M/s Kumar Enterprises, Chandigarh V. DCIT, Chandigarh

ITA 525/CHANDI/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0104 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-04-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 19-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Unexplained expenditure; Business income; Revision of order; Salary income; Loose papers; Principle of natural justice; Deemed to accrue or arise in india
• Section: 69C; 143(3); 69; 263; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.525/CHD/2014 (ASSESSMENT YEAR : 2010-11) M/S KUMAR ENTERPRISES, VS. THE D.C.I.T., SCO 355, SECTOR 32-D, CENTRAL CIRCLE-I, CHANDIGARH. CHANDIGARH. PAN: AAIFK2434N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI KUMAR RESPONDENT BY : SHRI SUSHIL KUMAR DATE OF HEARING : 11.04.2016 DATE OF PRONOUNCEMENT : 13.04.2016 O R D E R PER RANO JAIN, A.M . : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(CENTRAL), GURGAON DATED 27.3.2014 FOR ASSESSMEN T YEAR 2010-11, PASSED UNDER SECTION 263 OF THE INCOM E TAX ACT, 1961 (IN SHORT THE ACT). 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR DECLARING TOTAL INCOME OF RS.6,79, 273/-. THE ASSESSMENT UNDER SECTION 143(3) OF THE A CT WAS 2 COMPLETED AS ON 23.12.2011. LATER ON, ON PERUSAL O F THE RECORD, THE COMMISSIONER OF INCOME TAX FORMED AN OP INION THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND HENCE, NOTICE UNDER SECTION 263 OF THE ACT WAS ISSUED TO THE ASSESSEE. THE MAIN CONTENTION OF THE LEARNED COMMISSIONER OF INCOME TAX WAS THAT THE ASSESSING OFFICER HAS ALLOWED THE ENTIRE DEDUCTION WITHOUT WORKING OUT THE ALLOWBILITY OF DEDUCTION AS PER THE SCHEME OF SECTION 40(B) OF THE ACT. AS PER THE PROVISIONS OF THE ACT, THE REMUNERATION IS ALLOWABLE ONLY UP TO THE E XTENT AS PROVIDED IN THE PARTNERSHIP DEED AND FURTHER RESTRI CTED BY THE PROVISIONS OF SECTION 40(B) OF THE ACT, WHICH ALLOWS REMUNERATION ONLY OUT OF BOOK PROFIT FROM BUSINESS AND PROFESSION OF THE FIRM. THE LEARNED COMMISSIONER O F INCOME TAX WAS OF THE VIEW THAT THIS ISSUE HAS NOT BEEN EXAMINED BY THE ASSESSING OFFICER AS PER THE LEGAL CONNOTATIONS OF SECTION 40(B) OF THE ACT AND EXCESS REMUNERATION HAS BEEN CLAIMED BY THE ASSESSEE OVER AND ABOVE THE SUM ALLOWABLE UNDER SECTION 40(B) OF THE ACT. THE ASSESSEE TREATED THE INCOME OF RS.16 LACS DISCL OSED DURING THE COURSE OF SURVEY AS UNACCOUNTED BUSINESS INCOME AND THUS, CREDITED THIS AMOUNT TO THE PROFIT & LOSS ACCOUNT FOR COMPUTING THE ALLOWABLE REMUNERATION TO THE PARTNERS. THE ASSESSING OFFICER HAS ALLOWED REMUNE RATION TO THE PARTNERS ON THE BASIS OF THE BOOK PROFIT COMPUTED 3 AFTER CREDITING THE SURRENDERED INCOME OF RS.16 LAC S TO THE PROFIT & LOSS ACCOUNT. THE ASSESSEE FILED A REPLY TO THE COMMISSIONER OF INCOME TAX MAKING SUBMISSION THAT T HE SAID ISSUE WAS DULY CONSIDERED BY THE ASSESSING OFF ICER AND THE INCOME SURRENDERED, BEING BUSINESS INCOME, WOULD QUALIFY FOR CALCULATION OF THE ALLOWABLE REMUNERATION TO THE PARTNERS UNDER THE INCOME TAX A CT. RELIANCE WAS PLACED ON A NUMBER OF JUDICIAL PRONOUNCEMENTS. 3. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE COMMISSIONER OF INCOME TAX DID NOT FI ND ANY FORCE IN THE SAME. HE RELIED ON A JUDGMENT OF GUJA RAT HIGH COURT IN THE CASE OF FAKIR MOHMED HAJI HASAN VS. CIT (2001) 247 ITR 290, WHEREBY THE SCOPE AND DESCRIPTION OF THE SCHEME OF SECTIONS 69, 69A, 69B AND 69C OF THE ACT WERE INTERPRETED. THE PROPOSITION L AID DOWN BY THE GUJARAT HIGH COURT HAS ALSO BEEN APPROV ED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF M/S KIM PHARMA (P) LTD. VS. CIT IN ITA NO 106 OF 20 11 (O&M). HE FURTHER MENTIONED THAT THE SAID PROPOSIT ION HAS ALSO BEEN CONSIDERED IN TWO ORDERS OF THE I.T.A .T., CHANDIGARH BENCH IN THE CASE OF MRS.PROMILA JAIN V S. DCIT IN IA.1449/CHD/2010 DATED 25.9.2012 AND LIBERT Y PLYWOOD PVT. LTD. VS. ACIT IN ITA NO.727/CHD/2012 D ATED 17.12.2012. THE COMMISSIONER OF INCOME TAX FURTHER DISTINGUISHED THE JUDGMENT OF KARNATAKA HIGH COURT IN THE 4 CASE OF CIT VS. S.K. SRIGIRI & BROS. (2008) 298 IT R 13 (KAR). RELIANCE WAS PLACED BY THE ASSESSEE ON THIS JUDGMENT STATING THAT IN THE SAID JUDGMENT, THE FIN DING OF FACT WAS RECORDED THAT THE ASSESSEE RECEIVED ADDITI ONAL INCOME FROM BUSINESS ONLY AND, THEREFORE, IT WAS EN TITLED TO DEDUCTION ON ACCOUNT OF REMUNERATION PAID TO THE PARTNERS. THE COMMISSIONER OF INCOME TAX WAS OF TH E VIEW THAT IN THE PRESENT CASE NO SUCH FINDING HAS B EEN RECORDED AND NO EVIDENCE WAS FURNISHED BEFORE THE ASSESSING OFFICER IN SUPPORT OF THE CLAIM THAT THE SURRENDERED INCOME PARTAKE THE CHARACTER OF BUSINES S INCOME. IN VIEW OF ALL THIS, HE HELD THE ASSESSMEN T ORDER PASSED UNDER SECTION 143(3) DATED 23.12.2011 TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE IN SO FAR AS THE ISSUE OF ALLOWABILITY OF REMUNERATION TO PARTNERS OUT OF SURRENDERED INCOME IS CONCERNED. HE FURTHER DIRECTED THE ASSESSING OFFICER TO RECOMPUTE THE REMUNERATION TO THE PARTNERS BY EXCLUDING SURRENDER ED INCOME OF RS.16 LACS FROM THE BOOK PROFITS OF THE F IRM AND REASSESS THE INCOME OF THE FIRM AS WELL AS THE PART NERS OF THE FIRM ACCORDINGLY. 4. AGGRIEVED BY THIS, THE ASSESSEE HAS COME UP IN APPEAL BEFORE US, RAISING THE FOLLOWING GROUNDS OF APPEAL : 1. THAT ORDER PASSED U/S 263 OF THE INCOME TAX ACT , 1961 BY THE LD. COMMISSIONER OF INCOME TAX (CENTRAL), GURGAON IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS HE W AS NOT JUSTIFIED TO ARBITRARILY HOLD THAT ASSESSMENT ORDER D ATED 23.12.2011 PASSED BY THE LD, DEPUTY COMMISSIONER OF 5 INCOME TAX, CENTRAL CIRCLE-L, CHANDIGARH IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 2. THAT HE WAS FURTHER NOT JUSTIFIED TO DIRECT THE LD. ASSESSING OFFICER TO RECOMPUTE THE ALLOWABILITY OF REMUNERATION TO THE PARTNERS BY EXCLUDING THE SURRENDERED INCOME OF 16,00,000/- FROM BOOK PROFITS AS THE S U M O F RS.16,00,000/- SURRENDERED DURING THE COURSE OF SURV EY WERE AS A RESULT OF BUSINESS ACTIVITIES AND WAS DECLARED A S BUSINESS INCOME. 3. THAT THE IMPUGNED ORDER IS VOID ABINITIO IN AS MU CH ASTHE PRINCIPLES OF NATURAL JUSTICE HAVE BEEN GROSSLY VIOLAT ED AS THE ORDER WAS PASSED ON 27-03-14 WITHOUT AFFORDING A REASONABLE OPPORTUNITY OF HEARING, WHEREAS THE PROCEED INGS WERE ADJOURNED BY THE LD. CIT FOR 10-04-14. 5. THE LEARNED COUNSEL FOR THE ASSESSEE MAINLY REITERATED THE SUBMISSIONS MADE BEFORE THE COMMISSI ONER OF INCOME TAX. HIS MAIN FORCE WAS ON THE ARGUMENT THAT THE ISSUE OF SURRENDERED INCOME BEING BUSINESS INCO ME HAS BEEN DULY EXAMINED BY THE ASSESSING OFFICER DUR ING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS. FOR THIS, OUR ATTENTION WAS INVITED TO PAGE NO.15 OF THE PAPE R BOOK FILED BY THE ASSESSEE, WHICH IS A LETTER OF SURREND ER MADE BEFORE THE ADDL. DIRECTOR OF INCOME TAX (INVESTIGAT ION), CHANDIGARH DATED 10.10.2009, WHEREBY IT HAS BEEN CL EARLY MENTIONED THAT THE SURRENDER WAS BEING MADE ON ACCO UNT OF BUSINESS INCOME. FURTHER ATTENTION WAS INVITED TO A QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER DATED 24.10.2011 AT PAGE 17 OF THE PAPER BOOK, WHEREBY AT POINT NO.11, A DETAILED QUERY REGARDING SURRENDERED AMOU NT WAS RAISED, WHICH READS AS UNDER : 6 11. DURING THE COURSE OF SURVEY OPERATION AT YOUR BUSINESS PREMISES YOU HAVE MADE A TOTAL SURRENDER OF RS.16.00,000 /- AS UNDISCLOSED INCOME OVER AND ABOVE YOUR REGULAR INC OME. THE RELEVANT EXTRACT OF YOUR LETTER IS REPRODUCED AS UNDER:- 'DUE TO SOME LOOSE PAPERS, HOOKS ETC FOUND AND DIFFERENCE IN STOCKS FOUND DURING THE COURSE OF SURVEY, I AM UNABLE TO RECONCILE THE ISSUE AT THIS MOMENT, I HEREBY SURRENDER RS.16 LACS WHICH WAS SIPHONED OUT OF BUSINESS ON ACCOUNT OF DISCREPANCIE S IN THE STOCKS AND OTHER UNEXPLAINED DOCUMENTS AND T O COVER OTHERS ETC ON BEHALF OF THE FIRM ' IN THIS REGARD, PLEASE FURNISH THE FOLLOWING INFORMATION. (I) PLEASE FURNISH DETAILS OF TOTAL DISCLOSURE MADE BY YOU. DOCUMENT WISE/ASSETS WISE/INVESTMENT WISE. (II) PLEASE FURNISH DETAILS OF TOTAL DISCLOSURE MADE BY YOU IN YOUR INDIVIDUAL HAND AND IN THE HAND OF FIRM/COMPANY/TRUST IN WHICH YOU ARE A PARTNER/DIRECTOR/MEMBER. (III) PLEASE SUBSTANTIATE THE MANNER IN WHICH THE ADDITIONAL UNDISCLOSED WAS EARNED BY YOU. (IV) PLEASE MENTION AMOUNT OF THE TAXES PAID ON ADDITIONAL UNDISCLOSED INCOME. 6. THE REPLY OF THE SAID QUESTIONNAIRE WAS GIVEN BY THE ASSESSEE VIDE ITS LETTER DATED 15.11.2011, WHER EBY AT POINT NO.10(C) IT WAS CLARIFIED THAT THE INCOME SUR RENDERED IN THE HANDS OF THE FIRM WAS EARNED OUT OF BUSINESS OF THE ASSESSEE ONLY. IN ANOTHER LETTER DATED 19.12.2011 AT POINT NO.2, IT WAS AGAIN CLARIFIED THAT THE SURRENDERED I NCOME WAS OVER AND ABOVE THE NORMAL BUSINESS INCOME OF TH E 7 ASSESSEE FIRM. THEREFORE, THE COMMISSIONER OF INCO ME TAX DOES NOT HAVE ANY JURISDICTION UNDER SECTION 263 OF THE ACT TO REVIEW THE SAID ORDER. IN THE ALTERNATIVE, RELIANCE WAS PLACED ON THE JUDGMENT OF CALCUTTA HIGH COURT I N THE CASE OF MD.SERAJUDDIN & BROTHERS VS. CIT (2012) 80 DTR 46 (CAL), WHEREBY IT WAS HELD THAT EVEN IF THE INCO ME FROM OTHER SOURCES IS INCLUDED IN THE PROFIT & LOSS ACCO UNT TO ASCERTAIN THE NET PROFIT QUA BOOK PROFIT FOR COMPUT ATION OF THE REMUNERATION OF THE PARTNERS, THE SAME CANNOT B E DISCARDED. 7. THE LEARNED D.R. RELIED ON THE ORDER OF THE COMMISSIONER OF INCOME TAX AND STATED THAT THE ASSE SSING OFFICER IN THE ORIGINAL PROCEEDINGS HAS WRONGLY ALL OWED REMUNERATION TO THE PARTNERS ON THE BASIS OF BOOK P ROFITS COMPUTED AFTER CREDITING THE INCOME OF RS.16 LACS SURRENDERED IN THE CASE OF SURVEY UNDER SECTION 13 3A OF THE ACT. RELIANCE WAS PLACED ON THE FOLLOWING JUDG MENTS : A. BASSERA REALTORS P LTD VS CIT - 55 TAXMANN.COM 327 (ITAT, CHANDIGARH) B. CIT VS ANSAL HOUSING & CONSTRUCTION LTD. - 51 TAXMANN .COM 376 (SC) C. CIT, KARNAL VS RAJESH MAHAJAN - 16 TAXMANN.COM 85 (P&H ) D. VODAFONE SOUTH LTD VS CIT (TDS) - 61 TAXMANN.COM 1 08 (ITAT, CHANDIGARH) E. CIT VS SHREE MANJUNATHESWARE PACKING PRODUCTS AND CAMPHOR WORKS 231 ITR 53(SC )- THE HON'BLE SUPREME COURT H AS ALSO EXPLORED THE MEANING OF THE WORD RECORD AS APPEARI NG IN SECTION 263. F. CIT VS VALLABHDAS VITHALDAS 56 TAXMANN.COM 300 ( GUJ) - THE HON'BLE HIGH COURT HAS ALSO EXPLORED THE MEANING OF TH E WORD 'RECORD' AS APPEARING IN SECTION 263. 8 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. ON PERUSAL OF THE PAPER BOOK PAGES TO WHICH OUR ATTENT ION WAS INVITED BY THE LEARNED COUNSEL FOR THE ASSESSEE , WE OBSERVE THAT THE ISSUE OF SURRENDERED INCOME, ITS N ATURE AND MANNER OF DISCLOSURE IN THE PROFIT & LOSS ACCOU NT WAS VERY MUCH OPEN BEFORE THE ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS AND HE HAD IN FACT RAISED TH E SPECIFIC QUERIES IN THIS REGARD, WHICH WAS DULY REP LIED BY THE ASSESSEE. IN VIEW OF THE EVIDENCES SUPPORTING THE FACT THAT THE ISSUE WAS CLEARLY DELIBERATED UPON AT THE TIME OF ASSESSMENT PROCEEDINGS, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER HAS APPLIED HIS MIND TO THE ISSUE IN QUESTION AND ONLY THEN HE DECIDED TO TREAT THE SURR ENDERED INCOME AS BUSINESS INCOME. TIME AND AGAIN IN THE L ETTERS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFI CER, IT STUCK TO THE STAND THAT THE SURRENDERED INCOME WAS ITS BUSINESS INCOME. THE ASSESSING OFFICER WAS AWARE O F THIS STAND OF THE ASSESSEE AND ONLY THEN HE ALLOWED IT T HE DEDUCTION AVAILABLE OUT OF BUSINESS INCOME. WITH T HESE PLETHORA OF EVIDENCES ON RECORD, WE CANNOT JUST BRU SH ASIDE THE FACT THAT THE ASSESSING OFFICER WITHOUT APPLYIN G HIS MIND HAS ALLOWED THE ASSESSEE DEDUCTION UNDER SECTION 40 (B) OF THE ACT. FURTHER, WE SEE THAT THE COMMISSIONER OF INCO ME TAX WHILE HOLDING THE ORDER OF THE ASSESSING OFFICER TO BE 9 ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE, HAS PLACED HEAVY RELIANCE ON THE JUDGMENT OF THE GU JARAT HIGH COURT IN THE CASE OF FAKIR MOHMMED HAJI HASAN (SUPRA). RELIANCE WAS PLACED BY HIM FOR THE PROPOS ITION THAT THE NATURE OF INCOMES ASSESSED UNDER SECTIONS 69, 69A, 69B AND 69C OF THE ACT ARE TO BE TREATED AS DE EMED INCOMES AND NO BENEFIT, WHICH IS AVAILABLE OUT OF B USINESS INCOME CAN BE AVAILED BY THE ASSESSEE ON THESE INCO MES. HOWEVER, IF WE READ CLOSELY THE SAID JUDGMENT WE AL SO FIND SOME OTHER PROPOSITION LYING BEHIND IT. THE FINDIN GS OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF HAVE BEEN RECORDED BY THE COMMISSIONER OF INCOME TAX IN HIS O RDER AT PAGE 2 ONWARDS, WHICH READ AS UNDER : 7. THE SCHEME OF SECTIONS 69 , 69A . 69B AND 69C OF THE INCOME-TAX ACT, 1961, WOULD SHOW THAT IN CASES WHERE THE NATURE AND SOURCE OF INVESTMENTS MADE BY THE ASSESSEE OR THE NATURE A ND SOURCE OF ACQUISITION OF MONEY, BULLION, ETC., OWNED BY THE ASSESS EE OR THE SOURCE OF EXPENDITURE INCURRED BY THE ASSESSEE ARE NOT EXPLAINED AT ALL, OR NOT SATISFACTORILY EXPLAINED, THEN, THE VALUE OF SUCH INVESTMENTS AND MONEY OR THE VALUE OF ARTICLES NOT RE CORDED IN THE BOOKS OF ACCOUNT OR THE UNEXPLAINED EXPENDITURE MAY BE DEEMED TO BE THE INCOME OF SUCH ASSESSEE. IT FOLLOWS THAT THE MO MENT A SATISFACTORY EXPLANATION IS GIVEN ABOUT SUCH NATURE AND SOURCE BY THE ASSESSEE, THEN THE SOURCE WOULD STAND DISCLOSED AN D WILL, THEREFORE, BE KNOWN AND THE INCOME WOULD BE TREATED U NDER THE APPROPRIATE HEAD OF INCOME FOR ASSESSMENT AS PER THE PROVISIONS OF THE ACT. HOWEVER, WHEN THESE PROVISIONS APPLY BECAUSE NO SOURCE IS DISCLOSED AT ALL ON THE BASIS OF WHICH THE INCOME C AN BE CLASSIFIED UNDER ONE OF THE HEADS OF INCOME UNDER SECTION 14 OF THE ACT, IT WOULD NOT BE POSSIBLE TO CLASSIFY SUCH DEEMED I NCOME UNDER ANY OF THESE HEADS INCLUDING INCOME FROM 'OTHER SOUR CES' WHICH HAVE TO BE SOURCES KNOWN OR EXPLAINED. WHEN THE INCOME CAN NOT BE 10 SO CLASSIFIED UNDER ANY ONE OF THE HEADS OF INCOME UNDER SECTION 14 , IT FOLLOWS THAT THE QUESTION OF GIVING ANY DEDUCTION S UNDER THE PROVISIONS WHICH CORRESPOND TO SUCH HEADS OF INCOME WILL NOT ARISE. IF IT IS POSSIBLE TO PEG THE INCOME UNDER ANY ONE OF THOSE HEADS BY VIRTUE OF A SATISFACTORY EXPLANATION BEING GIVEN, TH EN THESE PROVISIONS OF SECTIONS 69 , 69A , 69B AND 69C WILL RIOT APPLY, IN WHICH EVENT, THE PROVISIONS REGARDING DEDUCTIONS, ET C., APPLICABLE TO THE RELEVANT HEAD OF INCOME UNDER WHICH SUCH INCO ME FALLS WILL AUTOMATICALLY BE ATTRACTED. 8. THE OPENING WORDS OF SECTION 14 'SAVE AS OTHERWISE PROVIDED BY THIS ACT' CLEARLY LEAVE SCOPE FOR 'DEEMED INCOME' OF THE NATURE COVERED UNDER THE SCHEME OF SECTIONS 69 , 69A , 69B AND 69C BEING TREATED SEPARATELY, BECAUSE SUCH DEEMED INCOME IS NO T INCOME FROM SALARY, HOUSE PROPERTY, PROFITS AND GAINS OF B USINESS OR PROFESSION, OR CAPITAL GAINS, NOR IS IT INCOME FROM 'OT HER SOURCES' BECAUSE THE PROVISIONS OF SECTIONS 69 , 69A , 69B AND 69C TREAT UNEXPLAINED INVESTMENTS, UNEXPLAINED MONEY, BULLION, E TC., AND UNEXPLAINED EXPENDITURE AS DEEMED INCOME WHERE THE N ATURE AND SOURCE OF INVESTMENT, ACQUISITION OR EXPENDITURE, AS T HE CASE MAY BE, HAVE NOT BEEN EXPLAINED OR SATISFACTORILY EXPLAI NED. THEREFORE, IN THESE CASES, THE SOURCE NOT BEING KNOWN, SUCH DEEM ED INCOME WILL NOT FALL EVEN UNDER THE HEAD 'INCOME FROM OTHER S OURCES'. THEREFORE, THE CORRESPONDING DEDUCTIONS WHICH ARE AP PLICABLE TO THE INCOMES UNDER ANY OF THESE VARIOUS HEADS, WILL NO T BE ATTRACTED IN THE CASE OF DEEMED INCOMES WHICH ARE COVERED UND ER THE PROVISIONS OF SECTIONS 69 , 69A , 69B AND 69C OF THE ACT IN VIEW OF THE SCHEME OF THOSE PROVISIONS. 9. ON READING OF THE VERY FIRST PARAGRAPH OF THE JUDGMENT OF GUJARAT HIGH COURT, WE SEE THAT THE VER Y FIRST IMPRESSION OF THE HON'BLE HIGH COURT AS REGARDS THE NATURE OF INCOME UNDER SECTIONS 69, 69A, 69B AND 69 C OF THE ACT IS THAT THE MOMENT WHEN A SATISFACTORY EXPLANATION IS GIVEN ABOUT THE NATURE AND SOURCE OF THESE INCOMES, SOURCE WOULD STAND DISCLOSED AND INCOME WO ULD 11 BE TREATED UNDER THE APPROPRIATE HEAD OF INCOME. O NLY ON THE BASIS OF CERTAIN FINDING OF FACT LATER ON IN TH E SAME DECISION, THE HON'BLE HIGH COURT HAS HELD THAT WHEN THE ASSESSEE HAS NOT BEEN ABLE TO SATISFACTORILY EXPLAI NED THE NATURE AND SOURCE OF THESE KIND OF INCOMES, THESE W ILL BE TREATED AS DEEMED INCOMES. APPLYING THE SAID PROPO SITION IN THE FACTS OF THE PRESENT CASE, WE SEE THAT THE A SSESSEE HAS ALL ALONG BEEN SAYING THAT THE SURRENDERED INCO ME IS OUT OF ITS BUSINESS. THE ASSESSING OFFICER WAS SEI ZED OFF THESE EXPLANATIONS OF THE ASSESSEE AND FORMED AN OP INION THAT THE SOURCE OF THESE SURRENDERED INCOMES HAS BE EN EXPLAINED BY THE ASSESSEE TO BE OUT OF ITS BUSINESS . WE SHOULD NOT FORGET THAT THE ASSESSEE IS A FIRM ENGAG ED IN THE BUSINESS AND MOST OF THE INCOMES EVEN IF NOT DI SCLOSED IN ITS BOOKS OF ACCOUNT PRIMARILY CONSISTS OF ITS B USINESS INCOME. IN VIEW OF THIS, EVEN APPLYING THE PROPOSI TION LAID DOWN BY THE GUJARAT HIGH COURT, WE CAN VERY EASILY INFER THAT THE ASSESSING OFFICER ONLY BEING SATISFIED BY THE EXPLANATION GIVEN BY THE ASSESSEE WITH REGARD TO TH E NATURE OF THE SURRENDERED INCOME HAS ALLOWED IT TO BE TREATED AS BUSINESS INCOME AND IN CONSEQUENCE, ALLO WED THE DEDUCTION UNDER SECTION 40(B) OF THE ACT ACCORD INGLY. 10. THE COMMISSIONER OF INCOME TAX HAS ALSO RELIED ON THE JUDGMENT OF HON'BLE PUNJAB & HARYANA HIGH CO URT IN THE CASE OF M/S KIM PHARMA (P) LTD. (SUPRA). W E WISH TO STATE HERE THAT IN THAT CASE, THE ONLY ISSUE WAS WITH REGARD TO THE CASH SURRENDERED AT THE TIME OF SURVE Y AND 12 NO OTHER INCOMES. SINCE OTHER INCOMES WERE ALREADY TREATED BY THE ASSESSING OFFICER HIMSELF AS BUSINES S INCOME, THEREFORE, THE PROPOSITION OF THAT CASE IS NOT APPLICABLE TO THE PRESENT CASE. ANOTHER POINT RAISE D BY THE COMMISSIONER OF INCOME TAX IN HIS ORDER, WHILE DISTINGUISHING THE CASE OF KARNATAKA HIGH COURT IN THE CASE OF S.K. SRIGIRI & BROS. (SUPRA), HE HAS STATED THAT IN THAT CASE THE FINDING WAS RECORDED THAT THE ADDITIO NAL INCOME SURRENDERED BY THE ASSESSEE WAS OF BUSINESS ONLY, WHICH IS NOT THERE IN THE PRESENT CASE. IN THIS RE GARD, ON PERUSAL OF THE RECORD, WE FIND THAT AMPLE QUERIES R EGARDING THE NATURE AND SOURCE OF INCOME WERE MADE BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS , WHICH WERE DULY REPLIED TO BY THE ASSESSEE. WE DO NOT HESITATE TO HOLD THAT EVEN IF THE ASSESSING OFFICER HAS NOT MENTIONED THE FACT OF THE SURRENDERED INCOME BEING BUSINESS INCOME, SPECIFICALLY IN HIS ORDER, WE UNDE RSTAND THAT THE ASSESSING OFFICER WAS SATISFIED TO THE EFF ECT THAT THE INCOME SURRENDERED PERTAINED TO THE BUSINESS OF THE ASSESSEE. IN VIEW OF THIS, WE SEE THAT THE ASSESSI NG OFFICER HAD MADE DETAILED ENQUIRIES AND FORMED AN O PINION WHICH WAS NOT ILLEGAL AND HIS OPINION IS BASED ON M ATERIAL AND EVIDENCES ON RECORD. THIS IS NOT THE CASE OF A NY ERROR HAVING CREPT IN THE ORDER OF THE ASSESSING OFFICER, THEREFORE, THE COMMISSIONER OF INCOME TAX WAS NOT R IGHT IN HOLDING THE ORDER OF THE ASSESSING OFFICER TO BE ERRONEOUS. FOR ASSUMING JURISDICTION UNDER SECTION 263 OF THE ACT, TWIN CONDITIONS OF THE ORDER BEING ERRONEO US AS 13 WELL PREJUDICIAL TO THE INTEREST OF THE REVENUE ARE TO BE APPLIED SIMULTANEOUSLY. SINCE WE HAVE ALREADY RECO RDED THAT THERE IS NO ERROR IN THE ORDER OF THE ASSESSIN G OFFICER, THE COMMISSIONER OF INCOME TAX CANNOT ASSUME JURISDICTION UNDER SECTION 263 OF THE ACT. ACCORDI NGLY, WE QUASH THE ORDER OF THE COMMISSIONER OF INCOME TAX P ASSED UNDER SECTION 263 OF THE ACT. 11. BEFORE PARTING, WE WOULD LIKE TO DEAL WITH T HE CASE LAWS RELIED ON BY THE LEARNED D.R. THE FIRST ORDER OF THE I.T.A.T. IN THE CASE OF BASSERA REALTORS P. LTD. (S UPRA), THE PROPOSITION WAS THAT MERE ACCEPTANCE OF SURRENDERED INCOME WITHOUT INQUIRY MAKES THE ORDER OF THE ASSESSING OF FICER ERRONEOUS. THE PRESENT CASE IS DEFINITELY NOT THE ONE OF NO ENQUIRY. THE JUDGMENT OF HON'BLE SUPREME COURT IN CASE OF CIT VS. ANSAL HOUSING & CONSTRUCTION LTD. (SUPRA) W HERE SLP HAS BEEN ADMITTED, RELATES TO A DEBATABLE ISSUE, HO WEVER, IN THE PRESENT CASE, NO SUCH DEBATABLE ISSUE IS INVOLV ED. THE ORDER OF THE I.T.A.T., CHANDIGARH BENCH IN THE CASE OF VODAFONE SOUTH LTD. (SUPRA) IS WITH RESPECT TO NOTI CE UNDER SECTION 263 OF THE ACT, WHICH IS NOT THE CONTROVERS Y INVOLVED IN THE PRESENT CASE. OTHER TWO CASES RELIED ON BY THE LEARNED D.R. IN THE CASE OF SHREE MANJUNATHESWARE PACKING PRODUCTS AND CAMPHOR WORKS (SUPRA) AND VALLABHDAS VITHALDAS (SUPRA) ARE ON THE INTERPRETATION OF THE TERM RECORD APPE ARING IN SECTION 263. IN THE PRESENT CASE, NO CONTROVERSY R EVOLVES AROUND THE MEANING OF THE TERM RECORD. THEREFORE , NONE OF 14 THE CASES RELIED ON BY THE LEARNED D.R. ARE OF ANY HELP TO THE CAUSE OF REVENUE. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF APRIL, 2016. SD/- SD/- (SANJAY GARG) (RANO JAIN) JUDICIAL MEMBER ACOUNTANT MEMBER DATED : 13 TH APRIL, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH