DURING THE SURVEY OPERATION AT THE BUSINESS PREMISES. SINCE EXCESS S TOCK IS A RESULT OF SUPPRESSION OF PROFIT FROM BUSINESS OVER THE YEA RS AND HAS NOT BEEN KEPT IDENTIFIABLE SEPARATELY BUT IS THE PART O F OVERALL PHYSICAL STOCK FOUND, THE INVESTMENT IN THE EXCESS STOCK SHO ULD BE TREATED AS BUSINESS INCOME. WHERE SOURCE OF INVESTMENT/ EX PENDITURE IS CLEARLY IDENTIFIABLE AND ALLEGED UNDISCLOSED ASSET HAS NO INDEPENDENT EXISTENCE OF ITS OWN OR THERE IS NO SEP ARATE PHYSICAL ITANO.16/IND/2019 RAJESH KUMAR BAJAJ 6 IDENTITY OF SUCH INVESTMENT/EXPENDITURE THEN WHAT I S TO BE TAXED IS THE UNDISCLOSED BUSINESS RECEIPT INVESTED IN UNIDEN TIFIABLE UNACCOUNTED ASSET. LD. COUNSEL FOR THE ASSESSEE HA S ALSO RELIED ON FOLLOWING CASE LAWS:- I) HONBLE ITAT JAIPUR BENCH IN THE CASE OF ACIT J AIPUR VS SANJAY BAIRATHI GEMS LIMITED ITA NO.157/JP/17 ORDE R DATED 09.05.2017 II) HONBLE ITAT JAIPUR BENCH IN THE CASE OF DCIT VS RAMNARAYAN BIRLA ORDER DATED 30.9.2016 III) HON BLE ITAT AHMEDABAD BENCH IN THE CASE OF CHOKSHI HIRALAL MANGILAL VS DCIT TTJ(AHD)1 ORDER DATED 21. 01.2011 IV) HONBLE ITAT MUMBAI BENCH IN THE CASE OF ACIT V/S RAHIL AGENCIES ITA NO.4413/MUM/2014 ORDER DATED 23.11.20 16 V) HONBLE ITAT JODHPUR BENCH IN THE CASE OF VASU SINGHAL V/S ITO & OTHERS ITA NO.142/JODH/2018 ORDER DATED 25.5.2018. 7. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE VEHEM ENTLY ARGUED SUPPORTING THE ORDERS OF BOTH THE LOWER AUTH ORITIES. 8. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE JUD GMENTS REFERRED AND RELIED BY THE ASSESSEE. THE SOLE GRIEVANCE OF THE ASSESSEE IS ITANO.16/IND/2019 RAJESH KUMAR BAJAJ 7 THAT INCOME OF RS. 92,81,150/- SURRENDERED DURING T HE COURSE OF SURVEY U/S 133A OF THE ACT WAS PURELY A BUSINESS IN COME LIABLE TO NORMAL RATE OF TAX AND BOTH THE LOWER AUTHORITIES H AVE ERRED IN CHARGING IT WITH THE TAX RATE @60% APPLYING THE PRO VISIONS OF SECTION 115BBE OF THE ACT BY TREATING THE ALLEGED U NDISCLOSED INCOME AS INCOME REFERRED IN SECTION 68, SECTION 69 , SECTION 69A, 69B, 69C & 69D OF THE ACT. SO AS FAR AS THE QUANTU M OF ADDITION IS CONCERNED IT IS NOT IN DISPUTE. 9. THE QUESTIONS BEFORE US ARE THAT (I) WHETHER THE UNDISCLOSED BUSINESS INCOME CAN BE TAXED UNDER SECTION 68, SECT ION 69, SECTION 69A, 69B, 69C & 69D OF THE ACT AND (II) WHE THER SUCH UNEXPLAINED/UNDISCLOSED INCOME REFERRED IN SECTION 68, SECTION 69, SECTION 69A, 69B, 69C & 69D CAN BE TAXED ONLY UNDER THE HEAD INCOME FROM OTHER SOURCES. 