Ashokkumar Kesherchand Pande, Aurangabad V. The Assistant Commissioner of Income Tax , Central Circle-1, Aurangabad

ITA 389/PUN/2023

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The case involves Ashokkumar Kesherchand Pande, who is engaged in the business of dealing with agricultural equipment under the name 'M/s. Chetan Sheti Sahitya'. A survey conducted at his business premises led to the discovery of discrepancies in stock valuation and unexplained expenditures, which Pande agreed to offer as income. The Assessing Officer taxed this income at a higher rate under section 115BBE, which applies to unexplained income. Pande appealed this decision, arguing that the income was already assessed under 'Income from business' and should not attract the higher tax rate. The Tribunal agreed with Pande, referencing a decision by the Rajasthan High Court, and overturned the lower authorities' decisions.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137150 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-07-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 04-04-2023
• Other Referred Cases: SVS Oils Mills vs. ACIT, CIT vs. Bajargan Traders
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 133A; 113

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S. S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपील सं. / ITA No.389/PUN/2023 िनधाᭅरण वषᭅ / Assessment Year : 2019-20 Ashokkumar Kesherchand Pande, Chetan Sheti Sahitya, Bus Stand Road, Kannad, Dist. Chh. Sambhajinagar, Aurangabad- 431103. PAN : ACGPP3668K Vs. ACIT, Central Circle-1, Aurangabad. Appellant Respondent आदेश / ORDER PER INTURI RAMA RAO, AM: This is an appeal filed by the assessee directed against the order of ld. Commissioner of Income Tax (Appeals)-12, Pune [‘the CIT(A)’] dated 03.02.2023 for the assessment year 2019-20. 2. Briefly, the facts of the case are that the appellant is an individual deriving income under the head “business”. It is engaged Assessee by : Shri Kishor B. Phadke Revenue by : Shri Ramnath P. Murkunde Date of hearing : 19.07.2023 Date of pronouncement : 31.07.2023 ITA No.389/PUN/2023 2 in the business of dealing in agricultural equipments i.e. seeds and pesticides in the name and style of “M/s. Chetan Sheti Sahitya”. The appellant had filed the Return of Income for the assessment year 2019-20 on 17.10.2019 declaring total income of Rs.1,44,78,720/-. The survey operations under the provisions of section 133A of the Income Tax Act, 1961 (‘the Act’) were conducted on 06.03.2019 at the business premises of the assessee. During the course of such survey operations, on physical verification of the stock, the value of stock-in-trade was found of Rs.1,65,87,189/- as against the value shown in the Trading Account of Rs.1,83,75,152/-. The difference in the value of stock in the form of deficit of stock of Rs.17,87,963/- was agreed to offer to tax and the same was offered to tax by crediting the said sum to the Trading Account. Similarly, it was found that the assessee had incurred expenditure in construction of the property i.e. “Pande Square” of Rs.32,58,608/-, the source of same was not explained and it was agreed to offer to tax. In the return of income, the appellant had offered this income by crediting the same to the Profit & Loss Account. The Assessing Officer, while accepting the income ITA No.389/PUN/2023 3 returned, had subjected the income declared during the course of survey proceedings to income tax rate prescribed u/s 115BBE of the Act. 3. Being aggrieved by the above order of assessment, an appeal was filed before the ld. CIT(A), who vide impugned order confirmed the action of the Assessing Officer placing reliance on the decision of the Hon’ble Madras High Court in the case of M/s. SVS Oils Mills vs. ACIT, 113 taxmann.com 388 (Madras). 4. Being aggrieved, the appellant is in appeal before us in the present appeal. 5. The ld. AR submits that the income offered during the course of survey proceedings was also offered to tax by crediting the same to the Trading Account and Profit & Loss Account respectively. He submits that the Assessing Officer assessed the said income under the head “Income from business”. Therefore, he submits that having assessed the additional income under the head “Income from business”, he cannot subject such income to tax u/s 115BBE of the Act. He also placed reliance on the decision of the Hon’ble ITA No.389/PUN/2023 4 Rajasthan High Court in the case of CIT vs. Bajargan Traders, 86 taxmann.com 295 (Rajasthan). 6. On the other hand, ld. Sr. DR placed reliance on the orders of the lower authorities. 7. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the applicability of provisions of section 115BBE of the Act in respect of income declared during the course of survey proceedings and offered to tax in the return of income. There is no dispute about the amount of addition to be made nor was there any dispute regarding the head of income under which the same was assessed to tax. The dispute is only with regard to the applicability of provisions of section 115BBE of the Act. Admittedly, the income offered during the course of survey proceedings was credited to Profit & Loss Account and the additional income offered on account of deficit in the physical stock was credited to Trading Account. The income offered on account of alleged expenditure incurred on construction of the commercial building was offered to tax by crediting the same amount to the Profit & Loss Account. Thus, the income was offered ITA No.389/PUN/2023 5 to tax under the head “Income from business”, the Assessing Officer also assessed the same under the head “Income from business”. Therefore, the presumption is to be drawn that the additional income was derived from the business. Thus, it cannot be said that the source for the additional income remain unexplained and, therefore, the provisions of section 115BBE have no application to the present case. The ratio of the decision of the Hon’ble Rajasthan High Court in the case of Bajargan Traders (supra) is squarely applicable to the facts of the present case. The reliance placed by the ld. CIT(A) on the decision of the Hon’ble Madras High Court in the case of M/s. SVS Oils Mills (supra) have no application to the facts of the present case, inasmuch as, in the said case, no explanation as to the source of excess stock was offered, whereas, in the present case, it is undisputed fact that the additional income was derived from business. Therefore, the orders of the Assessing Officer as well as the ld. CIT(A) are reversed and direct the Assessing Officer not to tax the additional income under the provisions of section 115BBE of the Act. The Assessing Officer shall tax the additional income under the normal rate of income tax. ITA No.389/PUN/2023 6 Accordingly, the grounds of appeal filed by the assessee stand allowed. 8. In the result, the appeal filed by the assessee stands allowed. Order pronounced on this 31 st day of July, 2023. Sd/- Sd/- (S. S. VISWANETHRA RAVI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 31 st July, 2023. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A)-12, Pune. 4. The Pr. CIT (Central), Nagpur. 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “A” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.