Appeal details
Counselvise Citation
[2017] 130 COUNSELVISE.COM (IT) 8227 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 11 month(s) 25 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
23-03-2017
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
09-02-2017
Assessment Year
2010-2011
Appeal Filed On
28-03-2014
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.315/CHD/2014 (ASSESSMENT YEAR : 2011-12) M/S PRASHANTI SURYA CONSTRUCTION VS. THE D.C.I.T., CO. PVT. LTD., VPO GURKARI, CENTRAL CIRCLE-II, TEHSIL & DISTRICT KANGRA (H.P.). CHANDIGARH. PAN: ADNPS8077K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 14.03.2017 DATE OF PRONOUNCEMENT : 23.03.2017 O R D E R PER ANNAPURNA GUPTA, A.M . : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)(CENTRAL), GURGAON DATED 20.1.2014 RELATIN G TO ASSESSMENT YEAR 2011-12. 2. BRIEF FACTS RELATING TO THE CASE ARE THAT DURIN G THE COURSE OF SEARCH OPERATION OF ONE SHRI VIJAY KU MAR SOOD, A SURRENDER OF RS.2 CRORES WAS MADE BY HIM IN HIS OWN HANDS, HIS FAMILY MEMBERS AND BUSINESS CONCERNS . IN RESPECT OF THE ASSESSEE COMPANY, RS.1.75 CRORES WERE SURRENDERED, WHICH WERE SHOWN IN THE COMPUTATION IN THE RETURN OF INCOME FOR ASSESSMENT YEAR 2011-12. ON F URTHER 2 PERUSAL OF RETURN OF INCOME IT WAS SEEN THAT THE AS SESSEE COMPANY HAD SET OFF THE ADDITIONAL INCOME OF RS.1.7 5 CRORES AGAINST THE BROUGHT FORWARD AND CURRENT LOSS ES OF RS.1,53,96,722/- AND RS.21,03,278/- RESPECTIVELY. THE ASSESSING OFFICER OBSERVED THAT SINCE THE ADDITIONA L INCOME SURRENDERED U/S 132(4) OF THE INCOME TAX ACT , 1961 (IN SHORT THE ACT) WAS IN ADDITION TO THE AS SESSEES REGULAR INCOME AND NO SATISFACTORY EXPLANATION ABOU T THE NATURE AND SOURCE WAS GIVEN BY THE ASSESSEE ,IT COU LD NOT BE CLASSIFIED UNDER ANY HEADS OF INCOME U/S 14 OF T HE ACT,AND CONSEQUENTLY THE SAME WAS NOT ALLOWED TO BE SET OFF AGAINST THE BROUGHT FORWARD BUSINESS LOSSES AS PER THE PROVISIONS OF SECTION 72 OF THE ACT. THUS, THE TOT AL INCOME OF THE YEAR WAS TAKEN AND ASSESSED AT RS.1.75 CRORE S. 3. AGGRIEVED BY THE SAME, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT (APPEALS) CONTE NDING THAT IT HAD FULLY EXPLAINED THE NATURE AND SOURCE O F THE SURRENDERED INCOME AS BEING COLLECTIONS FROM HIS BO T PROJECT AND THUS WAS NOTHING BUT ITS BUSINESS INCOM E AND THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH C OURT IN THE CASE OF M/S KIM PHARMA (P) LTD. VS. CIT, ITA NO.106 OF 2011 SUPPORTED ITS STAND. IT WAS FURTHER CONTENDED THAT THE SURRENDERED INCOME BEING IN THE NATURE OF BUSINESS, THE SET OFF OF BUSINESS LOSSES AND BUSINESS DEPRECIATION WAS ALLOWABLE AGAINST THE SAM E. THE LEARNED COMMISSIONER OF INCOME TAX, AFTER CONSIDERING THE ASSESSEES SUBMISSIONS, HELD THAT T HE 3 ASSESSEE HAD NOT SATISFACTORILY EXPLAINED THE NATUR E AND SOURCE OF THE SURRENDERED INCOME AND, THEREFORE, IT COULD NOT BE REGARDED AS ITS BUSINESS INCOME BUT WAS TO B E TREATED AS ITS DEEMED INCOME, WHICH COULD NOT BE CONSIDERED EVEN UNDER THE HEAD INCOME FROM OTHER SOURCES AND AS A CONSEQUENCE THEREOF SET OFF OF LO SSES WAS ALSO NOT AVAILABLE TO THE ASSESSEE, AS HELD BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/ S KIM PHARMA (P) LTD. (SUPRA). THE RELEVANT FINDINGS OF THE LD. CIT (APPEALS) AT PAGES 6 AND 7 OF ITS ORDER ARE AS FOLLOW: I FIND THAT THE AO HAS CATEGORICALLY NOTED THAT TH E NATURE AND SOURCE OF THE SURRENDERED INCOME WAS NOT SATISF ACTORILY EXPLAINED BY THE ASSESSEE. NEEDLESS TO ADD, AS SUCH CLAIM WOULD DILUTE THE SURRENDER, IT WAS IMPERATIVE UPON THE AS SESSEE TO SUBSTANTIATE WITH EVIDENCE THAT THE SURRENDERED INC OME PERTAINED SOLELY TO HIS BUSINESS. THE ASSESSEE HAS VEHEMENTLY TRIED TO DISTINGUISH THE CASES RELIED UPON BY THE AO, INC LUDING THE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF M /S KIM PHARMA (P) LTD (SUPRA}. HOWEVER, I FIND THAT THE CASE OF THE A SSESSEE IS SQUARELY COVERED BY THE DECISION OF M/S KIM PHARMA (P) LTD ( SUPRA}. IN THE CASE AT HAND, SHRI VIJAY KUMAR SOOD AFTER TH E SEARCH ON 8.10.2010, SUBMITTED A SURRENDER LETTER TO THE } DIT (INV) DATED 9.10.2010 WHEREIN HE HAD VOLUNTARILY OFFERED A SUM OF RS.2 CRORES AS ADDITIONAL INCOME FOR THE FY 2010-11 IN ADDITION TO THE REGULAR INCOME IN HIS HAND AND HIS BUSINESS CONCERNS. RS.1, 75,00,000/- WAS SURRENDERED IN THE HANDS OF THE ASSESSEE COMPANY. A T THE TIME OF RECORDING OF THE STATEMENT U/S 132(4) SUBSEQUENTLY ON 28.10.2010, HE WAS ASKED WHAT HE HAD TO SAY IN THIS REGARD (THE SURRENDER). IN RESPONSE, HE REITERATED WHAT HE HAD SUBMITTED TO TH E JDIT (INV.), THAT THE SURRENDER WAS IN ADDITION TO THE REGULAR I NCOME, SUBJECT TO NO PENALTY OR PROSECUTION, HOWEVER NO DETAILED BREA K-UP OF THE SURRENDERED AMOUNT WAS FURNISHED. THUS, THE ASSESSE E HAD A CHANCE TO ESTABLISH THE NATURE AND SOURCE OF THE SU RRENDERED INCOME DURING THE RECORDING OF THE STATEMENT, OR EV EN SUBSEQUENTLY. THIS WAS NOT DONE. IT IS UNDISPUTABLE THAT THE AMOUNT SURRENDERED WAS NOT REFLECTED IN THE BOOKS OF ACCOU NT AND NEITHER THE NATURE NOR ITS SOURCE WAS DECLARED BY THE ASSES SEE. THE SURRENDER WAS ADMITTEDLY OVER AND ABOVE THE ASSESSE E'S REGULAR INCOME. HENCE, SUCH INCOME SURRENDERED FROM UNKNOWN SOURCES 4 COULD NOT BE REGARDED AS BUSINESS INCOME; AND SO TH E SAME IS TO BE TREATED AS DEEMED INCOME AND SUCH DEEMED INCOME CAN NOT BE CONSIDERED EVEN UNDER THE HEAD 'INCOME FROM OTHER S OURCES'. THEREFORE AS ELUCIDATED IN KIM PHARMA (SUPRA), THE CORRESPONDING DEDUCTIONS WHICH ARE APPLICABLE TO THE INCOMES UNDE R ANY OF THESE VARIOUS HEADS, WILL NOT BE ATTRACTED IN THE CASE OF DEEMED INCOMES WHICH ARE COVERED UNDER THE PROVISIONS OF SECTIONS 69, 69A, 69B AND 69C OF THE ACT IN VIEW OF THE SCHEME OF THOSE PROVI SIONS.... THUS, THE ACTION OF THE AO IN DISALLOWING THE SET-O FF OF BROUGHT FORWARD BUSINESS LOSSES AS WELL AS THE CURR ENT BUSINESS LOSS AGAINST THE SURRENDERED INCOME OF RS.1,75,00,0 00/- IS CONFIRMED. ASSESSEE FAILS ON THIS GROUND. 4. AGGRIEVED BY THE SAME, THE ASSESSEE HAS NOW COME UP IN APPEAL BEFORE US, RAISING FOLLOWING GROU NDS: 1. THE LD. CIT(A) HAS ERRED BY UPHOLDING THE LD. D CITS ORDER WHICH IS CONTRARY TO LAW AND THE FACTS OF THE CASE. 2. THE LD. CIT(A) HAS ERRED BY UPHOLDING THE ORDER WRONGLY PASSED U/S 153A(1)(B), SINCE THE SEARCH WAS CONDUCT ED ON 8.10.2010 I.E. RELEVANT ASSESSMENT YEAR 2011-12 AND THE PERIOD DOES NOT FALL IN THE BLOCK PERIOD. 3. THE LD. CIT(A) HAS ERRED BY NOT ALLOWING SET OFF OF ADMITTED BUSINESS LOSS RS.1,53,96,722/- AND CARRIED FORWARD LOSS RS.21,03,278/- INCURRED BY THE COMPANY WRONGLY TREA TING THE TOTAL AMOUNT RS.1,75,00,000/- AS CARRIED FORWARD LO SS AGAINST THE AMOUNT OF BUSINESS INCOME SURRENDERED. 5. GROUND NO.1 RAISED BY THE ASSESSEE IS GENERAL I N NATURE AND NEEDS NO ADJUDICATION. GROUND NO.2 WAS NOT PRESSED BEFORE US AND, IS, THE REFORE TREATED AS DISMISSED. 6. GROUND NO.3 RAISED BY THE ASSESSEE IS AGAINST THE ACTION OF THE LD. CIT (APPEALS) IN TREATING THE SURRENDERED INCOME AS NOT ASSESSABLE UNDER ANY OF T HE 5 SPECIFIED HEADS OF INCOME AND FURTHER NOT ALLOWING SET OFF OF BUSINESS LOSS AND DEPRECIATION AGAINST THE SAME. 7. BEFORE US, THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE WERE TWO FOLD; I) THAT THE SURRENDERED INCOME WAS BUSINESS INCOME AND HENCE ASSESSABLE AS SUCH; II) THAT AGAINST ITS SURRENDERED INCOME SET OFF OF LOSSES ON ACCOUNT OF DEPRECIATION AND BUSINESS LOSS WAS ALLOWABLE. 8. THE LD. DR, ON THE OTHER HAND, VEHEMENTLY ARGUED THAT THE ASSESSEES CONTENTION OF THE SURREN DERED INCOME BEING ASSESSABLE UNDER THE HEAD BUSINESS IN COME WAS NOT SUSTAINABLE SINCE NEITHER THE NATURE, NOR T HE SOURCE OF INCOME WAS SATISFACTORILY EXPLAINED BY TH E ASSESSEE. 9. WE HAVE HEARD BOTH THE PARTIES. THE FACT THAT THE AMOUNT OF RS.1.75 CRORES WAS SURRENDERED BY THE ASSESSEE AND DISCLOSED IN ITS RETURN OF INCOME IS N OT DISPUTED. MOREOVER, THERE IS NO DISPUTE REGARDING THE PROPOSITION LAID DOWN BY M/S KIM PHARMA (P) LTD. (S UPRA) THAT IN CASES WHERE THE NATURE AND SOURCE OF SURREN DERED INCOME IS NOT DISCLOSED, THE SAME IS NOT TO BE ASSE SSED UNDER ANY OF THE SPECIFIED HEADS OF INCOME AND THE ALLOWANCES AVAILABLE UNDER THE SPECIFIED HEADS AS A LSO THE 6 SET OFF OF BUSINESS LOSSES U/SS 70 AND 71 OF THE AC T ARE NOT ALLOWABLE AGAINST SUCH INCOMES. 10. HAVING SAID SO, WE FIND THAT FIRST QUESTION TO BE ADDRESSED IN THE PRESENT CASE BEFORE US IS WHETHER THIS SURRENDERED INCOME OF RS.1.75 CRORES COULD BE ATTRI BUTED TO THE BUSINESS OF THE ASSESSEE AND THUS ASSESSED U NDER THE HEAD BUSINESS INCOME. 11. THE LD. COUNSEL FOR THE ASSESSEE IN SUPPORT OF ITS ABOVE CONTENTIONS DREW OUR ATTENTION TO THE LET TER ADDRESSED TO THE ACIT, CENTRAL CIRCLE-II, CHANDIGAR H DATED 20.7.2012 DURING THE COURSE OF ASSESSMENT PROCEEDIN GS PLACED AT PAPER BOOK PAGE NO.18 AND DISCLOSING THE SOURCE OF THE SURRENDERED INCOME AS BEING FROM THE NORMAL BUSINESS COLLECTIONS FROM THE BOT PROJECT UNDERTAKEN BY IT OF THE CONSTRUCTION OF KANGRA BUS STAND AND MCLEODGANJ BUS STAND. THE RELEVANT SUBMISSIONS MADE BY THE ASSESSEE VIDE ITS LETTER ARE AS UNDER: A SUM OF RS. 1.75 CRORE WAS SURRENDERED AS INCOME FR OM NORMAL BUSINESS AS COLLECTIONS FROM THE BOT PROJECT UT ILIZED IN CONSTRUCTION THROUGH THE PROMOTER SH. VIJAY KUMAR SO OD AND DULY DECLARED IN THE COMPUTATION SHEET DURING THE YEAR. 12. TO THIS, THE LD. DR COUNTERED STATING THAT WHI LE RECORDING THE STATEMENT OF SHRI VIJAY SOOD U/S 132( 4) OF THE ACT, HE HAD GIVEN A GENERAL EXPLANATION REGARDI NG THE SURRENDERED INCOME REPRODUCED IN THE ASSESSMENT ORD ER AS FOLLOWS: 7 THERE MAY BE CERTAIN DISCREPANCIES IN THE BOOKS OF ACCOUNTS OF MY CONCERNS MAINLY PERTAINING TO M/S PRASH ANTI SURYA CONSTRUCTION CO. PVT. LTD. WHICH IS SPECIAL PUR POSE VEHICLE FOR EXECUTING THE BOT PROJECT AT KANGRA AND MCLEODGANJ. ON ACCOUNT OF THIS, L HAVE ALREADY SURRE NDERED ADDITIONAL INCOME OF RS. 2 CRORES FOR F.Y. 2010-201 1 IN ADDITION TO MY REGULAR INCOME SUBJECT TO NO PENALTY OR PROSECUTUION UNDER IT AND OTHER LAWS. I PROMISE TO PAY TAX ON THIS ADDITIONAL INCOME AS PER PROVISIONS OF IT A CT, 1961. THE DETAILED BREAK-UP OF THE SURRENDER AMOUNT SHALL BE SUBMITTED WITHIN A COUPLE OF DAYS. 13. FURTHER THE LD. DR ALSO POINTED TO THE OBSERVATIONS OF THE LD. CIT (APPEALS) STATING SO AN D REPRODUCED IN THE EARLIER PART OF OUR ORDER. THE L D. DR CONTENDED THAT IT IS EVIDENT THAT NO NATURE AND SOU RCE OF THE SURRENDERED INCOME WAS EXPLAINED BY THE ASSESSE E OR EVEN SUBSTANTIATED. FURTHER THE LD. DR POINTED OUT THAT THE DIRECTORS REPORT OF THE ASSESSEE COMPANY APPEN DED TO THE AUDITED ACCOUNTS FOR THE IMPUGNED YEAR PLACED A T PAPER BOOK PAGE NO.37 SHOWED THAT THE SURRENDER WAS ON ACCOUNT OF INVESTMENT IN THE BOT PROJECT BY THE PROMOTERS. THE LD. DR CONTENDED THAT IN THE FIRST PLACE DESPITE AMPLE OPPORTUNITIES GIVEN TO THE ASSESSEE N O SOURCE OR NATURE OF THE SURRENDERED INCOME WAS EXPL AINED BY IT AND BY MAKING THE SURRENDER IT HAD STOPPED TH E REVENUE FROM MAKING FURTHER ENQUIRIES IN THIS REGAR D. THE LD. DR CONTENDED THAT NOTHING WAS BROUGHT ON RE CORD BY THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF THE INCOME. THE LD. DR ALSO CONTENDED THAT THE CONTENT ION NOW RAISED BY THE LD. COUNSEL FOR THE ASSESSEE WAS 8 CONTRARY TO WHAT WAS STATED BY ITS DIRECTORS IN THE IR REPORT ATTACHED TO THE BALANCE SHEET. 14. AT THIS JUNCTURE, THE LD. COUNSEL FOR THE ASSESSEE COUNTERED BY STATING THAT THERE WAS NO CONTRADICTION IN ITS EXPLANATION, AS THE EXPLANATIO N CLEARLY STATED THAT THE COLLECTIONS FROM THE BUS STAND WERE INVESTED IN THE BOT PROJECT WHICH WAS WHAT WAS STAT ED BY THE DIRECTORS ALSO IN THEIR REPORT AND THUS THERE W AS NO CONTRADICTION BETWEEN THE EXPLANATION GIVEN BY THE ASSESSEE TO THE ASSESSING OFFICER AND THAT STATED B Y THE DIRECTORS IN THEIR REPORT. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT NO OTHER SOURCE OF INCOME OF THE ASS ESSEE HAD BEEN POINTED OUT BY THE ASSESSING OFFICER AND F URTHER STATED THAT THE ASSESSEE HAD DISCHARGED ITS ONUS OF PROVING THE NATURE AND SOURCE OF INCOME AND SURREND ERED INCOME AND THE ONUS NOW RESTED ON THE DEPARTMENT TO PROVE THAT THE SURRENDERED INCOME RELATED TO SOME O THER SOURCE OF INCOME. 15. HAVING HEARD BOTH THE PARTIES, WE FIND THAT ON E FACT WHICH EMERGES UNDOUBTEDLY FROM THE ABOVE ARGUM ENTS MADE BEFORE US IS THAT THE SURRENDER IS ON ACCOUNT OF EXCESS/UNDISCLOSED AMOUNT INVESTED IN THE BOT PROJE CT UNDERTAKEN BY THE ASSESSEE. THE LD. DR DREW OUR ATTENTION TO THE DIRECTORS REPORT ANNEXED TO THE A UDITED BALANCE SHEET FOR THE IMPUGNED YEAR IN THIS REGARD STATING SO AT POINT NO.1 OF THEIR REPORT AND THE ASSESSEE H AS POINTED OUT ITS SUBMISSIONS MADE BEFORE THE ASSESSI NG 9 OFFICER VIDE THEIR LETTER DATED 20.7.2012 IN THIS R EGARD. THEREFORE, UNDOUBTEDLY WE FIND THAT THE SURRENDER I S ON ACCOUNT OF INVESTMENT IN THE BUSINESS PROJECT OF TH E ASSESSEE. THE ASSESSEE, WE FIND, HAS EXPLAINED THE SOURCE OF THE SAME AS BEING ON ACCOUNT OF COLLECTIONS FROM THE BOT PROJECT. 16. IN THE CASE OF GAURISH STEELS PVT. LTD. VS. A CIT, 43 ITR (TRIB.) CHD-TRIB., REFERRED TO BY BOTH THE P ARTIES IN SUPPORT OF ITS CONTENTIONS THAT WHETHER THE SURREND ERED INCOME SHOULD BE ASSESSED UNDER THE SPECIFIED HEADS OR OTHERWISE, WE FIND THAT ONE OF THE DISCLOSURES IN THAT CASE PERTAINED TO AND WAS ON ACCOUNT OF COST OF CONSTRUC TION OF BUILDING. THE I.T.A.T. IN THAT CASE HELD THAT THE SURRENDER WAS NOTHING BUT BUSINESS INCOME OF THE ASSESSEE SIN CE THE ASSESSING OFFICER HAD NOT OBJECTED TO THE HEAD UNDE R WHICH IT WAS SURRENDERED AND FURTHER NO OTHER SOURC E OF INCOME HAD BEEN FOUND BY THE ASSESSING OFFICER EXCE PT BUSINESS INCOME. FURTHER I.T.A.T. DISTINGUISHED TH E CASE OF M/S KIM PHARMA (P) LTD. (SUPRA) OF THE JURISDICT IONAL HIGH COURT ON THIS ISSUE STATING THAT IN THAT CASE WHILE THE SURRENDER MADE ON ACCOUNT OF DEBTORS, STOCK AND CONSTRUCTION IN BUILDING WAS ACCEPTED AS RELATING T O BUSINESS AND ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION, IT WAS THE SURRENDER MADE ON ACCOUNT OF EXCESS CASH FOUND WHICH WAS IN DISPUTE A ND WHICH THE HON'BLE HIGH COURT HAD HELD WAS NOT ASSES SABLE UNDER ANY OF THE SPECIFIED HEADS SINCE NO SATISFACT ORY 10 EXPLANATION OF THE NATURE OR SOURCE WAS GIVEN BY TH E ASSESSEE. THE I.T.A.T. HELD THAT SINCE THE SAID DE CISION RELATED ONLY TO THE SURRENDER MADE ON ACCOUNT OF EX CESS CASH, IT WAS DISTINGUISHABLE FROM THE FACTS OF THE CASE IN HAND AND THEREBY WENT TO HOLD THAT THE SURRENDER MA DE BY THE ASSESSEE ON ACCOUNT OF INVESTMENT IN CONSTRUCTI ON OF BUILDING WAS TO BE ASSESSED UNDER THE HEAD BUSINES S INCOME. THE RELEVANT FINDINGS OF THE I.T.A.T. IN THE SAID CASE ARE AS UNDER: 13. IN THE PRESENT CASE, WE SEE THAT THE ASSESSING OFFICER HAS NOWHERE DISPUTED THE BUSINESS LOSSES INCURRED BY THE ASSESSEE. THE BOOKS HAVE NOT BEEN REJECTED. IT WAS STATED AT THE BAR THAT EVEN AT THE TIME OF SURVEY, IN THE TRADING ACCOUNT PREPARED BY THE SURVEY TEAM, THERE WERE LOSSES INCURRED BY THE ASSESSEE. ALL THESE FACTS HAVE NOT BEEN DISPUTED BY THE ASSESSING OFFICER. FURTHER, THE SURRENDER MADE BY THE ASSESSEE WAS ON ACCOUNT OF CASH FOUND DURING THE COURSE OF SURVEY, DISCREPANCY IN THE COST OF CONSTRUCTION OF BUILDING, DISCREPANCY IN STOCK AND DISCREPANCY IN ADVANCES AND RECEIVABLES. BY NO STRETCH OF IMAGINATION, ANY OF THESE INCOMES APART FROM CASH CAN BE CONSIDERED AS INCOME UNDER ANY HEAD OTHER THAT THE BUSINESS INCOME. 14. NOWHERE IN HIS ORDER THE ASSESSING OFFICER HAS BEEN ABLE TO BRING ON RECORD THE FACT THAT THE INCOME SURRENDERED DURING THE COURSE OF SURVEY WAS NOT OUT OF THE BUSINESS OF THE ASSESSEE. ALSO NOWHERE HE HAS OBJECTED TO THE HEADS UNDER WHICH THE ASSESSEE HAD SURRENDERED 11 THESE AMOUNTS, I.E. CASH, CONSTRUCTION OF BUILDING, DISCREPANCY IN STOCK AND DISCREPANCY IN ADVANCES AND RECEIVABLE. FURTHER, EVEN THE SURVEY TEAM HAS NOT FOUND ANY SOURCE OF INCOME EXCEPT THE BUSINESS INCOME. NOW, FOLLOWING THE JUDGMENT OF JURISDICTIONAL HIGH COURT, IN THE BACKGROUND OF THE FACTS OF THE PRESENT CASE, WE CAN SAFELY INFER THAT APART FROM CASH ALL OTHER INCOME SURRENDERED MAY BE BROUGHT TO TAX UNDER THE HEAD BUSINESS INCOME WHILE THE CASH HAS TO BE TAXED UNDER THE HEAD DEEMED INCOME UNDER SECTION 69A OF THE ACT. 17. SINCE THE FACTS IN THE PRESENT CASE ARE IDENTI CAL TO THAT IN GAURISH STEELS PVT. LTD. (SUPRA), THE SU RRENDER HAVING BEEN MADE BY THE ASSESSEE ON ACCOUNT OF INVESTMENT MADE IN THE BOT PROJECT WHICH WAS THE BUSINESS OF THE ASSESSEE, THE DECISION RENDERED BY THE I.T.A.T. IN THE SAID CASE WILL SQUARELY APPLY IN TH E PRESENT CASE, FOLLOWING WHICH WE HOLD THAT THE INCOME SURRE NDERED BY THE ASSESSEE OF RS.1.75 CRORES IS ASSESSABLE UND ER THE HEAD INCOME FROM BUSINESS AND PROFESSION. 18. HAVING HELD SO, WE NOW COME UP TO THE SECOND LIMB OF THE GROUND OF APPEAL RAISED BEFORE US REGAR DING THE SET OFF OF BROUGHT FORWARD LOSSES AND DEPRECIAT ION TO THE TUNE OF RS.1,53,96,722/-. 19. SINCE WE HAVE HELD THE SURRENDERED INCOME TO B E ASSESSED UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION IT GOES WITHOUT SAYING THAT SET OFF OF UNABSORBED AND CURRENT BUSINESS LOSSES AND DEPRECIA TION 12 IS ALLOWABLE AGAINST THE SAME AS PER THE PROVISIONS OF SECTIONS 70 AND 71 OF THE ACT. THE LD. DR RAISED CONTENTION BEFORE US TO THE EFFECT THAT THE DEPRECI ATION LOSS WAS NOT IN THE NATURE OF DEPRECIATION AND THAT THE ASSESSEE HAD SHOWN BUSINESS LOSSES BY DEBITING INTE REST WHICH WAS NOT ALLOWABLE TO IT. THE LD. DR CONTENDE D THAT BUSINESS LOSSES AND DEPRECIATION LOSSES WERE ALL AR RANGED BY THE ASSESSEE IN A MANNER SO AS TO CLAIM SET OFF OF THE SAME AGAINST ITS SURRENDERED INCOME AND THUS REDUCE ITS INCOME TAX LIABILITY. THE LD. COUNSEL FOR THE ASSE SSEE AT THIS JUNCTURE COUNTERED BY STATING THAT THE LOSSES INCURRED BY THE ASSESSEE WERE ACCEPTED BY THE ASSES SING OFFICER AND WERE NEVER IN DISPUTE AND BY RAISING TH IS ISSUE THE LD. DR IS ONLY ATTEMPTING TO IMPROVE THE CASE O F THE ASSESSING OFFICER, WHICH CANNOT BE ALLOWED AT THE S TAGE. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ISSUE RAISED BY THE LD. DR IS NOT EMANATING FROM THE ORDE R OF THE ASSESSING OFFICER. 20. WE HAVE GONE THROUGH THE ORDER OF THE ASSESSIN G OFFICER AND FIND THAT THE BUSINESS LOSSES AND DEPRE CIATION LOSSES, WHICH THE ASSESSEE HAD SOUGHT TO SET OFF AG AINST ITS SURRENDERED INCOME HAVE NEVER BEEN QUESTIONED B Y THE ASSESSING OFFICER. WE ARE IN AGREEMENT WITH THE LD . COUNSEL FOR THE ASSESSEE THAT BY RAISING THIS ISSUE BEFORE US THE LD. DR IS ONLY ATTEMPTING TO ENLARGE THE SCO PE OF ASSESSMENT BY RAISING AN ISSUE NOT DEALT WITH BY TH E 13 ASSESSING OFFICER WHICH IS NOT PERMISSIBLE AT THE S TAGE. THUS WE REJECT THE ABOVE CONTENTION OF THE LD. DR. 21. IN EFFECT, WE HOLD THAT THE SURRENDERED INCOME OF THE ASSESSEE AMOUNTING TO RS.1.75 CRORES IS ASSESSA BLE UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION AND THE SET OFF OF BUSINESS LOSSES AND DEPRECIATION IS ACCORDINGLY ALLOWED AGAINST THE SAME. THE ASSESSIN G OFFICER IS DIRECTED TO SET OFF THE BUSINESS LOSSES SUFFERED BY THE ASSESSEE OUT OF THE SURRENDERED INCOME. THE GROUND NO.3 RAISED BY THE ASSESSEE IS ALLOWED. 22. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23 RD MARCH, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH
Mehul