M/s. Dev Raj Hi-Tech Machines Ltd, Ferozepur City. V. The Dy. Commissioner of Inocme-tax, Ferozepur

ITA 326/ASR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95029 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-09-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 15-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Revision of order; Depreciation; Deemed to accrue or arise in india; Difference of opinion; Corroborative evidences; Assessment record; Change of opinion; Revenue expenditure; Capital expenditure
• Section: 69C; 143(3); 133A; 69; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER AND SH. T.S. KAPOOR, HONBLE ACCOUNTANT MEMBER I.T.A. NO. 326(ASR)/2014 ASSESSMENT YEAR: 2010-11 PAN: AAACD6893M M/S DEV RAJ HI-TECH MACHINES LTD. INDUSTRIAL AREA FEROZEPUR CITY. VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-III FEROZEPUR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. ASHWANI KUMAR (C.A) RESPONDENT BY: SH. TARSEM LAL (DR) DATE OF HEARING: 1 6.09.2015 DATE OF PRONOUNCEM ENT: 07.10.2015 ORDER PER T. S. KAPOOR (AM): THIS IS ASSESSEES APPEAL FOR ASST. YEAR 2010-11 , AGAINST THE ORDER DATED 20.03.2014, PASSED BY THE LEARNED CIT, BATHINDA UND ER SECTION 263 OF THE ACT. THE ASSESSEE HAS TAKEN TWO GROUNDS OF APPEAL; HOWEV ER, THE CRUX OF GROUNDS OF APPEAL IS THE GRIEVANCE OF THE ASSESSEE AGAINST THE ORDER PASSED BY CIT, BATHINDA UNDER SECTION 263 OF THE ACT. THE CASE WAS EARLIER HEARD ON 2.2.2015, BUT IT WAS RE-FIXED FOR CERTAIN CLARIFICATIONS AND THEREAFTER AFTER FEW ADJOURNMENTS HAD COME UP FOR HEARING BEFORE THE PRE SENT BENCH. 2. ITA NO. 3 26(ASR)/2014 ASST. YE AR 2010-11 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A MANUFACTURER OF RICE SHELLER MACHINERIES AND ITS PARTS. A SURVEY WAS CAR RIED OUT ON THE PREMISES OF THE ASSESSEE ON 14.09.2009 U/S 133A OF THE I.T. ACT , 1961. DURING THE COURSE OF SURVEY, THE ASSESSEE SURRENDERED AN ADDITIONAL I NCOME OF RS.1,25,00,700/- OVER AND ABOVE THE NORMAL INCOME FOR THE YEAR UNDER CONSIDERATION. THE ASSESSEE FILED ITS RETURN OF INCOME ON 26.07.2010 A ND DECLARED INCOME OF RS.63,02,570/-. THE CASE OF THE ASSESSEE WAS SELECT ED FOR SCRUTINY. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO J USTIFY THE LOW RETURNED INCOME AS COMPARED TO THE SURRENDERED INCOME. THE A SSESSEE WAS ASKED TO FILE WITH THE DOCUMENTARY EVIDENCES IN THE FARM OF BREAK UP OF VARIOUS EXPENSES BEFORE AND AFTER THE SURVEY, AS WELL AS A COMPARISO N CHART SHOWING THE BREAKUP AND COMPARISON WITH REASONS. THE ASSESSING OFFICER AFTER EXAMINATION OF THE REPLY OF ASSESSEE COMPLETED THE ASSESSMENT AND MADE DISALLOWANCES OF RS.2,02,690/- AND RS.7,68,019/- ON ACCOUNT OF EXPEN SES AND GROSS PROFIT RATE RESPECTFULLY. THE LEARNED CIT AFTER EXAMINATION OF ASSESSMENT RECORDS OF THE ASSESSEE OBSERVED THAT DURING THE SURVEY U/S 133 A OF THE ACT, THE ASSESSEE HAD SURRENDERED AN INCOME OF RS.1,25,00,700/- AND S UCH SURRENDERED INCOME WAS TO BE TAXED UNDER THE PROVISIONS OF SECTION 69A OF THE ACT AND WHEREAS, THE ASSESSEE HAD CREDITED THE SURRENDERED INCOME TO THE PROFIT AND LOSS ACCOUNT AND HAD DEBITED VARIOUS EXPENSES AGAINST TH E SURRENDERED INCOME. HE OBSERVED THAT ASSESSING OFFICER HAD COMPLETELY IGNO RED THIS FACTOR WHILE COMPLETING THE ASSESSMENT AND THEREFORE, A NOTICE U NDER SECTION 263 WAS ISSUED TO THE ASSESSEE. IN REPLY THE ASSESSEE FILED DETAILED REPLY TO THE SHOW 3. ITA NO. 3 26(ASR)/2014 ASST. YE AR 2010-11 CAUSE NOTICE, HOWEVER, THE LEARNED CIT WAS NOT SATI SFIED WITH THE REPLY, THEREFORE, HE PASSED ORDER UNDER SECTION 263 AND DI RECTED THE ASSESSING OFFICER TO PASS NECESSARY ASSESSMENT ORDER AFTER GIVING EFF ECT TO THE ORDER UNDER SECTION 263. THE RELEVANT FINDINGS OF LEARNED CIT A RE REPRODUCED BELOW. 4. I HAVE CAREFULLY EXAMINED THE FACTS OF THE CASE , CONSIDERED VARIOUS SUBMISSION MADE BY THE LEARNED COUNSEL OF THE ASSES SEE AND PERUSED THE RELEVANT RECORDS OF THE CASE. VARIOUS ISSUES INVOLV ED IN THIS CASE ARE DISCUSSED AS UNDER:- 4.1 THE MAIN ISSUE INVOLVED IN THIS CASE IS WHETHE R THE INCOME SURRENDERED BY THE ASSESSEE DURING THE COURSE OF SURVEY IS BUSI NESS INCOME OR NOT. THE ASSESSEE HAS CONTENDED THAT THE ENTIRE SURRENDER OF INCOME MADE BY THEM DURING SURVEY WAS NOTHING BUT THE BUSINESS INCOME O NLY. PERUSAL OF THE SURRENDERED LETTER SUBMITTED BY THE ASSESSEE DURING SURVEY REVEALS THAT THE ASSESSEE HAD MADE DISCLOSURES OF ADDITIONAL INCOME OF RS.1.25 CORES UNDER THE FOLLOWING HEADS- I) EXCESS CASH FOUND RS.9,50,700/- II) STOCK FOUND EXCESS RS.15,90,000/- III) DIRECTORS IMPREST ACCOUNT RS.85,60,000/- IV) LABOUR ADVANCE RS.5,60,000/- V) OFFICE RENOVATION RS. 8,40,000/- 4.2 DURING THE COURSE OF HEARING, I HAD SPECIFICALL Y REQUESTED THE LEARNED COUNSEL OF ASSESSEE TO SUBMIT AS TO THE NATURE AND SOURCES OF RS.85.60 LACS ITEMS SHOWN UNDER THE HEAD DIRECTORS IMPREST ACCOUNT. HE WAS ALSO REQUESTED TO SUBMIT AS TO HOW THIS AMOUNT CAN BE TREATED AS B USINESS INCOME. SIMILARLY HE WAS ASKED TO EXPLAIN THE SOURCE AND BUSINESS CON NECTION OF OTHER ITEMS OF SURRENDER OF INCOME MENTIONED ABOVE. HOWEVER, THE A SSESSEE HAS NOT BEEN ABLE TO GIVE ANY SATISFACTORY REPLY AND EXPLANATIONS IN THIS REGARD. THE ASSESSEE HAD MERELY REPEATED THAT THESE ITEMS ARE BUSINESS INCOM E WITHOUT SUPPORTING THE CLAIM WITH ANY COGENT REASONS OR VERIFIABLE EVIDENC E. 4. ITA NO. 3 26(ASR)/2014 ASST. YE AR 2010-11 4.3 I HAD ALSO ASKED THE ASSESSEE TO EXPLAIN THE NA TURE OF THESE ENTIRES FROM THEIR BOOKS OF ACCOUNTS. THE ASSESSEE HAS SUBMITTED RELEVANT PHOTOCOPIES OF LEDGER ACCOUNT. HOWEVER, THE SAID ENTRY IN THE LEDG ER ACCOUNT ARE NOTHING BUT THE REPETITION OF THE ENTRIES MENTIONED IN PARA 4.3 ABOVE AND THE CORRESPONDING TRANSFER OF THESE ITEMS IN THE CREDIT SIDE OF THE P ROFIT AND LOSS ACCOUNT OF THE CURRENT YEAR. THE LEARNED COUNSEL OF THE ASSESSEE C OULD NOT EXPLAIN FROM THE BOOKS OF ACCOUNTS AS TO HOW THE SAID ENTRIES ARE IN TRICATELY CONNECTED WITH HIS BUSINESS TRANSACTIONS. 4.4 THE ASSESSEE HAS CONTENDED THAT THE DECISION OF HONBLE PUBJAB AND HARYANA HIGH COURT IN THE CASE OF M/S KIM PHARMA PV T. LTD. VS. CIT IN ITA NO.106 OF 2011 (O & M) DATED 27.04.2011 IS NOT APPL ICABLE IN THEIR CASE BECAUSE THE FACTS OF THE ASSESSEE ARE ENTIRELY DIFF ERENT. THE LEARNED COUNSEL HAS HIGHLIGHTED THESE DIFFERENCE IN HIS SUBMISSION DATE D 05.03.2014, AS UNDER. THE POINT FOR DETERMINATION IN THIS APPEAL IS, WHE THER RS.5,00,000/- WHICH WAS SURRENDERED BY THE ASSESSEE DURING THE CO URSE OF SURVEY UNDER SECTION 133A OF THE ACT WOULD FORM PART OF BUSINESS INCOME OR WAS ASSESSABLE UNDER SECTION 69A OF THE ACT. THE ASSESSING OFFICER , THE CIT(A) AND THE TRIBUNAL AFTER CONSIDERING THE FACTUAL ASPECT NOTICED THAT T HE AMOUNT SURRENDERED DURING THE SURVEY WAS NOT REFLECTED IN THE BOOKS OF ACCOUNT AND NO SOURCE FROM WHERE IT WAS DERIVED WAS DECLARED BY TH E ASSESSEE AND, THEREFORE, IT WAS DEEMED INCOME OF THE ASSESSEE UND ER SECTION 69A OF THE ACT. THE FINDINGS RECORDED BY THE TRIBUNAL IN THIS REGAR D ARE AS UNDER. THE BASIC ISSUE CONSIDERED BY THE HONBLE HIGH COUR T ABOVE IS THAT NO SOURCE FROM WHERE THE SURRENDERED INCOME WAS DERIVED BY TH E ASSESSEE HAD BEEN EXPLAINED BY THE ASSESSEE IN THE SAID CASE OF KIM P HARMA MENTIONED ABOVE. IN THE PRESENT CASE OF THE ASSESSEE, THE ASSESSEE HAS MADE THE SAID ENTRIES IN THE BOOKS OF ACCOUNTS ADMITTEDLY AS CONSEQUENCE OF SURV EY BUT THE SOURCE FOR THE GENERATION OF INCOME SURRENDERED BY ASSESSEE HAS NE VER BEEN EXPLAINED BY THE ASSESSEE AT ANY STAGE. IN FACT, ON MY REPEATED QUER Y ON THIS ISSUE, THE LEARNED COUNSEL MERELY REPEATED THAT THE ABOVE ITEMS ARE OU T OF BUSINESS INCOME ONLY WITHOUT SUBMITTING ANY CORROBORATIVE EVIDENCES OR E XPLANATIONS. 5. ITA NO. 3 26(ASR)/2014 ASST. YE AR 2010-11 4.5 THE APPLICATION OF SECTION 69A OF THE I.T ACT, 1961 IS ONLY CONSEQUENTIAL IN NATURE BECAUSE THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THAT ANY OF THE ABOVE MENTIONED ITEMS OF SURRENDER OF INCOME IS BUSINESS IN NATURE. THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE SOURCE OF EARNING OR D ERIVING THE ABOVE INCOMES. THEREFORE, SUCH INCOMES, FOR WHICH THE ASSESSEE OFF ERS NO EXPLANATIONS ABOUT THE NATURE AND SOURCE OF ACQUISITIONS, OR THE EXPLA NATIONS OFFERED BY THE ASSESSEE IS NOT SATISFACTORY, ARE HIT BY THE DEEMIN G PROVISION OF SECTION 69A OF THE I.T. ACT, 1961. THE FACT OF THE CASE OF THE ASS ESSEE SQUARELY FALL UNDER THE SAID PROVISIONS. 4.6 SINCE THE INCOME SURRENDERED BY THE ASSESSEE FA LLS UNDER THE SECTION 69 OF THE I.T. ACT, 1961, THE SAME HAS TO BE TAXED SEP ARATELY WITHOUT THE ADJUSTMENT OF ANY LOSSES OR DEDUCTIONS AVAILABLE TO THE ASSESSEE UNDER THE NORMAL COMPUTATION OF INCOME UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION. THE LAW ON THIS ISSUE WAS LAID DOWN BY THE HONBLE GUJRAT HIGH COURT IN THE CASE OF FAKIR MOHD. HAJI HASAN [120 TA XMAN 11] AND IN 247 ITR 290 (2002) THAT SECTION 69,69A, 69B AND 69C ARE DEE MING PROVISIONS AND THIS INCOME CAN NOT BE SET OFF UNDER ANY OTHER HEAD OF I NCOME. IN VIEW OF THE LEGAL POSITION ON THIS ISSUE CLEARLY LAID DOWN BY THE JUR ISDICTIONAL HIGH COURT, VARIOUS OTHER CASE LAWS RELIED UPON BY THE ASSESSEE DO NOT HELP THE CASE OF THE ASSESSEE IN ANY MANNER SINCE THIS ISSUE IS DIRECTLY AND SQUA RELY COVERED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF KIM PHARMA (SUPRA). TO GIVE AN EXAMPLE, THE ASSESSEE HAS RELIED HEAVILY ON THE JUD GMENT OF HONBLE KARNATKA HIGH COURT IN THE CASE OF CIT VS. S.K. SRIGIRI AND BROS., 298 ITR 13 (KAR). IN THIS CASE, THERE WAS A CLEAR FINDING OF FACTS BY LOWER A PPELLATE AUTHORITIES THAT ADDITIONAL INCOME RECEIVED BY THE ASSESSEE WAS FROM BUSINESS AND FROM NO OTHER SOURCES AND THEREFORE THE SALARY PAID TO THE PARTNERS WAS REQUIRED TO BE DEDUCTED WHILE CONSIDERING PROFIT AND LOSS. HOWEVER , IN THE CASE OF THE PRESENT ASSESSEE, NEITHER THE ASSESSEE NOR THE ASSESSING OF FICER HAVE BROUGHT ANY COGENT EVIDENCE OR A REASONABLE EXPLANATION TO PROV E THAT ANY OF THE ITEMS OF ADDITIONAL INCOME SURRENDERED DURING SURVEY WAS DER IVED FROM THE BUSINESS ACTIVITIES OF THE ASSESSEE. IN ANY EVENT, THE ASSES SEE COULD NOT PROVE THE SOURCE OF THE STATED ITEMS OF INCOME SURRENDERED DURING SU RVEY. THEREFORE, THE RATIO OF THE SAID CASE IS NOT APPLICABLE ON THE FACTS OF THI S ASSESSEE. AS RESULT, ALL OTHER 6. ITA NO. 3 26(ASR)/2014 ASST. YE AR 2010-11 CONTENTIONS OF THE ASSESSEE W.R.T. RELIANCE PLACED ON VARIOUS OTHERS CASE LAWS STAND DISCUSSED AND DISPOSED OFF AGAINST THE ASSESS EE. 4.7 FROM THE ABOVE FACTS AND DISCUSSION, IT IS APPA RENT THAT THE ASSESSING OFFICER HAD NOT CORRECTLY EXAMINED THE FACTS OF THE CASE AND HE HAD ACCEPTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE WITHOUT DUE E XAMINATION OF THE RELEVANT ENTRIES AND ALSO HE HAD TOTALLY IGNORED THE RATIO O F THE JURISDICTIONAL HIGH COURT ON THIS ISSUE. THEREFORE, I AM OF THE CONSIDERED VI EW THAT THE ASSESSMENT ORDER UNDER CONSIDERATION PASSED BY THE ASSESSING OFFICER IN THIS CASE IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN VIEW OF THE ABOVE, I HEREBY MODIFY THE ASSESSMENT ORDER U/S 143(3) OF THE I.T. ACT, 1961 DATED 05.03.2013 FOR ASSESSMENT YEAR 2010-11 UNDER CONSIDERATION, SO FAR AS TAXABILITY OF SURRENDERED INCOME OF RS.1,25,00,700/- IS CONCERNED . IN OTHER WORDS, I MODIFY THE ASSESSMENT FOR ENHANCING THE TAXABLE INCOME OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO RECOMPUTED THE TAXABLE INCOME OF THE ASSESSEE BY CONSIDERING THE INCOME OF RS.1,25,00,700/- SEPARATE LY U/S 69A OF THE I.T. ACT, 1961 WITHOUT ALLOWING ANY ADJUSTMENT OF BUSINESS LO SSES/DEPRECIATION ETC COMPUTED UNDER THE HEAD INCOME FROM BUSINESS AND P ROFESSION. THE A.O IS DIRECTED TO PASS THE NECESSARY ASSESSMENT ORDER GIV ING EFFECT TO THIS ORDER U/S 263 AFTER GIVING A FRESH OPPORTUNITY TO THE ASSESSE E FOR THE PURPOSE OF RE- COMPUTATION AND ENHANCEMENT OF TAXABLE INCOME. 3. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 4. AT THE OUT SET THE LEARNED AR INVITED OUR ATTENT ION TO COPY OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT PLACED AT PAPER B OOK PAGE 12 TO 32 AND OUR SPECIFIC ATTENTION WAS INVITED TO THE PROFIT AND LO SS ACCOUNT PLACED AT PAPER BOOKS PAGE 29 AND IT WAS SUBMITTED THAT THE SURREND ERED INCOME WAS DULY CREDITED TO THE PROFIT AND LOSS ACCOUNT AS THE SURR ENDERED INCOME WAS MADE OVER AND ABOVE THE NORMAL PROFITS OF THE CONCERN OF THE ASSESSEE. HE FURTHER TOOK US TO PAGE 35 WHERE A COPY OF LETTER WRITTEN B Y ASSESSING OFFICER ON 7. ITA NO. 3 26(ASR)/2014 ASST. YE AR 2010-11 15.07.2011 WAS PLACED. OUR SPECIFIC ATTENTION WAS I NVITED TO PARA-11 OF THE SAID LETTER WHERE ASSESSING OFFICER HAD SPECIFICALL Y REQUIRED THE ASSESSEE TO EXPLAIN NET INCOME DISCLOSED IN THE RETURN OF INCOM E VIZ-A VIZ SURRENDERED INCOME. THEREFORE, THE LEARNED AR SUBMITTED THAT DU RING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS S PECIFICALLY RAISED THIS ISSUE AND ASSESSEE HAD FILED A DETAILED REPLY VIDE ITS LE TTER DATED 18.1.2013 PLACED AT PAPER BOOK PAGE 37 TO 40 AND HE FURTHER, TOOK US TO PAPER BOOK PAGE 44 WHERE A FURTHER EXPLANATION SUBMITTED BY THE ASSESSEE VID E LETTER DATED 01.03.2013 WAS PLACED. THE LEARNED AR SUBMITTED THAT THE ASSES SEE DURING THE ASSESSMENT PROCEEDINGS HAD EXPLAINED EACH AND EVERY ITEM OF EX PENDITURE AND SPECIFIC ATTENTION WAS INVITED TO REPLY IN RESPONSE TO QUERY RAISED BY ASSESSING OFFICER VIDE PARA-11 OF HIS LETTER DATED 15.07.2011. IT WAS SUBMITTED THAT AGAIN ASSESSING OFFICER VIDE LATTER DATED 22.2.2013 RAISE D THIS ISSUE AND ASSESSEE AGAIN REITERATED ITS REPLY WHICH WAS PLACED AT PAPE R BOOK PAGE-44. IN VIEW OF THE ABOVE EXAMINATION BY ASSESSING OFFICER AND EXPL ANATION BY ASSESSEE THE ASSESSING OFFICER WAS SATISFIED WITH THE REPLY AND THEREFORE, HAD PASSED REASONED ORDER AND THEREFORE, IT CANNOT BE SAID THA T ASSESSING OFFICER HAD NOT APPLIED HIS MIND AND THEREFORE, CIT WAS NOT JUSTIFI ED IN PASSING THE ORDER UNDER SECTION 263. RELIANCE IN THIS RESPECT WAS PLA CED ON THE CASE LAWS OF CIT VS. GABRIEL INDIA LTD. 203 ITR 108 (BOM). THE LEARN ED AR SUBMITTED THAT IN THIS CASE, THE ASSESSEE HAD CLAIMED CERTAIN EXPENSES AS REVENUE EXPENDITURE. THE ASSESSING OFFICER HAD SOUGHT DETAILS OF THE SAME AN D THE ASSESSEE PROVIDED DETAILS AND EXPLAINED THE NATURE OF THE EXPENDITURE . THE ASSESSING OFFICER 8. ITA NO. 3 26(ASR)/2014 ASST. YE AR 2010-11 CONSIDERED THE EXPLANATION AND ALLOWED THE SAME BUT DID NOT INCLUDE THE DISCUSSION IN THIS RESPECT IN THE ASSESSMENT ORDER. THE COMMISSIONER HAD PASSED ORDER UNDER SECTION 263 ON THE GROUND THAT S UCH EXPENDITURE WAS CAPITAL EXPENDITURE AND AS SUCH THE ORDER OF ITO WA S ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE HONBLE TRIBUNAL RU LED IN FAVOUR OF THE ASSESSEE AND ON APPEAL BY REVENUE, THE HONBLE HIGH COURT OB SERVED THAT IT WAS CLEAR THAT I.T.O HAD RAISED A QUERY ABOUT NATURE OF THE E XPENDITURE AND THE ASSESSEE HAD OFFERED AN EXPLANATION TO THE SAID QUERY AND AF TER EXPLANATION OF THE ASSESSEE THE ASSESSING OFFICER HAD ALLOWED THE EXPE NDITURE AS REVENUE EXPENDITURE. THE HONBLE COURT FURTHER HELD THAT O RDER OF ASSESSING OFFICER CANNOT BE BRANDED AS ERRONEOUS ONLY BECAUSE OF THE REASON THAT ACCORDING TO COMMISSIONER THE ORDER SHOULD HAVE BEEN WRITTEN MOR E ELABORATELY. THE LEARNED AR FURTHER PLACED HIS RELIANCE ON THE FOLLO WING JUDICIAL PRONOUNCEMENTS. (I) CIT VS. ANIL KUMAR SHARMA 335 ITR 83 (P&H), (II) CIT VS. DEEPAK MITTAL 324 ITR 411 (P&H) (III) KHUSHI RAM & SONS FOODS PVT. LTD. VS. CIT 40 ITR (TRIB) 92 (CHD.) EXPLAINING THE FACTS OF THE CASE LAW OF ANIL KUMAR SHAMRA, THE LEARNED AR SUBMITTED THAT THE HONBLE DELHI HIGH COURT HAD HEL D THAT THERE WAS DISTINCTION BETWEEN LACK OF ENQUIRY AND INADEQUATE ENQUIRY AND IF THERE WAS ANY ENQUIRY EVEN INADEQUATE THAT WOULD NOT BY ITSEL F GIVE ACTION TO THE COMMISSIONER TO PASS ORDER UNDER SECTION 263 OF THE INCOME TAX ACT, MERELY BECAUSE HE HAD A DIFFERENT OPINION IN THE MATTER. T HE LEARNED AR SUBMITTED 9. ITA NO. 3 26(ASR)/2014 ASST. YE AR 2010-11 THAT IN THE PRESENT CASE THE ASSESSING OFFICER HAD RAISED THE QUERY AND ASSESSEE HAD DULY EXPLAINED THE SAME AND AFTER CONS IDERING THE EXPLANATION OF ASSESSEE THE ASSESSING OFFICER HAD PASSED THE ASSES SMENT ORDER. THEREFORE, IT WAS SUBMITTED THAT IN THIS CASE THE ASSESSING OFFIC ER HAD MADE FULL ENQUIRIES AND AS PER THE JUDGMENT OF HONBLE COURT EVEN INADE QUATE ENQUIRIES WERE SUFFICIENT TO DEBAR THE COMMISSIONER TO PASS ORDER UNDER SECTION 263. IT WAS FURTHER SUBMITTED THAT IN THE CASE LAW OF CIT VS. D EEPAK MITTAL (SUPRA) THE HONBLE COURT HELD THAT CHANGE OF OPINION BY REAPPR AISING THE EVIDENCE BY COMMISSIONER IS NOT WITHIN PARAMETERS OF REVISIONAL JURISDICTION TO COMMISSIONER UNDER SECTION 263 OF THE ACT. THE LEAR NED AR FURTHER SUBMITTED THAT THE CASE LAW DECIDED BY CHANDIGARH TRIBUNAL IS SQUARELY APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE AS IN THIS CASE SIMILAR SURRENDER WAS MADE BY ASSESSEE AND THE SAME WAS CREDITED TO THE PROFIT AND LOSS ACCOUNT AND THE HONBLE CHANDIGARH TRIBUNAL HAD QUASHED THE ORDER O F COMMISSIONER PASSED UNDER SECTION 263 OF THE ACT. WITHOUT PREJUDICE TO THE ABOVE THE LEARNED AR FURTHER ARGUED THAT SECTION 69A AS IMPOSED BY LEARN ED CIT WAS NOT APPLICABLE IN THIS CASE AND IN THIS RESPECT PROVISIONS OF SECT ION 69A WERE READ. THE LEARNED AR SUBMITTED THAT THESE PROVISIONS WERE APP LICABLE IN A CASE WHERE THE SOURCE OF MONEY OR AN ASSET FOUND DURING THE SURVEY WAS NOT EXPLAINED. HE SUBMITTED THAT IN THE PRESENT CASE, THE SOURCE OF S URRENDERED WAS DULY EXPLAINED IN THE LETTER OF SURRENDER ITSELF WHEREIN THE ASSESSEE MENTIONED THAT THE SURRENDER WAS OVER AND ABOVE THE NORMAL PROFITS OF THE CONCERN AND IN THIS RESPECT THE LEARNED AR TOOK US TO PAPER BOOK PAGE 3 8 AND INVITED OUR ATTENTION 10. ITA NO. 326(ASR)/2014 ASST. YE AR 2010-11 TO THE CONTENTS OF SURRENDER LETTER WHEREIN THE ASS ESSEE HAD STATED THAT THE SURRENDERED INCOME WAS OVER AND ABOVE NORMAL PROFIT S OF THE CONCERN. IT WAS ARGUED THAT IN ACCORDANCE WITH SURRENDER LETTER THE ASSESSEE HAD RIGHTLY CREDITED THE AMOUNT TO THE PROFITS AND LOSS ACCOUNT AND THEREFORE, ON MERITS ALSO THE ASSESSING OFFICER HAD TAKEN A CORRECT VIEW . 5. THE LEARNED DR, ON THE OTHER HAND SUBMITTED THAT THAT ASSESSING OFFICER HAD ESCAPED MAKING OF ADDITION ON ACCOUNT OF SURREN DERED INCOME AND THEREFORE, THE ASSESSING OFFICER HAD TAKEN ERRONEOU S VIEW WHICH WAS PREJUDICIAL TO THE INTEREST OF REVENUE AND THEREFOR E, THE LEARNED COMMISSIONER HAS RIGHTLY PASSED THE ORDER UNDER SECTION 263. THE LEARNED DR SUBMITTED THAT IT WAS MANDATORY AS PER CBDT GUIDELINES THAT IN THE CASE OF AN ASSESSEE WHO HAD SURRENDERED INCOME DURING SURVEY THE TAXABLE IN COME CANNOT FALL BELOW THE SURRENDERED INCOME AND IN THIS RESPECT, LEARNED DR READ PARA 2 OF ASSESSMENT ORDER AND ARGUED THAT ASSESSING OFFICER HIMSELF HAD HELD THAT ASSESSEE HAD VIOLATED THE PROVISIONS BY UNDERSTATIN G ITS RETURN OF INCOME. IT WAS SUBMITTED THAT AFTER RECORDING THIS FACT THE AS SESSING OFFICER ESCAPED MAKING ADDITIONS ON ACCOUNT OF SURRENDERED INCOME A ND THEREFORE, LEARNED CIT WAS FULLY EMPOWERED TO PASS ORDER UNDER SECTION 263 . AS REGARDS THE CASE LAWS RELIED UPON BY THE LEARNED AR, HE SUBMITTED THAT NO NE OF THE CASES RELIED UPON BY THE LEARNED AR ARE APPLICABLE TO THE FACTS AND C IRCUMSTANCES OF THE CASE AS IN THE CASE OF GABRIEL INDIA LTD. (SUPRA), THE HON BLE COURT HAD HELD THAT LEARNED CIT IS NOT EMPOWERED TO MAKE FISHING ENQUIR ES WHEREAS IN THE PRESENT 11. ITA NO. 326(ASR)/2014 ASST. YE AR 2010-11 CASE THE COMMISSIONER HAD JUST OBSERVED THAT ASSESS ING OFFICER HAD SKIPPED THE ADDITIONS ON ACCOUNT OF SURRENDERED INCOME AND HAS NOT MADE ANY FISHING ENQUIRIES. SIMILARLY, HE ARGUED THAT THE FACTS OF THE CASE LAWS OF CIT VS. DEEPAK MITTAL 324 ITR 411 ARE NOT PARA MATERIAL. AS REGARDS THE TRIBUNAL ORDER IN THE CASE OF KHUSHI RAM & SONS (PVT.). LTD. VS. CIT (SUPRA). THE LEARNED DR SUBMITTED THAT SUCH ORDER HAS NO PRECEDE NTIAL VALUE IN VIEW OF JUDGMENT OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF KIM PHARMA (PVT.) LTD.(SUPRA), WHEREIN THE HONBLE COURT HAS DECIDED THE ISSUE OF ALLOWANCE OF EXPENSES AGAINST THE SURRENDERED INCOME IN FAVOUR O F REVENUE. IN THIS RESPECT, HE INVITED OUR ATTENTION TO QUESTION-B FRAMED BY TH E HONBLE COURT. THE LEARNED DR SUBMITTED THAT AS PER ANSWER TO THIS QUE STION THE ASSESSEE WAS NOT ELIGIBLE FOR SET OFF OF LOSSES AND EXPENSES AGAINST THE SURRENDERED INCOME AND THEREFORE, HE ARGUED THAT THE CASE LAW OF KIM PHARM A (SUPRA) WAS SQUARELY APPLICABLE IN THE PRESENT CASE, WHICH THE ASSESSING OFFICER HAD IGNORED. IN VIEW OF THE ABOVE ARGUMENTS THE LEARNED DR SUBMITTE D THAT ORDER OF COMMISSIONER NEEDS TO BE UPHELD. 6. THE LEARNED AR IN HIS REJOINDER SUBMITTED THAT T HE OBSERVATIONS MADE BY ASSESSING OFFICER VIDE PARA 2 OF HIS ORDER ARE FOR GUIDELINES FOR SELECTION OF SCRUTINY CASES AND IN THIS RESPECT HE READ THE ENTI RE PARA 2 OF ASSESSMENT ORDER AND ARGUED THAT SINCE RETURNED INCOME WAS LOW ER THAN THE SURRENDERED INCOME, THEREFORE, AS PER CBDT GUIDELINES THE ASSES SEES CASE WAS SELECTED FOR SCRUTINY. HE FURTHER REITERATED THAT SURRENDER WAS MADE AS BUSINESS INCOME AND IN THE CASE OF KIM PHARMA PVT. LTD. (SUPRA), TH E SURRENDER WAS NOT MADE 12. ITA NO. 326(ASR)/2014 ASST. YE AR 2010-11 AS BUSINESS INCOME AND ASSESSEE HAD NOT CREDITED TH E SURRENDERED INCOME IN THE PROFIT AND LOSS ACCOUNT WHEREAS IN THE PRESENT CASE, THE INCOME WAS CREDITED TO THE PROFIT AND LOSS ACCOUNT AND THEREFO RE, THE ASSESSING OFFICER HAD PASSED A REASONED ORDER AND THEREFORE, HE PRAYED TH AT ORDER UNDER SECTION 263 BE QUASHED AND THAT OF AO BE RESTORED. 7. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. THE ONLY QUESTION TO BE ANSWERED BY US IN THE PRESENT APPEAL IS AS TO WHETHER THE SURRENDER MADE BY ASSESSEE CAN BE CONSIDERED AS BUSINESS INCOME OR CAN BE TAXED AS DEEMED INCOME UN DER SECTION 69A OF THE ACT. IN THIS RESPECT, LET US EXAMINE THE SURRENDER LETTER WHICH IS PLACED AT PAPER BOOK PAGE 46. FROM THE ABOVE SURRENDER LETTE R IT IS APPARENT THAT ASSESSEE HAD MADE A SURRENDER AS ADDITIONAL INCOME OVER AND ABOVE THE NORMAL PROFITS OF THE CONCERN AND SINCE THE INCOME HAS BEEN DECLARED AS BUSINESS INCOME, THE SAME HAS TO BE ASSESSED UNDER THE HEAD BUSINESS INCOME AND NOT AS DEEMED INCOME UNDER THE PROVISIONS OF SE CTION 69A. THE ASSESSING OFFICER HAD TAKEN A PLAUSIBLE VIEW WHILE ACCEPTING THE CONTENTION OF THE ASSESSEE. AS REGARDS THE ENQUIRIES DURING THE ASSES SMENT PROCEEDINGS, WE FIND THAT ASSESSING OFFICER VIDE LETTER DATED 15.07.2011 PLACED AT PAPER BOOK PAGE 35 RAISED THIS ISSUE VIDE PARA-11. THE ASSESSEE FIL ED A DETAILED REPLY UNDER THE HEADING JUSTIFICATION OF TAXABLE INCOME WHEREIN IT EXPLAINED AS TO WHY THE TAXABLE INCOME HAD DECREASED AS COMPARED TO SURREND ERED INCOME. AS PER PAPER BOOK PAGE-39, THE MAIN REASON FOR DECREASE IN TAXABLE PROFITS WAS DUE TO INCREASE IN DEPRECIATION AND INCREASE IN BANK INTER EST. THE ASSESSING OFFICER 13. ITA NO. 326(ASR)/2014 ASST. YE AR 2010-11 AFTER CONSIDERING THIS EXPLANATION HAD PASSED THE A SSESSMENT ORDER, HOWEVER, HE DID NOT MENTION THE FACT OF CONSIDERING THIS EXP LANATION IN THE ASSESSMENT ORDER. THE ONLY NONE MENTIONING OF CERTAIN ENQUIRIE S AND EXPLANATIONS THEREOF. IN THE ASSESSMENT ORDER IN ITSELF DOES NOT GIVE A R IGHT TO COMMISSIONER TO PASS ORDER UNDER SECTION 263. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GABRIEL INDIA LTD.(SUPRA) HAS HELD THAT WHERE T HE ASSESSING OFFICER HAD MADE ENQUIRIES IN REGARD TO NATURE OF EXPENDITURE I NCURRED BY ASSESSEE AND ASSESSEE HAD GIVEN DETAILED EXPLANATION IN THAT REG ARD AND ASSESSING OFFICER HAD ACCEPTED THE EXPLANATION OF THE ASSESSEE, THE D ECISION OF ASSESSING OFFICER COULD NOT BE HELD TO BE ERRONEOUS SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION IN THIS REGARD. IN THE PRES ENT CASE, THE ASSESSING OFFICER RAISED AN ENQUIRY AND ASSESSEE FILED DETAIL ED REPLY AND THEREAFTER, ASSESSING OFFICER ACCEPTED THE EXPLANATION AND DID NOT MAKE ANY ADDITION ON THAT ACCOUNT. THE ORDER OF ASSESSING OFFICER CANNOT BE SAID TO BE ERRONEOUS AS HE HAS TAKEN A PLAUSIBLE VIEW, KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANIL KUMAR SHARMA 335 ITR 83 HAS HELD AS UNDER: THERE IS A DISTINCTION BETWEEN LACK OF INQUIRY A ND INADEQUATE INQUIRY IF THERE WAS ANY INQUIRY, EVEN INADEQUATE THAT WOULD NOT BY ITSELF GIVE OCCASION TO THE COMMISSIONER TO PASS ORDERS UNDER SECTION 263 OF TH E INCOME-TAX ACT,1961, MERELY BECAUSE HE HAS A DIFFERENT OPINION IN THE MA TTER: HELD, DISMISSING THE APPEAL, THAT THE PRESENT CASE WOULD NOT BE ONE OF LACK OF INQUIRY EVEN IF THE INQUIRY WAS TERMED INADEQUATE. THE TRIBUNAL FOUND THAT COMPLETE DETAILS WERE FILED BEFORE THE ASSESSING OF FICER AND THAT HE APPLIED HIS 14. ITA NO. 326(ASR)/2014 ASST. YE AR 2010-11 MIND TO THE RELEVANT MATERIAL AND FACTS, ALTHOUGH S UCH APPLICATION OF MIND WAS NOT DISCERNIBLE FROM THE ASSESSMENT ORDER. THE TRIB UNAL HELD THAT THE COMMISSIONER IN PROCEEDINGS UNDER SECTION 263 ALSO HAD ALL THESE DETAILS AND MATERIAL AVAILABLE BEFORE HIM, BUT HAD NOT BEEN ABL E TO POINT OUT DEFECTS CONCLUSIVELY IN THE MATERIAL, FOR ARRIVING AT A CON CLUSION THAT PARTICULAR INCOME HAD ESCAPED ASSESSMENT ON ACCOUNT OF NON-APPLICATIO N OF MIND BY THE ASSESSING OFFICER. THE TRIBUNAL WAS RIGHT AND THE ORDER OF RE VISION WAS NOT VALID. 8. SIMILARLY, THE HONBLE PUNJAB & HARYANA HIGH COU RT IN THE CASE OF CIT VS. DEEPAK MITTAL 324 ITR 411, HAS HELD THAT CHANGE OF OPINION BY REAPPRAISING THE EVIDENCE IS NOT WITHIN THE PARAMETERS OF REVISI ONAL JURISDICTION OF THE COMMISSIONER UNDER SECTION 263 OF THE INCOME TAX AC T, 1961. THE RELEVANT FINDINGS OF HONBLE PUNJAB & HARYANA HIGH COURT ARE REPRODUCED AS UNDER: HELD, DISMISSING THE APPEAL, THAT THE TRIBUNAL HAD FOUND THAT THE ASSESSING OFFICER HAD GIVEN A CATEGORICAL FINDING THAT THE AS SESSEE WAS ENGAGED IN THE PROCESS OF MANUFACTURING OF PRODUCTS AND ACCORDINGL Y HE HAD GRANTED CONCESSION UNDER SECTION 80-IB. THE CLAIM OF THE ASSESSEE HAD BEEN FOUND TO BE GENUINE. THE ASSESSING OFFICER HAD ALSO EXAMINED THE VARIOUS WOR KERS OF THE ASSESSEE AND THEN RECORDED THE FINDING. THE ASSESSING OFFICER, W AS JUSTIFIED IN GRANTING THE SPECIAL DEDUCTION UNDER SECTION 80-IB. THE ORDER OF REVISION DISALLOWING THE SPECIAL DEDUCTION WAS NOT VALID. 9. THE HON,BLE CHANDIGARH TRIBUNAL IN THE CASE OF K HUSHI RAM & SONS PVT. LTD. (SUPRA) HAS DECIDED SIMILAR ISSUE WHEREIN THE ASSESSEE HAD SURRENDERED AN AMOUNT OF RS. 80 LACS DURING THE COURSE OF SURVE Y ON ACCOUNT OF BUILDING RENOVATION, OFFICE EQUIPMENT AND SUNDRY RECEIVABLES AND CLAIMED SET OFF OF UNABSORBED LOSSES FOR THE ASSESSMENT YEARS 2007-08 AND 2006-07 AND ASSESSING OFFICER ALLOWED THE SAME. THE LEARNED COM MISSIONER INVOKED JURISDICTION UNDER SECTION 263 OF THE ACT, ON THE G ROUND THAT THE ASSESSING 15. ITA NO. 326(ASR)/2014 ASST. YE AR 2010-11 OFFICER HAD FAILED TO MAKE ENQUIRIES IN RESPECT OF CLAIM OF SET OFF ON UNABSORBED LOSSES, FALL IN GROSS PROFIT RATE AND DEPRECIATION AND WRONGLY ALLOWED THE CLAIM AGAINST THE SURRENDERED INCOME WHICH WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE HONBLE TRIBUNAL HAS H ELD AS UNDER: HELD, ALLOWING THE APPEAL, THAT THE ASSESSING OFFI CER HAD MADE DETAILED ENQUIRY AT THE ASSESSMENT STAGE WITH REGARD TO THE FALL IN GROSS PROFIT RATE, SET OFF THE BROUGHT FORWARD LOSSES AND DEPRECIATION. THE ASSESS ING OFFICER CALLED FOR COMPLETE DETAILS WITH REGARD TO MANUFACTURING PROCE SS, MONTH-WISE PRODUCTION, CONSUMPTION, QUANTITATIVE SALES AND JUSTIFICATION O F MAJOR EXPENSES. THE ASSESSEE FURNISHED COMPLETE DETAILS AND REPLIES BEFORE THE A SSESSING OFFICER AND THERE WAS NO INFIRMITY IN THE REPLIES OF THE ASSESSEE. THE NA TURE OF BUSINESS OF THE ASSESSEE REVEALED THAT IT MIGHT NOT BE POSSIBLE TO GIVE THE EXACT DETAILS OF MANUFACTURING LARGE NUMBER OF SWEETS OF DIFFERENT QUANTITIES OR O F THE CLOSING STOCK. HENCE, THE ASSESSEE SUBMITTED COMPLETE DETAILS BEFORE THE ASSE SSING OFFICER AT THE ASSESSMENT STAGE REGARDING ALL THE ISSUES WHICH HAD BEEN RAISED BY THE COMMISSIONER IN THE ORDER UNDER SECTION 263 OF THE ACT. THE ASSESSING OFFICER WAS SATISFIED WITH ALL THE ITEMS AND ALLOWED THE CL AIM OF THE ASSESSEE AFTER CONDUCTING PROPER ENQUIRY INTO THE MATTER. THE COMM ISSIONER HAD NOT GIVEN ANY ELABORATE REASONS AS TO HOW THE ASSESSMENT ORDER WA S ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. HENCE, THE OPINION OF THE ASSESSING OFFICER COULD NOT BE SUBSTITUTED BY THE COMMISSIONER AND AS SUCH THE ASSESSMENT ORDER COULD NOT BE TREATED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND COULD NOT BE SET ASIDE IN THE PROCEEDINGS UNDER SEC TION 263 OF THE ACT. IN THE PRESENT CASE THE ASSESSING OFFICER HAD MADE ENQUIRIES AND ASSESSEE HAD EXPLAINED THE TAXABLE INCOME VIZ-A-VIZ SURRENDERED INCOME AND ASSESSING OFFICER FOUND THE EXPLANATION AS SATISFAC TORY. WE FIND THAT ASSESSEE VIDE LETTER DATED 18.01.2013 PLACED AT PAPER BOOK 3 7 TO 40 VIDE PARA JUSTIFICATION OF TAXABLE INCOME HAS DEMONSTRATED THE REASONS FOR LOWER 16. ITA NO. 326(ASR)/2014 ASST. YE AR 2010-11 RETURNED INCOME AS COMPARED TO SURRENDERED INCOME W HICH WAS PRIMARILY FOR EXCESS CLAIM OF DEPRECIATION TO THE EXTENT OF RS.50 .44 LACS AS COMPARED TO EARLIER YEAR. THE INCREASE IN DEPRECIATION HAS OCCU RRED BECAUSE THE ASSESSEE HAD INSTALLED AND PUT TO USE NEW MACHINERY WORTH RS .143.29 LACS AND THIS MACHINERY WAS IMPORTED FROM GERMANY AND WAS INSTALL ED IN THE MONTH OF JULY, 2009, MUCH BEFORE THE DATE OF SURVEY WHICH WAS ON 1 4.09.2009. THIS FACT OF PURCHASE OF ADDITIONAL MACHINERY WAS CONVEYED TO AS SESSING OFFICER VIDE LETTER DATED 01.03.2013, WHICH IS PLACED AT PAPER BOOK PAG E-44. IN THE SAME LETTER THE ASSESSEE HAD CONVEYED THAT FOR PURCHASE OF MACH INERY THE ASSESSEE HAD INCREASED ITS BANK BORROWINGS AND THEREFORE THERE W AS AN INCREASE IN INTEREST COSTS AND FURTHER THE REASONS FOR INCREASE IN THE E LECTRICITY CHARGES WAS ALSO EXPLAINED IN THE SAME LETTER. THEREFORE, THE ASSESS EE HAD SUBMITTED ALL DETAILS AND THE ASSESSING OFFICER HAD EXAMINED ALL FACTORS LEADING TO DECREASE IN NORMAL PROFITS AS COMPARED TO EARLIER YEAR. AS REGA RDS SURRENDERED INCOME, THE ASSESSEE HAS CLEARLY CREDITED THE SAME TO THE PROFI T & LOSS ACCOUNT OVER AND ABOVE THE NORMAL PROFITS OF THE CONCERN. THEREFORE, IN OUR OPINION THE ASSESSING OFFICER HAS TAKEN A PLAUSIBLE VIEW AS THE ASSESSEE HAD SURRENDERED THE INCOME AS BUSINESS INCOME WHICH WAS SEPARATELY CREDITED TO PROFIT AND LOSS ACCOUNT. 10. THE CASE LAW OF KIM PHARMA LTD. VS. CIT (SUPRA) AS RELIED UPON BY THE LEARNED DR IS NOT APPLICABLE TO THE FACTS AND CIRCU MSTANCES OF THE PRESENT CASE AS IN THAT CASE THE HONBLE COURT HAD REPRODUCED TH E FINDINGS OF TRIBUNAL THAT ASSESSEE DURING THE COURSE OF SURVEY HAD SURRENDERE D THE INCOME AS INCOME 17. ITA NO. 326(ASR)/2014 ASST. YE AR 2010-11 FROM OTHER SOURCES. WHEREAS IN THE PRESENT CASE THE ASSESSEE HAD SURRENDERED INCOME OVER AND ABOVE THE NORMAL PROFITS OF THE CON CERN AND NOT AS INCOME FROM OTHER SOURCES. THE FINDINGS OF TRIBUNAL AS REC ORDED BY HONBLE PUNJAB & HARYANA HIGH COURT ARE REPRODUCED AS UNDER: IN THE FACTS OF THE PRESENT CASE, WE FIND THAT AS SESSEE DURING THE COURSE OF SURVEY HAD SURRENDERED THE INCOME AS INCOME FROM OT HER SOURCES THOUGH A PLEA HAS BEEN RAISED BY THE ASSESSEE THAT THE INCOME WAS SURRENDERED AS INCOME FROM JOB WORK BUT NO EVIDENCE TO PROVE THAT STAND O F THE ASSESSEE HAS BEEN BROUGHT ON RECORD. THE ASSESSEE HAD ALSO SURRENDERE D ADDITIONAL INCOME OF RS.10 LACS IN ASSESSMENT YEAR 2005-06 ON ACCOUNT OF SUNDR Y CREDITS, REPAIRS TO BUILDING AND ADVANCES TO STAFF, WHICH BEING RELATABLE TO BUS INESS CARRIED ON BY ASSESSEE WAS INCLUDED AS INCOME FROM BUSINESS. HOWEVER, IN R ESPECT OF CASH FOUND DURING SURVEY, WHICH WAS NOT REFLECTED IN THE BOOKS OF ACC OUNT, NO SOURCE WAS DECLARED BY THE ASSESSEE AND IN THE ABSENCE OF NATURE OF SOU RCE OF CASH BEING PROVED; THE SAME IS NOT ASSESSABLE AS INCOME FROM BUSINESS. IN THE CIRCUMSTANCES, WE UPHOLD THE ORDER OF THE CIT(A) IN INCLUDING THE ADD ITIONAL INCOME AS DEEMED INCOME U/S 69A OF THE ACT AND NOT ALLOWING THE BENE FIT OF THE BUSINESS LOSSES DETERMINED AGAINST THE SAID DEEMED INCOME. THE GROU NDS OF APPEAL RAISED BY THE ASSESSEE ARE DISMISSED. 11. FROM THE ABOVE FINDINGS OF HOBLE PUNJAB & HARY ANA HIGH COURT, WE FIND THAT SURRENDER IN THIS CASE WAS MADE IN TWO YEARS I .E., 2005-06 AND 2006-07. THE HONBLE TRIBUNAL HAD RECORDED THAT IN ASST. YEA R 2005-06, THE INCOME SURRENDERED RELATED TO BUSINESS CARRIED ON BY THE A SSESSEE AND THEREFORE, WAS INCLUDED AS INCOME FROM BUSINESS WHEREAS IN ASST. Y EAR 2006-07, THE ASSESSEE COULD NOT PROVE THAT INCOME WAS RELATED TO BUSINESS AND ASSESSEE HIMSELF HAD SURRENDERED THE INCOME AS INCOME FROM THE OTHER SOU RCES AND THEREFORE, FOR ASST. YEAR 2006-07 THE HONBLE COURT HAD HELD THAT ADDITIONAL INCOME WAS 18. ITA NO. 326(ASR)/2014 ASST. YE AR 2010-11 RIGHTLY TREATED AS DEEMED INCOME UNDER SECTION 69A OF THE ACT. IN THE SAME CASE LAWS FOR ASST. YEAR 2005-06, THE HONBLE TRIBU NAL HAD NOTED THAT SINCE THE SURRENDERED ADDITIONAL INCOME RELATED TO SUNDRY CRE DITORS, REPAIRS TO BUILDING AND ADVANCES AND STOCK WHICH RELATED TO BUSINESS CA RRIED ON BY ASSESSEE AND THEREFORE, WAS INCLUDED IN INCOME FROM BUSINESS. I N THE PRESENT CASE ALSO, THE INCOME SURRENDERED WAS DUE TO RENOVATION OF BUILDIN G, STOCK AND ADVANCE AND IMPREST ACCOUNT WITH DIRECTORS AND DUE TO CASH IN H AND WHICH CLEARLY RELATED TO THE BUSINESS OF ASSESSEE AND MOREOVER, THE ASSES SEE HAD DECLARED SUCH SURRENDER OVER AND ABOVE, THE NORMAL PROFITS OF THE CONCERN, THEREFORE, THE CASE LAWS RELIED UPON BY THE LEARNED DR IS ALSO IN FAVOU R OF THE ASSESSEE. 12. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, A ND IN VIEW OF JUDICIAL PRONOUNCEMENTS AS NOTED ABOVE, WE ARE OF THE CONSID ERED OPINION THAT ASSESSING OFFICER HAD TAKEN A PLAUSIBLE VIEW AND TH E POWER EXERCISED BY LEARNED COMMISSIONER OF INCOME TAX IS NOT AS PER SE TTLED LAW. IN VIEW OF THE ABOVE, WE ALLOW THE APPEAL OF THE ASSESSEE AND SET ASIDE THE ORDER OF COMMISSIONER OF INCOME TAX AND UPHELD THE ORDER OF ASSESSING OFFICER. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH OCTOBER, 2015. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTA NT MEMBER DATED: 07.10.2015. /PK/ PS. 19. ITA NO. 326(ASR)/2014 ASST. YE AR 2010-11 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S DEV RAJ HI-TECH MACHINES LTD., FE ROZEPUR CITY. 2. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE-III, FER OZEPUR. 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.