10. TO PROCEED WE WILL FIRST GO THROUGH THE PROVISI ONS OF SECTION 115BBE, SECTION 68, SECTION 69, SECTION 69A, 69B, 6 9C & 69D OF THE ACT WHICH ARE REPRODUCED BELOW:- 115BBE. (1) WHERE THE TOTAL INCOME OF AN ASSESSEE, INCLUDE S ANY INCOME REFERRED TO IN SECTION 68, SECTION 69, SECTION 69A, SECTION 69B , SECTION 69C OR SECTION 69DTHE INCOME-TAX PAYABLE SHALL BE THE AGGREGATE OF ITANO.16/IND/2019 RAJESH KUMAR BAJAJ 8 (I) THE AMOUNT OF INCOME-TAX CALCULATED ON THE IN COME 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 ASSESS EE 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 COM PUTING HIS INCOME REFERRED TO IN CLAUSE (A) 65[AND CLAUSE (B)] OF SUB -SECTION (1). SECTION 68 WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO E XPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR : PROVIDED THAT WHERE THE ASSESSEE IS A COMPANY (NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED), AND THE SUM SO CREDITED CONSISTS OF SHARE APPLICATION MONEY, SHARE CAPITAL, SHARE PREMIUM OR ANY SUCH AMOUNT BY WHATEVER NAME CALLED, ANY EXPLANATIO N OFFERED BY SUCH ASSESSEE-COMPANY SHALL BE DEEMED TO BE NOT SATISFAC TORY, UNLESS (A) THE PERSON, BEING A RESIDENT IN WHOSE NAME SUCH CREDIT IS RECORDED IN THE BOOKS OF SUCH COMPANY ALSO OFFERS AN EXPLANATIO N ABOUT THE NATURE AND SOURCE OF SUCH SUM SO CREDITED; AND (B) SUCH EXPLANATION IN THE OPINION OF THE ASSESSI NG OFFICER AFORESAID HAS BEEN FOUND TO BE SATISFACTORY: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IF THE PERSON, IN WHOSE NAME THE SUM REFERRED TO THERE IN IS RECORDED, IS A VENTURE CAPITAL FUND OR A VENTURE CAPITAL COMPANY A S REFERRED TO IN CLAUSE (23FB)OF SECTION 10. SECTION 69 WHERE IN THE FINANCIAL YEAR IMMEDIATELY PRECEDING T HE ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMENTS WHICH ARE NOT REC ORDED 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 OPIN ION OF THE ASSESSING OFFICER, SATISFACTORY, THE VALUE OF THE I NVESTMENTS MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE OF SUCH FINANCIAL YEAR . ITANO.16/IND/2019 RAJESH KUMAR BAJAJ 9 SECTION 69A WHERE IN ANY FINANCIAL YEAR THE ASSESSEE IS FOUND T O BE THE OWNER OF ANY MONEY, BULLION, JEWELRY OR OTHER VALUABLE ARTICLE A ND SUCH MONEY, BULLION, JEWELRY 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 ACQUISIT ION OF THE MONEY, BULLION, JEWELRY OR OTHER VALUABLE ARTICLE, OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SA TISFACTORY, THE MONEY AND THE VALUE OF THE BULLION, JEWELRY OR OTHER VALUABLE ARTICLE MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR . SECTION 69B WHERE IN ANY FINANCIAL YEAR THE ASSESSEE HAS MADE I NVESTMENTS OR IS FOUND TO BE THE OWNER OF ANY BULLION, JEWELRY OR OT HER VALUABLE ARTICLE, AND THE ASSESSING OFFICER FINDS THAT THE AMOUNT EXPENDE D ON MAKING SUCH INVESTMENTS OR IN ACQUIRING SUCH BULLION, JEWELRY O R OTHER VALUABLE ARTICLE EXCEEDS THE AMOUNT RECORDED IN THIS BEHALF IN THE B OOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT SUCH EXCESS AM OUNT OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE EXCESS AMOUNT MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR . SECTION 69C WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS INCURRED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF, OR THE EXPLANATION, IF ANY, OFFERED BY HIM IS NOT, IN THE OPINION OF THE ASSESSING OFFICER, SA TISFACTORY, THE AMOUNT COVERED BY SUCH EXPENDITURE OR PART THEREOF, AS THE CASE MAY BE, MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR .PROVIDED THAT, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, SUCH UNEXPLAINED EXPENDITURE WHICH IS DEEMED TO BE THE INCOME OF THE ASSESSEE SHALL NOT BE ALLOWED AS A DEDUCTION UNDER ANY HEAD OF INCOME. SECTION 69D WHERE ANY AMOUNT IS BORROWED ON A HUNDI FROM, OR AN Y AMOUNT DUE THEREON IS REPAID TO, ANY PERSON OTHERWISE THAN THR OUGH AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK, THE AMOUNT SO BORROWED OR R EPAID SHALL BE DEEMED TO BE THE INCOME OF THE PERSON BORROWING OR REPAYING THE AMOUNT AFORESAID FOR THE PREVIOUS YEAR IN WHICH THE AMOUNT WAS BORROWED OR REPAID, AS THE CASE MAY BE : ITANO.16/IND/2019 RAJESH KUMAR BAJAJ 10 PROVIDED THAT, IF IN ANY CASE ANY AMOUNT BORROWED ON A HUND I HAS BEEN DEEMED UNDER THE PROVISIONS OF THIS SECTION TO BE T HE INCOME OF ANY PERSON, SUCH PERSON SHALL NOT BE LIABLE TO BE ASSESSED AGAI N IN RESPECT OF SUCH AMOUNT UNDER THE PROVISIONS OF THIS SECTION ON REPA YMENT OF SUCH AMOUNT. EXPLANATION.FOR THE PURPOSES OF THIS SECTION, THE AMOUNT REPAID SHALL INCLUDE THE AMOUNT OF INTEREST PAID ON THE AMOUNT B ORROWED.] 11. UNDER THE I.T. ACT THE COMPUTATION OF INCOME CO MES UNDER CHAPTER IV WHICH COMPRISES OF VARIOUS HEADS OF INCO ME STARTING FROM SECTION 14 TO SECTION 59 WHICH INTER-ALIA COVE RS INCOME FROM SALARY, INCOME FROM HOUSE PROPERTY, PROFITS AND GAINS OF BUSINESS OR PROFESSION, CAPITAL GAINS AND INCOM E FROM OTHER SOURCES. AS FAR AS SECTION APPEARING IN SECTION 1 15BBE OF THE ACT I.E. SECTION SECTION 68, SECTION 69, SECTION 69A, 6 9B, 69C & 69D OF THE ACT THEY ARE MENTIONED IN CHAPTER VI WITH THE H EAD AGGREGATION OF INCOME AND SET OFF OR CARRY FORWARD OF LOSS AND COVERS SECTION 68 TO SECTION 80. IN THE INSTANT CA SE THERE IS NO ISSUE RELATING TO SET OFF OR CARRY FORWARD OF LOSS SO WE NEED TO FOCUS ON THE HEADAGGREGATION OF INCOME WHICH COVERS SEC TION 66 TO 69D OF THE ACT. THE WORD AGGREGATION OF INCOME NOWHERE MAKES A DISTINCTION ABOUT THE HEAD OF INCOME AS TO WHETHER IT IS INCOME FROM SALARY, INCOME FROM HOUSE PROPERTY, PROFITS AND GAINS OF BUSINESS OR PROFESSION, CAPITAL GAINS OR INCOME FROM OTHER SOURCES. THE WORD US ED IS INCOME AND ITANO.16/IND/2019 RAJESH KUMAR BAJAJ 11 THE SAME IS DEFINED IN SECTION 2(24) OF THE I.T ACT WHICH INCLUDES VARIOUS INCOME MENTIONED IN THE SECTION INCLUDING T HE PROFIT AND GAINS OF BUSINESS. THE CONTENTION OF THE LD. COUN SEL FOR THE ASSESSEE THAT THE LD. A.O BEFORE INVOKING THE SECTI ON 115BBE OF THE ACT SHOULD HAVE FIRST ASSESSED THE SURRENDERED INCOME AS INCOME FROM OTHER SOURCES SEEMS TO BE ON LOOSE WI CKET. LOOKING TO THE LAYOUT OF THE INCOME TAX ACT CHAPTERS AND SE CTION IT IS PREDOMINANTLY CLEAR THAT ALL TYPES OF INCOME NAMELY SALARY, INCOME FROM HOUSE PROPERTY, PROFITS AND GAINS OF BUSINESS OR PROFESSION, CAPITAL GAINS AND INCOME FROM OTHER SOURCES WHICH A RE NOT FULLY DISCLOSED IN BOOKS OF ACCOUNTS OR ASSESSEE FAILS TO OFFER ANY EXPLANATION OR UNEXPLAINED EXPENDITURE OR AMOUNT B ORROWED OR REPAID ON HUNDI CAN BE SUBJECTED TO TAX AS INCOME U /S 68, SECTION 69, SECTION 69A, 69B, 69C & 69D. 12. IF WE SEE THE PROVISIONS OF SECTION 68 TO SECTI ON 69C THE HIGHLIGHTING PART WHICH IS COMMON IS THAT IF THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE OF SOURCE OF EITHER CASH CREDITS, INVESTMENT, MONEY BULLION, JEWELLERY OR OTHER VALUA BLE ARTICLE INVESTMENT AND EXPENDITURE. ITANO.16/IND/2019 RAJESH KUMAR BAJAJ 12 13. LET US EXAMINE THE STATEMENT GIVEN BY THE ASSES SEE DURING THE COURSE OF SURVEY IN REPLY TO QUESTIONS RAISED ABOUT THE SOURCE OF EXCESS STOCK, EXCESS CASH AND UNDISCLOSED SUNDRY DE BTORS. 3. CONCERN M/S R.R.TEXTILE MILLS ! '# $ %& ' & CASH BOOK ' ( ) * CASH BALANCE +. 17413.71 )/ 0 #1 (23 45& 6 0 +. 9,77,450/- 0 #1 = CONCERN +. 9,60,036.29 0 #1 = @ & +. 9,60,036/- * %AB = C6& 3. D & ! EF +. 9,60,036/- * %AB G' # H I EJ D & ! EF +. 9,60,036/- * *KBEF ' M/S R.R.TEXTILE MILLS ! 5E& 5&LM& N O6& P' 2014-15 2 & 5 ' P' 2015-16 EJ Q*OP& O'& ( SURRENDE R ) & # H I T C 4 ' 0& U & # H I = 5. CONCERN '# 13-14 C$*0 0, 2 ' # ' M/S R.R.TEXTILE MILLS 45& 6 ' %BV +. 1,03,95,983/- 0 #1 (23 ! 5E& /- ' %&X ' M/S R.R.TEXTILE MILLS %BV EF +. 28,49,869/- F' 0 #1 = ' +. 75,46,114/- %BV 0 #1 = @ 0 %BV ! EF +. 75,46,114/- %Y *& * %AB = C6& 5. #*, D M/S R.R.TEXTILE MILLS 0 %BV +. 75,46,114/- %Y*& %AB G' # H I = &Z & ! EF +. 75,46,114/- * *KB EF ' M/S R.R.TEXTILE MILLS ! 5E& 5&LM& N O6& P ' 2014-15 2 & 5 ' P' 2015-16 EJ Q*OP& O'& ( SURRENDE R ) & # H I T C 4 ' 0& U & # H I = 6. D * BI-1 ( [ ' ! \ )/ # # H I ]( ' 1 25 @ A E/& #1 ]( ANNEXURE-B _( 3 0 #1 (* `5 %G 13-14, C$ *0 0, 2 ' # ' 0 #1 = @ \ * / 2& 3 3 ` # (' #1 ? T M 4 `# ! 5E& /- ' %&X (' #1? C6& 6. D $ 0K \ BI-1 , ( [ ' * BCD &# / E #1 = [ ! O]AB (' #1, ]( / M/S R.R.TEXTILE MILLS ! 5E& /- ' %&X (' # #1 = D O]ABX %Y*& * %AB G' # H I = &Z @ A E 1 25 & (' ' [ ! EF +. 7,75,000/- * *B ' M/S R.R.TEXTILE MILLS ITANO.16/IND/2019 RAJESH KUMAR BAJAJ 13 ! 5E& 5&LM& Q*OP& & # ' J * #& ' O'& & # H I T C 5 ' 4 ' 0& U & # H I = 14. NOW IN ORDER TO KNOW THAT WHETHER THE ASSESSEE HAS OFFERED ANY EXPLANATION TO THE EXCESS STOCK, EXCESS CASH OR RECEIVABLE FROM SUNDRY PARTIES, FROM PERUSAL OF THE STATEMENTS IN THE REPLY GIVEN BY THE ASSESSEE IN QUESTION NO.3, 5 AND 6 WE FIND THAT ASSESSEE HAS CATEGORICALLY ACCEPTED THAT HE IS UNABLE TO EXPLAI N THE SOURCE OF EXCESS CASH, EXCESS STOCK AND UNACCOUNTED RECEIVABL ES. THERE IS NO OTHER EVIDENCE BROUGHT ON RECORD BY THE ASSESSEE TO SHOW THAT SOME UNACCOUNTED PURCHASES FOR THE YEAR OR UNACCOUN TED SALES OR UNRECORDED SALES HAPPENED DURING THE YEAR OR DETAIL S OF THE DEBTORS WHICH CAN SHOW THE NEXUS OF THE SURRENDERED INCOME AS BUSINESS INCOME FOR THE YEAR UNDER CONSIDERATION. 15. THE ALLEGED SURRENDERED INCOME IS THE CUMULATIV E TOTAL OF UNRECORDED AND UNDISCLOSED INCOME FOR PRECEDING YEA RS WHICH WERE NOT OFFERED TO TAX DURING THE YEAR WHEN THEY WERE E ARNED. BEFORE THE INSERTION OF PROVISION OF SECTION 115BBE OF THE ACT W.E.F. 1.4.2013 DURING THE COURSE OF SURVEY U/S 133A OF THE ACT IF ANY EXCESS CASH OR EXCESS STOCK WAS FOUND AND THEN THE ASSESSEE WA S SUBJECTED TO TAX ON THE NORMAL RATE OF TAX APPLICABLE FOR THE YE AR IN WHICH THE ITANO.16/IND/2019 RAJESH KUMAR BAJAJ 14 SURVEY PROCEEDINGS WERE CARRIED OUT. THERE WAS NO M ECHANISM TO MAKE THE DISTINCTION BETWEEN THE GENUINE ASSESSEE W HO REGULARLY OFFERS HIS CORRECT INCOME TO TAX ON YEAR TO YEAR BA SIS AND THE ASSESSEE WHO CONCEALS THE INCOME IN THE PRECEDING Y EARS AND ONLY IN CASE IF HE IS SUBJECTED TO SURVEY ACTION THEN HE OFFERS UNDISCLOSED INCOME OF EXCESS CASH OR EXCESS STOCK DURING THE YE AR WHEN THE SURVEY TAKES PLACE AND OFFERS IT TO TAX. THIS CLEA RLY CREATES A DISPARITY BECAUSE THE PERSONS WHO CONCEALS THE INCO ME IN THE PRECEDING YEARS SINCE ITS COMMENCEMENT OF BUSINESS AND PAY TAX ON UNRECORDED/UNACCOUNTED INCOME ONLY IF HE IS SUBJ ECTED TO SURVEY ACTION AND THAT TOO IN THE YEAR THE SURVEY T AKES PLACE THEREBY TAKING THE BENEFIT OF PAYING THE TAXES WITH OUT SUBJECT TO LEVY OF INTEREST AND PENALTY ON SUCH INTENTIONALLY DEFERRED TAX LIABILITIES AND IF HE IS NOT SUBJECTED TO SURVEY AC TION U/S 133A OF THE ACT HE KEEPS ON ENJOYING THE BENEFITS. 16. TO COPE UP WITH THIS SITUATION SECTION 115BBE O F THE ACT WAS INSERTED W.E.F. 1.4.2013 INDICATING THAT ONLY IF TH E INCOME FALLS U/S 68 TO 69D AS DISCUSSED ABOVE WHICH DOES NOT NECESSA RILY BE INCOME OF BUSINESS BUT CAN BE FROM ANY HEAD OF INCOME I.E. THE INCOME ITANO.16/IND/2019 RAJESH KUMAR BAJAJ 15 DEFINED IN SECTION 2(24) OF THE ACT FOR WHICH THE A SSESSEE IS UNABLE TO OFFER ANY EXPLANATION, THEN SUCH HIGHER RATE OF TAX I.E. 60% IS TO BE LEVIED U/S 115BBE OF THE ACT. 17. AS FAR AS THE JUDGMENTS REFERRED AND RELIED BY THE LD. COUNSEL FOR THE ASSESSEE IS CONCERNED IN THE CASE OF SANJAY BAIRATHI GEMS LIMITED (SUPRA) THE ISSUE RELATES TO SET OFF OF LOSS AGAINST SURRE NDERED INCOME IN VIEW OF THE AMENDMENT BY FINANCE ACT CAME INTO EXIS TENCE W.E.F. 1.4.2017 CONSIDERING THE SET OFF OF ANY LOSS. TH IS JUDGMENT IS NOT APPLICABLE TO THE ASSESSEE BECAUSE THERE IS NO DISP UTE ABOUT THE NATURE OF INCOME. MOREOVER THE INCOME SURRENDERED BY THE A SSESSEE WHICH CERTAINLY IS A BUSINESS INCOME BUT SINCE THE ASSESS EE HAS NOT OFFERED ANY EXPLANATION OF ITS SOURCE IT HAS BEEN RIGHTLY COVER ED U/S 115BBE OF THE ACT. THE DECISION OF THE HON'BLE AHMEDABAD BENCH T RIBUNAL IN THE CASE OF CHOKSHI HIRALAL MANGILAL DATED 21.01.2011 IS ALSO NOT RELEVANT SINCE SECTION 115BBE WAS INSERTED FROM 1.4.2013. THE DEC ISION OF HON'BLE JODHPUR BENCH IN THE CASE OF VASU SINGHAL V/S ITO IS ALSO NOT APPLICABLE SINCE THE DECISION IS OF THE SINGLE BENC H AND IS NOT BINDING ON DOUBLE BENCH OF TRIBUNAL. 18. WE THEREFORE IN THE GIVEN FACTS AND CIRCUMSTANC ES OF THE CASE ARE OF THE CONSIDERED VIEW THAT THOUGH THE ALLEGED SURREND ERED INCOME OF ITANO.16/IND/2019 RAJESH KUMAR BAJAJ 16 RS.92,81,150/- IS A BUSINESS INCOME BUT SINCE ASSES SEE BEING INDIVIDUAL HAVING NO LIMITATION OF EARNING INCOME FROM SOURCES OTHER THAN FOR THE OBJECTS OF THE BUSINESS AND ALSO THE ASSESSEE HAVIN G NOT OFFERED ANY EXPLANATION IN THE STATEMENT GIVEN DURING THE COURS E OF SURVEY WHICH STANDS UNREBUTTED, THEREFORE THE ALLEGED UNEXPLAINE D/UNDISCLOSED INCOME OF RS.92,81,150/- IS LIABLE TO BE TAXED AS I NCOME FALLING UNDER SECTION 68 TO 69D OF THE ACT AS APPLICABLE TO THE T YPE OF INCOME AND HAS BEEN RIGHTLY TAXED BY LD. A.O APPLYING THE HIGHER R ATE OF TAX PROVIDED IN SECTION 115BBE OF THE ACT. WE THEREFORE CONFIRM TH E FINDINGS OF LD. CIT(A). THE ASSESSEE FAILS TO SUCCEED AND THE SOLE GROUND RAISED IN THE INSTANT APPEAL STANDS DISMISSED. 19. THE OTHER GROUNDS ARE GENERAL IN NATURE WHICH N EEDS NO ADJUDICATION. 20. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISS ED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 09.03.20 20. SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 09 MARCH, 2020 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE