Mukesh Kumar Saraogi, Churu V. Principal Commissioner of Income Tax-2, Jaipur

ITA 186/JPR/2022

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 8804 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-09-2022
• Assessment Year: 2017-2018
• Appeal Filed On: 11-05-2022
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: RAJIV SOGANI
• Keywords: Business income; Revision of order; Loose papers; Set aside
• Section: 68; 69; 263; 271(1)(c); 69C; 143(3); 142(1); 133A; 143(1); 143(2); 69A

Judgement Text

vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,’A’ JAIPUR Jh laanhi xkslkbZ] U;kf;d lnL; ,oa Jh jkBkSM deys’k t;arHkkbZ] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 186/JP/2022 fu/kZkj.k o"kZ@Assessment Years : 2017-18 Mukesh Kumar Saraogi M/s Sohal Lal Mukesh Kumar, Anaj Mandi Sadulpur, Churu cuke Vs. Principal Commissioner of Income Tax-2, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AETPS 0642 B vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Smt. Shivangi Samdhani, CA & Sh. Rajiv Sogani, CA jktLo dh vksj ls@ Revenue by : Sh. P. R. Meena (CIT) lquokbZ dh rkjh[k@ Date of Hearing : 27/09/2022 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 09/11/2022 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal is filed by the assessee aggrieved from the order of the Pr. Commissioner of Income Tax, Jaipur-2 [ Here in after referred as Ld. PCIT ] for the assessment year 2017-18 dated 25.03.2022 as per provision of section 263 of the Act, which in turn arises from the order passed by the ACIT, Circle- Jhunjhunu passed under Section 143(3) of the Income tax Act, 1961 (in short 'the Act') dated 14.08.2019. 2 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT 2. The assessee marched this appeal on the following grounds of appeal:- “1. In the facts and circumstances of the case and in law, ld. PCIT has erred in exercising the revisionary powers by passing the order u/s 263 of I.T. Act, 1961 setting aside the order passed u/s 143(3), dated 14.08.2019. The action of the ld. PCIT is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the order passed u/s 263. 2. In the facts and circumstances of the case and in law, ld. PCIT has erred in holding the order passed u/s 143(3) dated 14.08.2019 as erroneous and prejudicial to the interest of the revenue. The order passed u/s 263 is bad in law and, therefore, the action of the ld. PCIT is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the order passed u/s 263 and holding the order passed u/s 143(3) dated 14.08.2019 as not erroneous and prejudicial to the interest of the revenue. 3. The assessee craves his right to add, amend, or alter any of the grounds on or before the hearing.” 3. The relevant fact as culled out from the records is that the return of income declaring total income of Rs. 55,36,290/- was filed electronically on 31/10/2017 which was processed u/s 143(1) on the declared income. The case was manually selected for scrutiny and the notice u/s 143(2) of the Income-tax Act, 1961 was issued online on 12/09/2018 which was duly served upon the assessee. Subsequently, notice u/s 142(1) of the Act along with detailed questionnaire was issued online on 08/04/2019 and the same was also served upon the assessee. In response to these notices and subsequent notices, Shri Vinod Agarwal CA & AR of the assessee filed replies and documents online from time to time. He also 3 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT submitted details/evidences as required online and books of accounts are produced manually which were also tested on test check basis. The assessee is engaged in business of trading of grains as wholesaler and running under the name and style of M/s Sohan Lal Mukesh Kumar. During the year under consideration, the assessee has derived income from business of Rs.51,22,865/-, income from other source of Rs.592/- and declared total income at Rs.55,36,285/- after claiming the deduction under chapter VI-A of the Income-tax Act, 1961 and interest on house loan of Rs. 1,43,619/-. During the course of assessment proceedings, the assessee furnished relevant details and evidences in support of income declared in the return of income. The assessee has also produced books of accounts along with statement of accounts, ledger, bank statement and other relevant documents as required for verification of the case which are placed on the record after due verification. After perusal of the documents filed in the case, the returned income of the assessee was accepted. 4. After culmination of the assessment proceedings the ld Pr.CIT called for the records of the assessment proceedings and observed that the order passed by the assessing officer is erroneous and 4 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT prejudicial to the interest of revenue. Thus, he has recorded his findings which are reiterated here in below:- “The case of assessee was selected for manual scrutiny, the assessment u/s 143(3) of the I.T. Act, 1961, was completed on 14.08.2019 by the Assistant Commissioner of Income Tax Circle, Jhunjhunu on the returned income of Rs. 55,36,290/-. 1. During the F.Y 2016-17 a survey u/s 133A of the Act was conducted at the business premises of the assessee on 23.09.2016. During survey proceedings assessee had declared undisclosed income of Rs. 51,22,273/- on account of excess cash, GP on unaccounted sates, loose papers and excess stock. Assessee filed his return of income declaring the undisclosed income of Rs.51,22,273/- as income from other sources under section 69 of the Income-tax Act, 1961, and the same fact is reflected in the computation of income filed by the assessee. 2. On perusal of the assessment order it is seen that while completing the assessment the Assessing Officer has taken the income of Rs.51,22,865/- as income derived from business while the same was to be treated as undisclosed income to be taxed u/s 69 of the Act read with section115BBE of the Act. 3. Therefore, it is factually clear that the A.O. has not properly addressed the issue while completing the assessment. In view of this position, it appears that the assessment order passed u/s 143(3) of the I.T. Act 1961 for A.Y. 2017-18 on 14.08.2019 is erroneous in so far as it is prejudicial to the interest of the revenue. 4. Considering the above facts, a show-cause notice u/s 263 of the I.T. Act, 1961was issued to the assessee vide this office letter No. ITBA/REV/F/REV1/2021- 22/1039794277(1) dated 16.02.2022 to explain as to why the assessment order passed by the ACIT-Circle, Jhunjhunuon14.08.2019 may not be revised u/s 263 and may not be treated as erroneous and prejudicial to the interest of the revenue as the undisclosed income surrendered during the survey proceedings was to be taxed u/s 69 read with section 115BBE of the Act and as the assessment order was passed mechanically without application of mind for the reason mentioned in the notice. 5 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT 5. Against the Notice of the PCIT proposing action u/s. 263 of the Act the assessee filed their submission and the same is restated here in below: 5. The assessee filed its reply on 09.02.2022 which is reproduced as under: 1. Assessment Proceedings: 1. In the case of assessee survey operation u/s 133A was conducted on 23.09.2016. During the course of such survey operation the assessee surrendered income of Rs. 51,22,273 on account of excess cash, GP on unaccounted sales, loose papers and excess stock. 2. The case of assessee was selected for scrutiny. 3. The assessment was completed vide order u/s 143(3) dated 14.08.2019 by DCIT Circle, Jhunjhunu[PB 1-2]. 4. During the course of assessment proceedings, Id. AO sought various details and made exhaustive queries. On the basis of such details submitted, the assessment was completed. Returned Income was accepted and no addition was made. Further, the surrendered income was taxed as income from "Profits and Gains of Business or Profession. Issue raised in the Notice u/s. 263: Revisionary jurisdiction u/s. 263 is proposed to be assumed because ld. AO assessed surrendered income as income under the head profits and gains of Business or Profession. Whereas, in the notice it is alleged that such surrendered income was to be assessed as per the provisions of section 69/69A/69B and accordingly, was to be taxed u/s. 115BBE @ 60 %. Our responses to the notice u/s 263 is as under: 1. The assessee surrendered income of Rs. 51,22,273 on account of excess cash, GP on unaccounted sales, loose papers and excess stock. Ld. AO consciously and after due application of mind assessed such surrendered income as business income and not as per the provisions of 6 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT section 69/69A/69B. The relevant extract of assessment order is as under[PB 1]: ME "The assessee is engaged in business of trading of grains as wholesaler and running under the name and style of M/s SohanLalMukesh Kumar. During the year under consideration. the assessee has derived income from business of Rs.51,22,865/- ,income from other source of Rs.592/- and declared total income at Rs.55,36,285/- after claiming the deduction under chapter VI-A of the Income-tax Act, 1961 and interest on house loan of Rs. 1,43,619/-." [Emphasis Supplied] 1. Accordingly, the provisions of section 115BBE were not invoked. Returned Income was accepted and resultantly no demand was raised. 2. The conscious call, of not assessing surrendered income as per the provisions of section 69/69A/698 and, accordingly, not applying the provisions of section 115BBE, is evident from the fact that proceedings u/s 154 were initiated in the case of assessee. Notice dated 18.01.2022 was issued by Id. AO and it was proposed to rectify the order passed u/s 143(3) dated 14.08.2019. Surrendered Income was proposed to be taxedu/s 115BBE @60% [PB 3]. 3. However, after considering the submissions [PB 4-6]of the assessee and after appreciating that a conscious call of not taxing surrendered income as per the provisions of section 115BBE was taken, proceedings u/s 154 were withdrawn by the Id. AO [PB-7]. 4. In the above factual background it is submitted that the assessment was completed after due application of mind and after appreciating the facts. The assessment order was reconsidered in the rectification proceedings, however, the assessment originally done was found to be correct. 5. It is pertinent to note that the income surrendered in the form of excess stock and GP on unaccounted sale cannot, by any stretch of imagination, be considered as any income other than business income. 6. No error can be attributed to any assessment order which was passed after adequate enquiry and in accordance with the prevalent judicial view and which was the reconsidered in the rectification proceedings. 7. Adopting one of the possible views is not an error. Hon'ble Jaipur ITAT in the following decisions, under similar facts, held that provisions of the section 115BBE cannot be applied in case of surrendered income: 7 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT ⚫ HariNarainGattani Vs. DCIT [2021] 123 taxmann.com 8 (Jaipur. Trib.) [PB 8-12]: Headnote-Section 115BBE. read with sections 143 and 154, of the Income-tax Act, 1961 - Tax on income referred to in section 68 to section 69D (Scope of provisions) – Assessment year 2017-18 - Assessing Officer completed assessment in case of assessee under section 143(3) at assessed income of Rs. 41.78 lakhs which included income surrendered pursuant to search of Rs. 22.19 lakhs as current year's business income offered to tax, by charging tax and interest at normal rates and raised nil demand - Thereafter, Assessing Officer issued notice under section 154 firstly, on ground that tax rate on surrendered income was to be charged as per provision of section 115BBE and secondly, during assessment proceedings, tax rate on surrendered income had been charged at 30 per cent, however, as per amended provisions of section 115BBE, it should have been charged at 60 per cent - However, it was found that there was nothing stated in either pre-amended or post- amended provisions of section 115BBE that where assessee surrenders undisclosed income during search action for relevant year, tax rate has to be charged as per provisions of section 115BBE Further there was no finding that provisions of section 115BBE had been invoked by Assessing Officer during assessment proceedings and tax rate had been charged at rate of 30 per cent on surrendered income under section 115BBE and thus, action of Assessing Officer in rectifying and increasing rate of taxation from 30 per cent to 60 per cent on undisclosed income in view of amended section 115BBE did not come within purview of section 154 Whether therefore, action of Assessing Officer in invoking jurisdiction under section 154 was not legally tenable - Held, yes [Paras 12 and 13][In favor of assessee] • ACIT Vs. Sudesh Kumar Gupta [2020] 117 taxmann.com 178 (Jaipur-Trib.) [PB 13-16]: "...11.In the instant case, as we have noted above, the return of income so filed has been accepted by the Assessing officer without making any adjustment/variation to the income so offered by the assessee and the assessment has been completed u/s. 143(3) of the Act. Further, there is nothing on record which shows that the Assessing officer has called for any Explanation of the assessee regarding the nature and source of such investment during the course of assessment proceedings and any formation of opinion and recording of satisfaction by the Assessing officer which is required before invoking the provisions of section 69 of the Act. 8 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT Though the Assessing officer has issued a show-cause as to why penalty proceedings u/s. 271(1)(c) may not be initiated in respect of such investment, however, he has not issued any show-cause for invoking provisions of section 69 of the Act or has called for any Explanation of the assessee regarding the nature and source of such investment. In fact, the assessment order so passed by the Assessing officer is silent about invoking the provisions of section 69 of the Act. Where the provisions of section 69 have not been invoked by the Assessing officer while passing the assessment order u/s. 143(3), going by the plain language of section 115BBE, the latter cannot be invoked in the instant case. 12. It is therefore not a case where provisions of section 69 have been invoked by the Assessing officer while passing the assessment order u/s. 143(3) and at the same time, he has failed to apply the rate of tax as per section 115BBE of the Act. Had that been the case, it would clearly be a case of rectification and powers under section 154 can be invoked. However, in the instant case, the Assessing officer has not invoked the provisions of section 69 at first place while passing the assessment order u/s. 143(3), therefore, the provisions of section 115BBE which are contingent on satisfaction of requirements of section 69 cannot be independently applied by invoking the provisions of section 154 of the Act. We therefore upheld the order of the Id. CIT(A) and the matter is decided in favor of the assessee and against the Revenue..." 1. Where the Assessing Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion, such a conclusion cannot be considered erroneous simply because the Commissioner does not feel satisfied with the conclusion. 2. Provision of section 263 nowhere allows to challenge the judicial wisdom of Id. AO or to replace his wisdom in the guise of revision unless the view taken by Id. AO is not at all sustainable in law. Extent of enquiry can be stretched to any level by forcing the AO to go through the assessment process again and again, however, this proposition is not authorised by the law. Reliance is placed on the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs. Ganpat Ram Bishnoi, 296 ITR 292 (Raj.) wherein at para 11 of the Hon'ble Court held as under[PB 17-20]: "Jurisdiction under section 263 cannot be invoked for making short enquiries or to go into the process of assessment again and again 9 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT merely on the basis that more enquiry ought to have been conducted to find something." 1. 