ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, ALWAR V. SHRI SUDESH KUMAR GUPTA, ALWAR

ITA 976/JPR/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0774 (ITAT-JAIPUR)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 22-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 271(1)(c); 69C; 143(3); 133A; 69B; 69A; 68; 69; 154

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HES B JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 976/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2014-15 THE ACIT, CIRCLE-02, ALWAR CUKE VS. SHRI SUDESH KUMAR GUPTA PROP. M/S SALASAR TEXTILES, 1, BABU KARAN SINGH COMPLEX, COURT ROAD, BEHROR, DISTT. ALWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ACUPG6791Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : MS. CHANCHAL MEENA (ADDL.CIT) FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SH. P. C. PARWAL (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 08/06/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 09/06/2020 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A), ALWAR DATED 23.05.2019 WHEREIN THE SOLE GROUND OF A PPEAL READS AS UNDER:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN QUASHING THE ACTION OF THE AO U/S 154 OF THE ACT IN APPLYING PROVISION OF SECTION 115BBE OF THE IT ACT ON UNDISCLOSED INVESTMENT OF RS. 21,00,000/- SURRENDER ED DURING THE COURSE OF SURVEY PROCEEDINGS. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A SURVEY U/S 133A WAS CONDUCTED ON 29.08.2013 AT THE BUSINESS PREMISES OF THE ASSESSEE. DURING ITA NO. 9 76-JP-2019 ACIT, ALWAR VS. SHRI SUDESH KUMAR GUPTA 2 THE COURSE OF SURVEY PROCEEDINGS, STOCK WAS PHYSICA LLY VERIFIED AND VALUED AT RS. 46,07,640/- AND THE ASSESSEE SURRENDERED AN AMO UNT OF RS. 21,00,000/- AS UNDISCLOSED INVESTMENT IN STOCK FROM UNDISCLOSED INCOME. THE SURRENDERED INCOME OF RS 21,00,000/- WAS THEREAFTER OFFERED AND REFLECTED IN RETURN OF INCOME FILED BY THE ASSESSEE FOR THE YEAR UNDER CON SIDERATION. SUBSEQUENTLY, THE MATTER WAS TAKEN UP FOR SCRUTINY AND THE RETURN ED INCOME OF RS. 22,80,070/- FILED BY THE ASSESSEE WAS ACCEPTED AND ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT VIDE ORDER DATED 01 .09.2016. SUBSEQUENTLY, A NOTICE U/S 154 WAS ISSUED TO THE ASSESSEE AND THE C ONTENTS THEREOF READ AS UNDER:- THE ASSESSEE HAS SURRENDERED OF RS. 21,00,000/- AS UNDISCLOSED INVESTMENT IN STOCK FROM UNDISCLOSED INCOME DURING THE SURVEY CONDUCTED U/S 133A OF THE ACT ON 06.09.2013 ON WHIC H THE TAX WAS TO CHARGED @ 30% WHILE PASSING THE ORDER U/S 143(3) OF THE ACT ON 24.05.2016 BUT THE TAX WAS CHARGED AS PER SLAB RATE BY RS. 5,13,374/- INSTEAD OF 6,48,900/-. AS PER SECTION 115BBE OF THE ACT WHERE THE ANY INCOME INCLUDED IN TOTAL INCOME REFERRED U/S 68, 69 , 69A, 69B, 69C AND 69D OF THE IT ACT, THE TAX HAS TO BE CHARGED @ 30%. 3. THE ASSESSEE, IN RESPONSE TO THE AFORESAID NOTIC E, SUBMITTED THAT IN THE SURVEY STATEMENT, HE HAS ADMITTED EXCESS STOCK OF R S. 21,00,000/- ON ESTIMATED BASIS AND THE SAME WAS OFFERED TO TAX IN THE RETURN OF INCOME WHICH WAS ACCEPTED BY THE AO WHILE COMPLETING THE A SSESSMENT PROCEEDINGS. IT WAS SUBMITTED THAT THE EXCESS STOCK OFFERED IN S URVEY IS PART OF THE BUSINESS INCOME AND WITHOUT ANY CORROBORATIVE EVIDE NCE, THE EXCESS STOCK WAS DETERMINED BY VALUING THE BUSINESS STOCK AT CUR RENT PRICE INSTEAD OF PURCHASE PRICE AND NOTHING WAS BROUGHT TO SUGGEST T HAT THIS WAS NOT A REGULAR ITEM OF STOCK DEALT WITH BY THE ASSESSEE. IT WAS FU RTHER SUBMITTED THAT WHERE ASSET IN WHICH UNDECLARED INVESTMENT IS SOUGHT TO B E TAXED IS NOT CLEARLY ITA NO. 9 76-JP-2019 ACIT, ALWAR VS. SHRI SUDESH KUMAR GUPTA 3 IDENTIFIABLE OR DOES NOT HAVE INDEPENDENT IDENTITY BUT IS INTEGRAL AND INSEPARABLE PART OF DECLARED ASSET, FALLING UNDER A PARTICULAR HEAD, THEN THE DIFFERENCE SHOULD BE TREATED AS UNDECLARED BUSINESS INCOME EXPLAINING THE INVESTMENT. FURTHER, RELIANCE WAS PLACED ON THE CO- ORDINATE BENCH DECISION IN CASE OF DCIT VS. RAM NARAYAN BIRLA (482/JP/2015 DATED 30.09.2016). 4. THE SUBMISSION SO FILED BY THE ASSESSEE WAS CONS IDERED BUT NOT FOUND ACCEPTABLE TO THE ASSESSING OFFICER. AS PER THE AS SESSING OFFICER, DURING THE COURSE OF SURVEY PROCEEDINGS, THE ASSESSEE HAS SURR ENDERED AN AMOUNT OF RS. 21,00,000/- AS UNDISCLOSED INVESTMENT IN STOCK FROM UNDISCLOSED INCOME AND THE ISSUE HAS BEEN ELABORATELY DISCUSSED IN THE ASS ESSMENT ORDER PASSED U/S 143(3) OF THE ACT. IT WAS ACCORDINGLY HELD THAT SEC TION 69 IS CLEARLY ATTRACTED IN THE CASE AND TAX IS TO BE CHARGED IN ACCORDANCE WIT H SECTION 115BBE OF THE ACT. ACCORDINGLY, TAX @ 30% ON SURRENDERED INCOME O F RS. 21,00,000/- WAS CHARGED INSTEAD OF TAX CHARGED AS PER THE SLAB RATE WHILE PASSING THE ASSESSMENT ORDER U/S 143(3) OF THE ACT. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AS PER LD. CIT(A), THE ASSESSING OFFIC ER IS NOT JUSTIFIED IN TAXING SURRENDERED STOCK U/S 115BBE WHERE HE HAS ALREADY A CCEPTED IT UNDER THE HEAD BUSINESS INCOME WHILE PASSING THE ASSESSMENT O RDER U/S 143(3) OF THE ACT AND IN SUPPORT, RELIED UPON THE CO-ORDINATE BEN CH DECISIONS IN CASE OF CHOKSHI HIRALAL MAGANLAL VS. DCIT 141 TTJ (AHD) 1 A ND DCIT VS. RAM NARAYAN BIRLA (SUPRA). FURTHER, THE LD CIT(A), RELYING ON T HE DECISION OF HONBLE SUPREME COURT IN CASE OF T. S. BALRAM ITO VS. VOLKA RT BROTHERS REPORTED IN 82 ITR 50, HELD THAT ACTION OF THE ASSESSING OFFICER U /S 154 IS NOT JUSTIFIED. AGAINST THE SAID FINDINGS, THE REVENUE IS IN APPEAL BEFORE US. 6. DURING THE COURSE OF HEARING, THE LD. DR RELIED ON THE FINDINGS OF THE AO AND SUBMITTED THAT THE PROVISIONS OF SECTION 69 ARE CLEARLY ATTRACTED IN THE ITA NO. 9 76-JP-2019 ACIT, ALWAR VS. SHRI SUDESH KUMAR GUPTA 4 INSTANT CASE AND THEREFORE, AO WAS JUSTIFIED IN INV OKING THE PROVISIONS OF SECTION 154 OF THE ACT AS THERE IS NO DISPUTE THAT THE AMOUNT HAS BEEN SURRENDERED BY WAY OF UNDISCLOSED INVESTMENT IN STO CK FROM UNDISCLOSED INCOME AND THE PROVISIONS OF SECTION 69 AND SECTION 115BBE ARE CLEARLY ATTRACTED AND THERE CANNOT BE TWO VIEWS ABOUT IT. 7. PER CONTRA, THE LD. AR RELIED ON THE FINDINGS O F THE LD. CIT(A) AND SUBMITTED THAT THE AMOUNT SURRENDERED DURING THE CO URSE OF SURVEY HAS BEEN DULY OFFERED BY THE ASSESSEE AS BUSINESS INCOME WHI LE FILING HIS RETURN OF INCOME AND THE SAID RETURN OF INCOME HAS BEEN ACCEP TED BY THE ASSESSING OFFICER. IT WAS SUBMITTED THAT THERE IS NO FINDING RECORDED BY THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER THAT THE PROVISIONS OF SECTION 69 ARE ATTRACTED IN THE INSTANT CASE AND IN ABSENCE TH EREOF, THE PROVISIONS OF SECTION 115BBE CANNOT BE APPLIED. FURTHER, RELIANC E WAS PLACED ON THE CO- ORDINATE BENCH DECISION IN CASE OF DCIT VS. RAM NAR AYAN BIRLA (SUPRA). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. DURING THE COURSE OF SURVEY, T HE ASSESSEE HAS SURRENDERED AN AMOUNT OF RS 21,00,000/- AS UNDISCLO SED INVESTMENT IN STOCK FROM UNDISCLOSED INCOME DURING THE COURSE OF SURVEY . IN THE RETURN OF INCOME, THE SAME HAS BEEN OFFERED TO TAX UNDER THE HEAD BUSINESS INCOME AND THE RETURN OF INCOME SO FILED HAS BEEN ACCEPTED BY THE ASSESSING OFFICER WITHOUT MAKING ANY ADJUSTMENT/VARIATION EITHER IN T HE QUANTUM, NATURE OR CLASSIFICATION OF INCOME SO OFFERED BY THE ASSESSEE . THE ASSESSEE, BEING AN INDIVIDUAL, HAS OFFERED THE SAME TO TAX APPLYING TH E SLAB RATE OF TAXATION AS APPLICABLE TO AN INDIVIDUAL. THE CASE OF THE REVENU E IS THAT THE SAME IS TAXABLE @ 30% AS PER PROVISIONS OF SECTION 115BBE R /W SECTION 69 OF THE ACT AND IS THUS A MISTAKE APPARENT FROM RECORD RECTIFIA BLE U/S 154 OF THE ACT. ITA NO. 9 76-JP-2019 ACIT, ALWAR VS. SHRI SUDESH KUMAR GUPTA 5 9. IN ORDER TO APPRECIATE THE RIVAL CONTENTIONS, I T WOULD BE APPROPRIATE TO REFER TO THE PROVISION OF SECTION 115BBE AT THE REL EVANT POINT IN TIME WHICH READS AS UNDER: 115BBE. (1) WHERE THE TOTAL INCOME OF AN ASSESSEE, (1) INCLUDES ANY INCOME REFERRED TO IN SECTION 68 , SEC TION 69, SECTION 69A , SECTION 69B , SECTION 69C OR SECTION 69D, THE INCOME- TAX PAYABLE SHALL BE THE AGGREGATE OF (A) THE AMOUNT OF INCOME-TAX CALCULATED ON THE INCOME R EFERRED TO SECTION 68 , SECTION 69, SECTION 69A , SECTION 69B , SECTIO N 69C OR SECTION 69D, AT THE RATE OF THIRTY PER CENT; AND (B) 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 (A). 10. THE PROVISIONS OF SECTION 115BBE THUS PROVIDES THAT WHERE THE INCOME OF THE ASSESSEE INCLUDES ANY INCOME REFERRED TO IN SECTION 69, THE INCOME TAX PAYABLE SHALL BE AT THE RATE OF 30% ON INCOME SO RE FERRED IN SECTION 69 AND ON THE REMAINING INCOME, THE AMOUNT OF INCOME-TAX W ITH WHICH THE ASSESSEE WOULD HAVE BEEN CHARGEABLE HAD HIS TOTAL INCOME BEE N REDUCED BY THE AMOUNT OF INCOME REFERRED IN SECTION 69. IN OTHER WORDS, IT PROVIDES FOR A SPECIAL RATE OF TAXATION AT THE RATE OF 30% AS AGAI NST THE NORMAL RATE OF TAXATION WHICH MAY BE APPLICABLE TO THE ASSESSEE. THE QUESTION IS WHETHER ASSESSEES INCOME INVOLVES INCOME REFERRED TO IN SE CTION 69 AND THE PROVISIONS THEREOF READS AS UNDER: 69. WHERE IN THE FINANCIAL YEAR IMMEDIATELY PRECED ING THE ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMENTS WHICH ARE NO T RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NA TURE AND SOURCE OF THE INVESTMENTS OR THE EXPLANATION OFFERED BY HIM I S NOT, IN THE OPINION ITA NO. 9 76-JP-2019 ACIT, ALWAR VS. SHRI SUDESH KUMAR GUPTA 6 OF THE ASSESSING OFFICER, SATISFACTORY, THE VALUE O F THE INVESTMENTS MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE OF SUCH FINANCIAL YEAR. 11. IN THE INSTANT CASE, AS WE HAVE NOTED ABOVE, TH E RETURN OF INCOME SO FILED HAS BEEN ACCEPTED BY THE ASSESSING OFFICER WI THOUT MAKING ANY ADJUSTMENT/VARIATION TO THE INCOME SO OFFERED BY TH E 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 OF FICER HAS CALLED FOR ANY EXPLANATION OF THE ASSESSEE REGARDING THE NATURE AN D SOURCE OF SUCH INVESTMENT DURING THE COURSE OF ASSESSMENT PROCEEDI NGS AND ANY FORMATION OF OPINION AND RECORDING OF SATISFACTION BY THE ASSESS ING OFFICER WHICH IS REQUIRED BEFORE INVOKING THE PROVISIONS OF SECTION 69 OF THE ACT. THOUGH THE ASSESSING OFFICER HAS ISSUED A SHOW-CAUSE AS TO WHY PENALTY P ROCEEDINGS 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 SE CTION 69 OF THE ACT OR HAS CALLED FOR ANY EXPLANATION OF THE ASSESSEE REGARDIN G THE NATURE AND SOURCE OF SUCH INVESTMENT. IN FACT, THE ASSESSMENT ORDER SO P ASSED 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), GOIN G 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 B E 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 O N SATISFACTION OF ITA NO. 9 76-JP-2019 ACIT, ALWAR VS. SHRI SUDESH KUMAR GUPTA 7 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 LD CIT(A) AND THE MATTER IS DECIDED IN FAVOUR OF THE A SSESSEE AND AGAINST THE REVENUE. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09/06/2020. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 09/06/2020 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ACIT, CIRCLE-02, ALWAR 2. IZR;FKHZ@ THE RESPONDENT- SH. SUDESH KUMAR GUPTA, ALWAR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 976/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR