The DCIT, Circle-1 (1), Rajkot, Rajkot V. Shri Samirbhai Maganbhai Kalariya And Others, Rajkot

ITA 185/RJT/2022

AI Insights

The case involves an appeal by the Deputy Commissioner of Income Tax, Circle-1(1), Rajkot against Shri Samirbhai Maganbhai Kalariya concerning the assessment year 2018-19. The core issue was the classification of an undisclosed income of Rs. 1,75,00,000 admitted by the assessee during a survey operation under section 133A of the Income Tax Act, 1961. The Assessing Officer treated this income as unexplained expenditure under section 69C, subject to higher tax rates under section 115BBE. However, the CIT(A) reclassified this income as normal business income, a decision contested by the Revenue in the Tribunal. The Tribunal upheld the CIT(A)'s decision, emphasizing that the diary entries related to business expenses and the income should be taxed under the head 'business and profession'.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 302861 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 08-08-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 08-06-2022
• Other Referred Cases: Fakir Hazi Hasan vs. State, Kin Farm Pvt. Ltd. vs. State, JK Chokshi vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRISHRAMDEEPSINHA
• Assessee Lawyers: SHRIMEHULRANPURA

Judgement Text

INTHEINCOMETAXAPPELLATETRIBUNAL RAJKOTBENCH,RAJKOT [CONDUCTEDTHROUGHVIRTUALCOURT] Before:ShriWaseemAhmed,AccountantMember AndShriSiddharthaNautiyal,JudicialMember TheDy.CIT, Circle-1(1), Rajkot (Appellant) Vs ShriSamirbhai MaganbhaiKalariya, 501,ShilpaSquare, Nr.JalaramChikki, 150FeetRingRoad, IndiraChowk,Rajkot PAN:AAMAS2815G (Respondent) Assesseeby:ShriMehulRanpura,A.R. Revenueby:ShriShramdeepSinha,CIT-D.R. Dateofhearing:09-08-2023 Dateofpronouncement:21-09-2023 आदेश/ORDER PER:WASEEMAHMED,ACCOUNTANTMEMBER:- ThisRevenue’sappealforA.Y.2018-19,arisesfromorderofthe CIT(A)-11,Ahmedabaddated04-08-2021,intheproceedingsundersection 250oftheIncomeTaxAct,1961,inshort“theAct”. ITANo.185/Rjt/2022 AssessmentYear2018-19 I.T.ANo.185/Rjt/2022A.Y.2018-19PageNo DCITvs.ShriSamirbhaiMaganbhaiKalariya 2 2.TheRevenuehasraisedthefollowinggroundsofappeal:- “1.ThelearnedCIT(A)haserredinlawandonfactsindetermining theundisclosedincomeofRs.1,75,00,000/-asregularbusiness income. 2.ThelearnedCIT(A)haserredinlawandonfactsindeletingthe additionu/s69CofRs.1,75,00,000/-&directingthatthesaidincome shouldbetreatedasnormalbusinessincome. 3.Itis,therefore,prayedthattheorderoftheCIT(A)besetaside andthatoftheAOberestoredtotheaboveextent.” 3.TheonlyissueraisedbytheRevenueisthattheld.CIT(A)erredin treatingtheunexplainedexpenditureu/s69CoftheActanincomeunderthe headofbusinessandprofession. 4.Brieflystatedfactsofthecasearethattheassesseeinthepresentcase isanAOPandengagedinthebusinessofrealestateactivity.Theassesseein theyearunderconsiderationhasdevelopedtherealestateprojectnamely M/sShilpan.Therewasasurveyoperationu/s133AoftheActatthe businesspremisesoftheassesseedated18 th July2018.Duringsurvey operation,adiarywasfoundcontainingthedetailsoftheexpenditurenot recordedinthebooksofaccounts.However,theassesseeinthestatement furnishedu/s131oftheActduringsurveyproceedingsagreedtooffer additionalincomeofRs.1,75,00,000/-onaccountofunrecordedexpenses. TheassesseeinthereturnfiledhasdisclosedsuchanincomeofRs. 1,75,00,000/-asincomeundertheheadbusinessandprofession.However, theAssessingOfficerwasoftheviewthattheamountofunexplained I.T.ANo.185/Rjt/2022A.Y.2018-19PageNo DCITvs.ShriSamirbhaiMaganbhaiKalariya 3 expenditureshouldbebroughttotaxundertheprovisionofsection69Cof theAct.Accordingly,thesameisliabletotaxatthehigherratespecifiedu/s 115BBEoftheAct.TheAssessingOfficerinholdingsohasalsomadea referencetothejudgmentofHon’bleGujaratHighCourtinthecaseofFakir HaziHasanreportedin247ITR290andHon’blePanjab&HaryanaHigh CourtinthecaseofKinFarmPvt.Ltd.reportedin216taxmann.com153. Thus,theAssessingOfficercalculatedtheincometaxontheincome admittedbytheassesseeundertheprovisionsofsection115BBEoftheAct. 5.Aggrievedassesseepreferredanappealbeforetheld.CIT(A).The assesseebeforetheCIT(A)submittedthatatthetimeofsurveyoperation, therewasnoquestionraisedaboutthenatureofincomerecordedinthediary basedonwhichtheincomeofRs.1,75,00,000/-wasofferedtotax.Itwas alsosubmittedbytheassesseethatthetransactionsrecordedinthediary relatetothebusinessexpensessuchascement,iron,labourexpenses.The assesseehasalsofurnishedtheaffidavitstatingthattheincomeoffered duringthesurveyoperationwasrelatedtothebusinessonly.Theassessee alsopointedoutthatthereisnoincomebroughtonrecordbytheRevenueat thetimeofsurveyoperationotherthanthebusinessincome.Theassessee furthercontendedthatevenasurveywasconductedintheyear2016 whereinalsotheincome,onlyundertheheadbusinesswasaccepted.Thus, aspertheassesseeinabsenceofanycontraryinformation,theamount offeredatthetimeofsurveyshouldbetreatedasincomeunderthehead businessandprofession.Theld.CIT(A)afterconsideringthesubmissionof theassessee,theorderoftheAssessingOfficertreatedtheincomeoffered duringsurveyoperationasincomeundertheheadbusinessandprofession. I.T.ANo.185/Rjt/2022A.Y.2018-19PageNo DCITvs.ShriSamirbhaiMaganbhaiKalariya 4 Thus,aspertheld.CIT(A),theincometaxonsuchincomewastobetaxed atthenormalrateandnotattheratespecifiedu/s115BBEoftheActas allegedbytheAssessingOfficer.Therelevantfindingoftheld.CIT(A)is reproducedonpages28to38ofhisorder. 6.Beingaggrievedbytheorderofld.CIT(A),theRevenueisinappeal beforeus.Beforeus,boththeld.DepartmentalRepresentativeandthe AuthorizedRepresentativevehementlysupportedtheordersofauthorities belowasfavourabletothem. 7.Wehaveheardtherivalcontentionsofboththepartiesandperused thematerialonrecord.Theissueinthepresentcaserelateswhetherthe incomeadmittedbytheassesseeduringsurveyoperationistobetaxed undertheheadbusinessandprofessionoru/s69CoftheAct.Fromthe precedingdiscussion,wenotethattheentirethrustoftheRevenueof makingtheadditiontothetotalincomeoftheassesseewasthediary impoundedduringthesurveyoperation.Thereisnodoubtthatthediary compiledduringthesurveyoperationcontainedthedetailsoftheexpenses relatingtothebusiness.Thisfactwasalsoacceptedandcommunicatedby theassesseeintheaffidavitfurnishedduringtheassessmentproceedings. Allthesefactshavenotbeencontrovertedbytheld.Departmental RepresentativeappearingonbehalfoftheRevenue.TheHon’bleGujarat HighCourtinthecaseJKChokshivs.ACITinTaxAppealNo.149of2003 hasobservedasunder:- I.T.ANo.185/Rjt/2022A.Y.2018-19PageNo DCITvs.ShriSamirbhaiMaganbhaiKalariya 5 2.Whetheronthefactsandinthecircumstancesofthecase,theTribunalis justifiedintreatingundisclosedincomeofferedduringsurveyu/s.133Aas "incomefromothersources"andnotanincomefrom"profitsandgainsof businessorprofession"especiallywhentheassesseeisnothavinganyother sourceofincome? 7.1TheabovequestionwasansweredbytheHon’bleHighCourtby treatingtheundisclosedincomeundertheheadbusinessandprofession.In viewoftheabove,weareoftheviewthattheincomeoftheassesseeshould betaxedasnormalbusinessincome. 7.2Theprovisionsofsection115BBEoftheActdealswiththerateoftax atwhichtheincomeu/s69CoftheActshouldbecharged.Assuchthe provisionofsection115BBEoftheActdoesnotdefinetheincomewhich needstobetaxedu/s69CoftheAct.Nevertheless,theprovisionsofsection 69Chastobeseenbeforeinvokingtheprovisionsofsection115BBEofthe Act.Theprovisionsofsection69CoftheActprovidethattheexpenses incurredbytheassessee,thesourceofwhichhasnotbeenexplained,willbe subjecttotaxundertheprovisionsofsection69CoftheAct.Inthepresent case,thecontentionoftheassesseethattheincomeadmittedduringsurvey operationisbusinessincomewhichisalsoevidentfromthenothingsofthe impoundeddiary.Undeniably,thecontentsofthediaryhavenotbeen controvertedbytheld.DRappearingonbehalfoftheRevenue.Thus,weare inclinedtoupholdthefindingofld.CIT(A) 7.3ThecaselawsreferredtobytheAssessingOfficerinhisorderare distinguishablefromthefactsofthecaseathand.Inthosecases,the I.T.ANo.185/Rjt/2022A.Y.2018-19PageNo DCITvs.ShriSamirbhaiMaganbhaiKalariya 6 assesseefailedtojustifythesourceofincomeinhishandsandthereforethe provisionsofsection69Cwereattractedbutitissointhecaseonhand. Accordingly,wedonotfindanyinfirmityintheorderoftheld.CIT(A). Hence,theappealoftheRevenueisherebydismissed. 8.Intheresult,theappealoftheRevenueisherebydismissed. Orderpronouncedintheopencourton21-09-2023. Sd/-Sd/- (SIDDHARTHANAUTIYAL)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad:Dated21/09/2023