1.It is further submitted that where the assessee has furnished the requisite information and the Assessing Officer has completed the assessment after considering all the facts, the order cannot be termed as erroneous. Reliance is placed on the following judicial pronouncements: 1. CIT v Ratlam Coal Ash Co (1988) 171 ITR 141 (MP) 2. Ashok Kumar Parasramka v ACIT (1998) 65 ITD 1 (Cal) 3. CIT v Mehrortra Brothers (2004) 270 ITR 157 (MP) 4. CIT v ParameshwarBohra (2004) 267 ITR 698 (Raj) 5. Paul Mathews & Sons v CIT (2003) 263 ITR 101 (Ker) 6. CIT v Arvind Jewellers (2003) 259 ITR 502 (Guj) 7. CIT v Hastings Properties (2002) 253 ITR 124 (Cal) 8. CIT v Goal (JP) (HUF) (2001) 247 ITR 555 (Cal) 9. CIT v Amalgamations Ltd. (1999) 238 ITR 963 (Mad) 10. CIT v MacneillMagore Ltd. (1998) 232 ITR 945 (Cal) 1. Without prejudice to aboveand without agreeing it is submitted that if the provisions of section 115BBE are made applicable then also rate of 60% cannot be applied because of the following reasoning: 1. The provisions of Section 115BBE were inserted in the Income Tax Act, 1961 by Finance Act, 2012, with effect from 1.04.2013 and the rate specified in the section was 30% (plus surcharge and cess). 2. Thereafter, the provisions of sub-section (1) of Section 115BBE were substituted by Taxation Laws (Second Amendment) Act, 2016, w.e.f 1.04.2017 i.e. AY 2017-18 ("Amendment -115BBE") andrate specified in the section was substituted to 60% (plus surcharge and cess). Although, Taxation Laws (Second Amendment) Act. 2016 received the assent of the President of India only on 15.12.2016. 3. Survey on the assessee was carried out on 23.09.2016. 4. Chronology of various events, as discussed hereinbefore, is as under: Particulars Date 115BBE Introduced for the first time in the income Tax Act. Rate of Tax 30% 01.04.2013 Survey conducted on the assessee 23.09.2016 Amendment-115BBE introduced in LokSabha 28.11.2016 Amendment -115BBE passed by LokSabha 29.11.2016 Amendment- 115BBE received President assent. 15.12.2016 10 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT 1. 1. 1. Thus, the law, which is proposed to be applied in revisionary proceedings did not see the light of the day. when the survey was conducted on assessee. The said law for the first time was introduced on 28.11.2016, i.e. after a gap of about 2 months of the taxing event having taken place. Hence, because of this reason also the rate of 60% cannot be applied in the case of the assessee. 2. After considering the above legal position Id. AO consciously did not apply rate of 60% as specified u/s 115BBE. In view of the above there is no error in order of Id. AO nor any prejudice is caused to the revenue. Therefore, the proceedings initiated u/s 263may please be dropped." 6. The ld. PCIT after considering the submission of the assessee invoked the revisionary jurisdiction u/s 263 because Id. AO assessed surrendered income as offered by the assessee in his computation of income which is supported by a detailed statement recorded at the time of survey proceeding at the premises of the assessee. The detailed finding of the PCIT is recorded in his order and the same is extracted here in below for the sake of brevity: 1. I have considered the facts of the case and the material available on record. It is seen that the A.O. while framing the assessment has not examined the income disclosed during survey and the applicability of the provisions of Section 69 read with section 115BBE. In this case, a perusal of the return filed by the assessee shows that it has shown this incomeof an amount of Rs.51,22,273/ under the head "Income from other sources" and mentioned that it is deemed income under Section 69 on account of income surrendered. Thus, the assessee has himself surrendered the income under section 69 and in that situation application of section 115BBE has to be applied. Section 115BBE reads as follows: "115BBE. (1) Where the total income of an assessee 11 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT 1. includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, and reflected in the return of income furnished under section 139; or 2. determined by the AO includes any income referred to in Section 68, section 69, section 69A, section 69B, section 69C or section 69D, if such income is not covered under clause (a). the income-tax payable shall be the aggregate of (i) the amount of income-tax calculated on income referred to in clause (a) and clause (b), at the rate of thirty 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) Not withstanding anything contained in this Act, no deduction in respect of any expenditure or allowance 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)." 1. However, as the A.O. failed to do so, the assessment order passed on 14.08.2019 is erroneous within the purview of Explanation-2 of section 263(1) of the I.T. Act. Thus, it is evident that the AO has not applied his mind to the issue in any manner and not applied relevant provisions of the Act. 2. I have gone through the assessment order and case records and in the facts and circumstances of the case I find that the revisionary powers can be exercised by the PCIT/CIT where he/she finds that AO has passed any order which is erroneous and prejudicial to the interest of revenue. In reaching the above conclusion that action u/s 263 is justified in this case, I am aided by the following judicial rulings: (1) The Hon'ble Supreme Court in the case of Malabar Industrial Limited V/S CIT2431TR wherein it has held as under "An incorrect assumption of facts or an incorrect application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind". 10. From the above facts and circumstances of the case and having regard to the material available on record, the Assessing Officer failed to consider/apply his mind to the information available on record with regard to the, undisclosed income declared by the assessee and included by him u/s 69 while filing his return of income. The AO while completing the assessment did not treat this undisclosed income as income to be taxed u/s 69 read with section 115BBE of the Act but treated as business 12 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT income even though the assessee himself had also shown it as deemed income under section 69 and as such the assessment was made without application of mind on the given facts on record. This in turn has resulted in passing of an erroneous order by the Assessing Officer in the case due to non-application of mind to relevant material, reflecting non appreciation of facts and an incorrect application of mind to law which is prejudicial to the interest of the revenue. 11. Accordingly, by virtue of powers conferred on the undersigned under the provisions of section 263 of the Income Tax Act 1961, I hold that the order under Section 143 (3) of the IT Act dated 14.08.2019 for AY 2017- 18 passed by the Assessing Officer is erroneous in so far as it prejudicial to the interest of revenue as the said order has been passed by the Assessing Officer in a routine and perfunctory manner without considering/applying his mind to the information available on record with regard to the undisclosed income declared by the assessee and included by him u/s 69 while filing his return of income. The AO while completing the assessment did not treat this undisclosed income as income to be taxed u/s 69 read with section 115BBE of the Act but treated as business income. The order of the Assessing Officer is therefore liable to revision under the clause (a)& (b) of Explanation (2) to section 263 of the Income Tax Act. Hence, the assessment order is set aside as discussed above. 6. Aggrieved from the said order of the PCIT the assessee has marched this appeal on the grounds raised and reiterated here in above para. The ld. AR of the assessee submitted a detailed paper book containing the relied upon documents and the same is extracted here in below : S. No. Particulars Page No. 1 Copy of Notice issued by ld. PCIT u/s 263 1-2 2 Copy of Submissions filed before ld. PCIT 3-9 3 Copy of Assessment Order dated 14.08.2019 10-11 4 Copy of Notice u/s 154 dated 18.01.2022 12 5 Copy of Reply of assessee in response to notice u/s 154 dated 09.02.2022 13-15 6 Copy of order evidencing withdrawal of section 16 13 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT 154 proceedings 7. In addition, to the above paper book ld. AR of the assesses placed reliance on the following decisions to support their contentions: S. No. Particulars Page No. 1 Copy of judgment of Hon’ble ITAT Indore in the case of DCIT vs M/s Punjab Retail Pvt. Ltd.- ITA Nos. 677/Ind/2019 1-17 2 Copy of judgment of Hon’ble Rajasthan High Court in the case of CIT vs. Ganpat Ram Bishoni- [2008] 296 ITR 292 (Raj.) 18-20 3 Copy of judgment of Hon’ble Rajasthan High Court judgment in the case of PCIT vs. Bajargan Traders 86 taxmaan.com 295 (Rajasthan) 21-23 8. The ld. AR of the assessee relying on the submission made before the PCIT submitted that during the course of survey proceedings income of Rs. 51,22,273/- was disclosed on account of excess cash GP unaccounted sales and loose papers and excess stock found at the time of search and proceedings initiated by the Department. This income is only of current year income and are declared/surrendered as business income only and therefore, the provision of sections 69/69A/69B of the Act will not apply. The assessee by mistake included the income as other sources and the same cannot be considered as to chargeable u/s 69 of the Act. 14 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT Since the incomes are arising only on account of business of the assessee provision of section 115BBE of the Act cannot be invoked. The ld. Assessing Officer has also accepted the version of the assessee and remained chosen and considered the business income of the assessee. All the income has direct nexus with the business of the assessee. There is no other information is placed on record by the revenue that the income declared by the assessee is income arising out of any other sources. Therefore, the finding given by the Assessing Officer is correct and order is not prejudicial to the interest of the Revenue. The ld. AR of the assessee further submitted that the fact that even the ld. AO has after initiating proceedings u/s 154 of the Act has passed an order withdrawing the proceedings. The AO was not of the view to charge of the income as per provision of section 115BBE of the Act to support the argument, ld. AR of the assessee relied upon the judgment of Hon’ble ITAT Indore in the case of DCIT vs M/s Punjab Retail Pvt. Ltd.- ITA Nos. 677/Ind/2019. 9. The ld. AR of the assessee further stated before the start of the proceedings before ld. PCIT. The ld. AO also initiated the proceedings and passed an order withdrawing the proceedings u/s. 15 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT 154 of the Act. Therefore, there cannot be any separate proceedings by the ld. PCIT under the provisions of section 263 of the Act not only that ld. PCIT has not disclosed the fact of the proceedings u/s 154 of the Act is initiated and closed/withdrawn by the AO. The AO himself has only initially in the assessment order not invoked the provisions of section 115BBE of the Act and even after that order by issuing notice u/s 154 of the Act and after considering the submission of the assessee has also withdrawn section 154 proceedings. Therefore, the action of ld. PCIT to invoke the provision of section 263 is bad in law as well as on facts. The ld. AR of the assessee further submitted that anything which is not comfortable or not done as per will and wishes is not prejudicial to the interest of the revenue. The ld. PCIT of the order cannot be revised to substantiate their view. The ld. AR of the assessee heavily relied upon the decision of Hon’ble Rajasthan High Court in the case of Ganpat Ram Bishnoi wherein the Hon’ble Rajasthan High Court has said that the jurisdiction u/s 263 cannot be invoked for making the short inquiries or to go into the process on assessment again and merely on the basis that more inquiry ought to have been conducted to find something. 16 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT 10. Per contra, the ld. DR has justified the action of the ld. PCIT as the order of the Assessing Officer erroneous and prejudicial to the interest of the revenue. The ld. DR specifically drawn our attention to the fact that the assessee themselves have declared income as other sources u/s 69 of the Act. The extract of the computation of income is extracted here in below for the sake of brevity of the facts : 17 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT 11. Thus, when the assessee themselves has offered the income under the provision of section 69 of the Act which is supported by the 18 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT statement recorded at the time of survey, the provisions of section 115BBE of the Act are automatic and ld. PCIT has power to review the orders of the Assessing Officer which are thus prejudicial to the interest of the revenue. The relevant extract of the statement recorded is also extracted here in below: 19 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT 20 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT 12. Since the assessee themselves have accepted the income arising out of undisclosed sources in the firm of stock and cash found at the time of survey the same is also supported by a 21 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT computation of income wherein the income is offered u/s. 69 of the Act therefore, the provision of section 115BBE are automatic which the AO not invoked and there is no discussion also in the assessment order. This fact is not disputed by the assessee also. In fact the assessee has submitted that this is a mistake and the assessee should be guided by the ld. AO. As regards the withdrawal of 154 notice by an order on 27.02.2022 is on account of 263 proceedings initiated by ld. PCIT vide notice dated 16.02.2022 as explained by the DR and the ld. AR has not controvert to this fact argued by the ld. DR, as the parallel proceedings cannot be initiated against the assessee and therefore, becoming aware, he himself has dropped that proceeding does not meaning that the Assessing Officer has accepted that the order is not rectifiable u/s 154 of the Act. When the higher authority call for the record and issued the notice u/s. 263 notice given u/s 154 proceedings though by non- speaking order withdrawn on account of this fact which is a genuine facts not controverted by the ld. AR. The decision relied upon by the ld. AR of the assessee in the case of Ganpat Ram Bishnoi given by Hon’ble Rajasthan High Court is in respect of the fact that the assessee has disclosed the income as business income whereas in this case the same is disclosed and accepted as undisclosed 22 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT income for which the ld. DR has pointed out the relevant questions and answer of the statement and computation of income filed by the assessee. Thus, the facts of the case relied upon by the ld. AR of the assessee are differentiated on facts and both the judgement of the Jurisdictional high court are thus on different set of facts. As regards the decision of Indore bench also the fact that the assessee has disclosed the income as business income and there is no admission of undisclosed income recorded by the assessee themselves. Therefore, the provisions of section 115BBE of the Act being automatic, the assessee is supposed to pay tax as per provisions of the Act. Therefore, the assessee is subjected to tax as per provision of section 115BBE of the Act decision of the Hon’ble Rajasthan High Court relied upon AR of the assessee not only differentiated on facts but it is due to change in law as argued by the ld. DR. The assessee themselves have agreed that the income is chargeable u/s 69 of the Act and they have offered the same in other income as per provision of the fact evident from the record. Therefore, the assessee cannot take shelter of this decision. As regards the arguments of the ld. AR of the assessee that the rate as prescribed u/s. 115BBE cannot be applied retrospectively as the survey was conducted on 15.09.2016 and the hike of the rate from 23 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT 30 % to 60 % received the president assent on 15.12.2016, the ld. DR draw our attention to provision of section 4 of the Act being the charge of the income and has relied provision of thereon which is extracted hereinbelow:- “4. Charge of income-tax (1) Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and [subject to the provisions (including provisions for the levy of additional income-tax) of, this Act] in respect of the total income of the previous year [****] of every person: Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly. (2) In respect of income chargeable under sub-section (1), income-tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act.” 13. We have heard the rival contentions and perused the written submission and case laws cited by both the parties to drive whom to their contentions. We have also gone through the orders of the lower authorities. It is not disputed even by the ld. AR of the assessee that the assessee themselves accepted the fact that the income that they have disclosed during the course of survey is supported by the excess stock cash and loose paper found and also offered as income chargeable u/s. 69 of the Act. They themselves have accepted this fact and offered the income under the head other income in the computation. This fact is not disputed but the ld. AR of 24 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT the assessee argued that it is genuine mistake and department should assist the assessee and they should not take benefit of the ignorance or mistake of the assessee. Therefore, ld. AR submitted that it is also not disputed that the income that the disclosed is arising out of the business activities of the assessee and therefore, the contention of the revenue to charge the income at special rate provided u/s 115BBE of the Act is not correct. The ld. AR of the assessee further argued that the survey is dated 23.09.2016 whereas the provision of the increase in rate has received the assent of the President on 12.12.2016 and therefore, relying on the decision of Indore Bench in the case of DCIT, Central-2, Indore vs. M/s Punjab Retail Pvt. Ltd., Indore in ITA No. 677/Ind/2019 dated 08.10.2021. As rightly differentiated all the judgment relied upon by the ld. AR of the assessee are on different set of facts and we agree with the difference pointed out by the ld. DR. Since all the decisions cited of wherein the admission is not recorded where in this case the assessee has admitted in the statement and also considered the said income u/s. 69 of the Act. Therefore, the ratio decided in those cases are not directly applicable to the fact of the case. The rate of tax is to be seen from the provision of the Act. The issues raised before us are already decided by the Hon’ble High Court of Kerala in 25 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT the case of Maruthi Babu Rao Jadav vs. ACIT in WA No. 984 of 2019 where in the court has decided the issue of applicability of the higher rate of tax. The relevant observation is extracted here in below : 13. Section 115 BBE was inserted by Finance Act, 2012 w.e.f 01.04.2013. As on 01.04.2016 the financial year in which the subject seizures occurred Section 155BBE provided for 30% tax on income refereed to in Sections 68, 69, 69A, 69B, 69C and 694. The same was amended by the 2nd Amendment Act; w.e.f. 01.04.2011, enhancing the rate to 60%. Hence there was no new liability created and the rate of tax merely stood enhanced which is applicable to the assessments carried on in that year. The enhanced rate applies from the commencement of the assessment year, which relates to the previous financial year. 14. Likewise it was by Chapter II with heading 'Rates of Income Tax', as provided in the Finance Act 2016, that a surcharge was introduced by way of the 3' proviso of Section 2(9) of that Finance Act. This comes into effect from the Financial Year 2016-2017; which is the year in which the subject seizures were occasioned. The proviso refers to various provisions where the advanced tax computed under the first proviso stands increased by a surcharge for the purpose of the Union. Section 115BBE is one of the provisions referred to in the 3rd proviso and in the case of individuals the surcharge was @ 15% where the total income exceeds one crore, as on 01.04 2016 By the 2nd Amendment Act section 2 of the Finance Act, 2016 stood amended by which 115BBE was omitted from the 3rd proviso After the 6th proviso yet another proviso was inserted which provided for the advance tax’ computed under the first proviso, in respect of any income chargeable to tax under Section 115BBE (1) (i), to be increased by a surcharge for the purposes of the Union, calculated @ 25%. Hence there is no new liability of surcharge created and it is a mere enhancement of the rate of surcharge the 15. In the financial year 2016-17 itself the tax as provided under section 115BBE and the surcharge on advance tax was available as discernible from the IT Act and Finance Act, 2016 as it stood on 1.4.2016 itself. A major misdemeanor leading to assessment of income as accrued under Section 69A invites the consequences of Section 115BBE and surcharge provided under Section 2(9) of the Finance Act, 2016. When it stands enhanced from 01.04.2017, for every assessment carried out in that year related to the previous year, the rates as applicable on 01.04.2017 has to be applied. There being no new liability created or obligation imposed the arguments raised by the appellant’s counsel falls. The appellant cannot have a contention that he committed the misconduct on the expectation 26 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT that if he were caught he would have to shell out only lesser aunts as tax and surcharge. There is no right accrued on the assessee to commit an offence on the expectation of a lesser penalty. 16. It was also argued that Income Tax at the rate or rates specified, as prescribed in any Central Act to be charged for any assessment year, shall be so charged in respect of the total income of the previous year as per Section 4 of the IT Act. However, there is no such provision to enable a surcharge to be so taxed, on the Finance Act prescribing an enhanced rate at the commencement of an year. The said contention however, cannot be sustained especially looking at the decision on the Hon'ble Supreme Court in CIT Kerala v. K Srinivas [(1972) 4 SCC 526. The facts are not relevant to the issue raised here and we need only look at the declaration as to the nature of a surcharge imposed the Finance Act. The legislative history with respect the concept of surcharge was traced by the Court, which, for the first time was found to have been recommended in the report of the Committee on Indian Constitutional Reforms Volume 1 Part 1. The word surcharge was used compendiously for the special addition to taxes on income imposed in September 1931. It was held so in paragraph 7 and 8: 7. The above legislative history of the Finance Acts, as also the practice, would appear to indicate that the term "Income tax" as employed in Section 2 includes surcharge as also the special and the additional surcharge whenever provided which are also surcharges within the meaning of Article 271 of the Constitution. The phraseology employed in the Finance Acts of 1940 and 1941 showed that only the rates of income tax and super tax were to be increased by a surcharge for the purpose of the Central Government. In the Finance Act of 1958 the language used showed that income tax which was to be charged was to be increased by a surcharge for the purpose of the Union. The word "surcharge" has thus been used to either increase the rates of income tax and super tax or to increase these taxes. The scheme of the Finance Act of 1971 appears to leave no room for doubt that the term "Income tax" as used in Section 2 includes surcharge. 8. According to Article 271 notwithstanding Anything in Articles 269 and 270 Parliament may at any time increase any of the duties or taxes referred to in those Articles by a surcharge for the purpose of the Union and the whole proceeds of any such surcharge shall form part of the Consolidated Fund of India. Article 270 provides for taxes levied and collected by the Union and distributed between the Union and the States. Clause (1) says that tax on income other than agricultural income shall be levied and collected by the Government of India and distributed between the Union and the States in the manner provided in clause (2) Article 269 deals with taxes levied and collected by the Union but assigned to the States. The provisions of Article 268 which is the first one under the 27 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT heading "distribution of revenue between the Union and the States" relate to duties levied by the Union but collected and appropriated by the States. Thus these Articles deal with the levy, collection and distribution of the proceeds of the taxes and duties mentioned therein between the Union and the States. The legislative power of Parliament to levy taxes and duties is contained in Articles 245 and 246(1) read with the relevant entries in List I of the Seventh Schedule." 17. In the instant case surcharge was imposed by Finance Act, 2016 and the rate stood enhanced by Finance Act, 2017. The Income Tax even as per the Finance Act was to be at the rate specified in Part I of the 1st Schedule which shall be increased by surcharge for purposes of the Union. Surcharge hence partakes the character of Income tax and Article 271 itself empowers the Parliament, at any time to increase any of the duties or taxes by a surcharge for the purpose of the Union and it forms part of the Consolidated fund. So when a surcharge is imposed it is in effect an enhancement of the tax or duty. The provision in the Finance Act also employs the words 'the income tax computed shall be increased by a surcharge': Section 4 of the IT Act squarely applies to the surcharge imposed. The judgment of the learned Single Judge is affirmed for the for the reasoning herein above and the Writ Appeal would stand dismissed without any order as to costs.” 14. Therefore, the action of ld. PCIT invoking the provisions of section 263 of the Act to charge the income of the assessee which is subject matter of section 69 and the same is chargeable at special rate of provision of section 115BBE of the Act is clear cut error prejudicial to the interest of the revenue and therefore, we confirm the action of ld. PCIT invoking the provision of section 263 of the Act and therefore, the appeal of the assessee is dismissed. In terms of these observations, the appeal of the assessee is dismissed. 28 ITA No. 186/JP/2022 Sh. Mukesh Kumar Saraogi vs. PCIT Order pronounced in the open court on 09/11/2022 Sd/- Sd/- ¼ lanhi xkslkbZ ½ ¼ jkBkSM deys’k t;arHkkbZ ½ (Sandeep Gosain) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 09/11/2022 *Ganesh Kumar vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Sh. Mukesh Kumar Saraogi, Churu 2. izR;FkhZ@ The Respondent- PCIT-2, Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA No. 186/JP/2022) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar