PRANATI BUILDCON, KOTA,KOTA V. ACIT/DCIT CEN CIR ,KOTA, KOTA

ITA 95/JPR/2025

AI Insights

Pranati Buildcon, a partnership firm engaged in real estate development, faced a survey under section 133A of the Income Tax Act, 1961, on November 8, 2017. During the survey, unrecorded transactions amounting to Rs. 8,90,000 related to construction material purchases were discovered. The partner of the firm admitted these expenses were not recorded in the regular books but offered the amount for taxation. The Income Tax Officer (ITO) taxed this income at special rates under section 115BBE, considering it unexplained expenditure under section 69C. The Commissioner of Income Tax (Appeals) upheld this decision. However, the Tribunal reversed this decision, treating the income as business income and not subject to the special tax rate, citing that the income was recorded in the regular books and was part of the business activities.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 773888 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Appeal Filed On: 23-01-2025
• Other Referred Cases: Pr. CIT vs. Bajargan Traders, Shri Ram Narayan Birla vs ITO, Shri Lovish Singhal vs ITO, Krishnamegh Yarn Industries vs ACIT, Chokshi Hiralal Maganlal vs DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANITA RINES H
• Assessee Lawyers: HANEDRA GARGIEYA; V. C
• Keywords: Set aside; Business income; Question of law; Corroborative evidences; Unexplained expenditure; Unexplained investment; Salary income; Income from undisclosed sources; Capital Gains; Deemed to accrue or arise in india; Revision of order
• Section: 143(3); 56; 68; 69; 69C; 139; 28; 133A; 244A

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBkSM+ deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 95/JPR/2025 fu/kZkj.k o\"kZ@Assessment Years : 2018-19 Pranati Buildcon Parshavnath Complex, Parshvnath Enclave Extn. Kunhadi, Kota. cuke Vs. The ACIT/DCIT, Central Circle, Kota. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AALFP0844Q vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Hanedra Gargieya, Adv. (V.C.) Shri Hemang Gargieya, Adv. jktLo dh vksj ls@ Revenue by : Mrs. Anita Rinesh, JCIT, Sr.-DR a lquokbZ dh rkjh[k@ Date of Hearing : 10/07/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement : 23/09/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM By way of present appeal, the assessee–appellant challenges the order of the Learned Commissioner of Income Tax ( Appeals)– 2, Udaipur [ for short CIT(A) ] dated 17.12.2024 for assessment year 2018-19. The said order of the ld. CIT(A) arises as against the order dated 11.05.2021 passed u/s 143(3) of the Income Tax Act, 1961 [for short ‘Act’] by the ACIT/DCIT, Central Circle, Kota [for short ‘AO’]. Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 2 2. In this appeal, the assessee has raised the following grounds:- “1. The impugned order passed u/s 143(3) dated 11.05.2021 are bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same kindly be deleted. 2. Rs. 8,90,000/-: The CIT(A) erred in law as well as on the facts of the case in confirming the addition made by the Id. AO in imposing tax, surcharge, cess etc. as per provision of S. 115BBE of the Act on the income surrendered during survey. The consideration of income as unexplained u/s 69C and invoking of S.115BBE is contrary to the provisions of law, on facts and without jurisdiction. The tax liability so created, kindly be deleted in full. 3. The CIT(A) erred in law as well as on the facts of the case in confirming the charging of interest u/s 234A, 234B, 234C & 234D of the Act and as also in withdrawing interest u/s 244A of the Act made by the AO. The interest so charged/withdrawn, being contrary to the provisions of law and facts, kindly be deleted in full. 4. The appellant prays your honour to add, amend or alter any of the grounds of the appeal on or before the date of hearing.” 3. Brief Facts of the Case are that the appellant is a partnership firm engaged in the business of real estate development. A survey u/s 133A of the Act was conducted on 08.11.2017 at the business premises of the assessee. During the survey, a notepad labelled 'Marbito' was found and impounded as Annexure A-1, Ex.1. The said notepad reflected unrecorded transactions relating to purchase of construction material amounting to Rs.8,90,000/-. The partner of the firm, Shri Pradeep Dadhich, in his statement recorded during the survey proceedings, Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 3 admitted that the entries pertained to expenses incurred by the firm, which had not yet been recorded in the books of accounts. He accordingly offered the said sum for taxation. 3.1 Thereafter while filling the return of income for the A.Y. 2018- 19 on 29.09.2018 the assessee declared total income of Rs.1,17,31,970/-, which included the said amount of Rs. 8,90,000/- as part of its business income. The case was selected for scrutiny under CASS. 3.2 During the course of assessment proceedings, a show cause notice was issued by the ld. AO proposing to tax the surrendered income of Rs. 8,90,000/- at the rate prescribed u/s 115BBE of the Act. The assessee submitted a detailed reply dated 18.02.2021, explaining that the amount related to the business of construction had been duly accounted for before the year-end in the trading account and purchases. The AO, however, did not find the explanation satisfactory and proceeded to tax the said income as unexplained expenditure u/s 69C, invoking section 115BBE of the Act. Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 4 3.3 The assessment was completed u/s 143(3) on 11.05.2021 at returned income, but with a split taxation—Rs. 1,08,41,965/- at normal rates and Rs. 8,90,000/- at special rates u/s 115BBE. 4. Aggrieved from the order of AO, the assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below:- “4.3 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- In this case, the AO noted that during the survey proceeding, a note pad 'Marbito' was found and impounded, which was annexed as annexure -A-1, Ex-1. On perusal of this exhibit, it was noticed that assessee firm had incurred undisclosed expenditure of Rs. 8,90,000/- in development of land and construction during the F.Y 2017-18. The partner of the assessee firm Shri Pradeep Dadhich had accepted in his statement recorded during survey proceedings, that these expenses were not recorded in regular books of accounts of the assessee and offered undisclosed income of Rs. 8,90,000/- for taxation. The assessee had included this offered income of Rs. 8,90,000/- in its total income under the head \"Business Income\" in ITR filed for the relevant year and paid tax at normal rate there on. As the unaccounted/unexplained expenditure are covered u/s 69C of the I.T. Act, therefore tax should be charged as per the provision of section 115BBE of I.T. Act 1961. The assessee submitted that the said expenses are routine expenses and related to the current year. Hence these are regular nature of expenditure and related to routine business and there is no evidence found about the payment of such expenses hence the section 115BBE shall not attract on the assessee. As the assessee shown all the expenses which have not verifiable at the time of survey incorporated Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 5 in his regular return of income and paid the normal rate tax. Hence section 115 BBE not applicable on the same case. The submission of the assessee was not found acceptable because the assessee admitted that these expenses were not recorded in its regular books of accounts. Further, assessee has not produced any documentary evidences regarding he sources of these unaccounted expenses of Rs. 8,90,000/- during the survey proceedings as well as assessment proceedings. Hence, these unaccounted and unexplained expenses is covered u/s 69C of the I.T. Act. The appellant argued that Section 115BBE wrongly invoked and applied. At the outset it is submitted that S.115BBE specifically refers to the income which are of the nature as referred in S. 68, 69, 69A of the Act being the income from other sources. Therefore, subjected income has essentially to be classified u/s 14 of the Act as income from other sources and that is possible only when the income is not capable of being classified under any other head being income from salary, house property, capital gain, business or profession The argument of the appellant are considered but not found to be acceptable. It is true that when the income is not capable of being classified under any other head being income from salary, house property, capital gain, business or profession or income from other sources then it is to be assessed as deemed income u/s 68 or 69 family. In the present case, the addition made by the AO is u/s 69C of the Act. The section 69C is reproduced as under- Unexplained expenditure, etc. 69C. Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the AO, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year. In the present case, On perusal of annexure -A-1. Ex-1 it was noticed that assessee firm had incurred undisclosed expenditure of Rs. 8,90,000/- in development of land and construction during the F.Y 2017-18. The partner of the assessee firm Shri Pradeep Dadhich accepted that these expenses were not recorded in regular books of Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 6 accounts of the assessee and offered undisclosed income of Rs. 8,90,000/-for taxation. The assessee has incurred an expenditure as per the findings of survey. This fact is not disputed. The assessee has not offered any explanation about the source of such expenditure. This fact is also not disputed. This fact was evident at the time of survey. In such a case, the amount covered by such expenditure may be deemed to be the income of the assessee for such financial year. Hence, the AO is found to be justifying making addition u/s 69C of the Income Tax Act It is argued that once a comparison is made between the income shown in the accounts and those in ROI, there will be no difference. The assessee has not explained the source of expenditure which was admitted to be not recorded in the books of accounts. Therefore, the case of the assessee is covered by the section 69C. The assessee cannot come out from the clutches of section 69C without explaining the source of the undisclosed expenditure. The arguments of the assessee are therefore not found to be acceptable. Undisclosed income-Business income only. It is stated that Annexure-A-1, Ex.1 pages 1 to 2 are related to the building material purchases totaling to Rs. 8.90,000/- made which has not been accounted for hence, unable to get them verified. Thus, undisputedly the entire amount of Rs. 8,90,000/-related to the purchases of construction material pending accounting on the date of survey in the present case, the above facts & circumstances rather very clearly indicated and established that the alleged undisclosed income of Rs. 8.90.000/-, was nothing but real estate business income in case of assessee firm Pranati Buldoon but not income from other sources or in any case falling u/s 69 of the act The arguments of the assessee are considered. The claim made by the assessee that entire amount of Rs. 8,90,000/-related to the purchases of construction material pending accounting on the date of survey is not found to be acceptable. If only accounting was pending and payment was made, it must have been made from the sources which are not recorded in the books of accounts. This is not the case of the assessee that payment was pending and it was made after date of survey from accounted sources. Hence, the payment was made from unaccounted Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 7 sources. Therefore, the section 69C is clearly applicable on the facts of the case. The claim that undisclosed income of Rs.8,90,000/-, was nothing but real estate business income in case of assessee firm Pranati Buildcon is also not supported by any evidence. No evidence is furnished to show that this amount was earned from business activity by the assessee. This claim is just an assertion without any supporting evidence. In the absence of any evidence, the claim is not found to be acceptable. The payment was made from unaccounted sources. Therefore, the section 69C is clearly applicable on the facts of the case. It is argued that there is no whisper of this in entire statement of partner Pradeep Dadhich nor any finding recorded in the impugned assessment order u/s 143(3) for AY 2018-19 in case of the appellants that income was something beyond income from business/capital gains etc. or that there was some other source of income giving rise to such alleged undisclosed Income The arguments of the assessee are not found to be acceptable because of two reasons. Firstly, the onus is on the person who is claiming. The assessee is claiming that source of unaccounted expenditure is from business. Then the onus is on the assessee to establish the claim. In the absence of proving the same, the AO was justified in treating these amounts as earned from undisclosed sources as Income from other sources and not from business. Secondly, the source of the expenditure which is not accounted is in exclusive knowledge of the assessee. The AO cannot be expected to prove which is in exclusive knowledge of the assessee. Therefore, the reply of the assessee is not found to be acceptable. In essence, the assessee is arguing that since the assessee is engaged in business activity, all unaccounted expenditure or income found during search and survey should be considered as earned from business activity. If the argument of the assessee are accepted then there will be no addition u/s 68, 69, 69A or 69C in case the assessee is engaged in some business activity. This is not found to be acceptable as per the provisions of Income Tax Act. There was no such intention of the legislature. There is no provision in the Income Tax which says that the sections of deemed income family are not applicable on the assessee who is engaged in the business activity. Hence, the arguments of the assessee are not found to be acceptable. Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 8 In view of clear failure on the part of the assessee to explain the source of the advances made by the assessee, the addition made by the AO on account of undisclosed expenditure of Rs. 8,90,000/-is found to be justified and upheld. The appellant has relied upon the decision in the case of Pr. CIT vs. Bajargan Traders in DBITA No. 258/2017 dated 12.09.2017, Shri Ram Narayan Birla in ITA No. 482/JP/2015 dated 30.09.2016, Shri Lovish Singhal vs ITO (ITA No 142 to 146/Jodh/2018 for AY 2014-15 dated 25.05.2018) and some other decisions. On perusal of these decisions, it is noticed that decisions were not rendered with respect to undisclosed expenditure added u/s 69C of the Income Tax Act. Hence, this reliance placed on this decision is found to be misplaced. The decision is not found to be applicable on the facts of the case. Charging of Tax u/s 115BBE The appellant has also raised the issue of charging tax u/s 115BBE of the Income Tax act. The section 115BBE is charging section. The argument of the appellant are considered. The Income Tax Act is a self contained code consists of both charging and machinery sections. Charging sections are those sections by which liability is created or fixed. Machinery sections are those sections which ensure quantification, imposition and collection of tax created by the 'charging sections'. Thus 'Machinery Provisions are basically subordinates to the charging section. On applying the above principles section 115BBE is categorized as 'machinery provision' which is subordinate to the charging sections 68 and section 69 family. There is a very practical rule in the interpretation of taxing Statutes that 'charging provisions' are interpreted strictly while the 'machinery provisions' are interpreted liberally. The above criteria of interpretation of the 'Statute' is supported by several judicial precedents Some land mark judicial precedents are as under (1) J.K. Synthetics Ltd. v. CTO 1994 taxmann.com 370 (SC). (ii) Gurshai Saigal v. CIT [1963] 48 ITR 1 (SC). (ii) India United Mills Ltd. v. CEPT (1955) 27 ITR 20 (SC) (iv) CIT v. Mahaliram Ramjidas [1940] 8 ITR 442 (PC) Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 9 under: The Hon'ble Supreme Court in the case of J.K. Synthetics Ltd. (supra) held as \"It is well-known that when a statute levies a tax it does so by inserting a charging section by which a liability is created or fixed and then proceeds to provide the machinery to make the liability effective. It, therefore, provides the machinery for the assessment of the liability already fixed by the charging section, and then provides the mode for the recovery and collection of tax, including penal provisions meant to deal with defaulters.... Ordinarily the charging section which fixes the liability is strictly construed but that rule of strict construction is not extended to the machinery provisions which are construed like any other statute. The machinery provisions must, no doubt, be so construed as would effectuate the object and purpose of the statute and not defeat the same. (Whitney v. Commissioners of Inland Revenue 1926 A C 37, CIT v. Mahaliram Ramjidas [1940] 8 ITR 42 (PC), Indian United Mills Ltd. v. Commissioner of Excess Profits Tax, Bombay. [1995] 27 ITR 20 (SC) and Gursahai Saigal v. CIT. Punjab, [1963] 48 ITR 1 (SC).\" The Hon'ble Supreme Court in the case of Gursahai Saigal (supra) held as under:- \"Those sections which impose the charge or levy should be strictly construed; but those which deal merely with the machinery of assessment and collection should not be subjected to a rigorous construction but should be construed in a way that makes the machinery workable. The Hon'ble Supreme Court in the case of 'India United Mills Ltd. (supra) applied the principles laid down by the Privy Council in the case of 'Mahaliram Ramjidas (supra)' held as under: \"Ordinarily, the charging section which fixes liability is strictly construed but the rule of strict construction is not extended to the machinery provisions which are construed like any other statute. The machinery provision must, no doubt, be so construed as would effectuate the object and purpose of the Statute and not to defeat the same.\" In view of above discussion, when the addition is made in sections 68 and section 69 family. If the addition is made under these sections, the tax has to be charged as per provisions of section 115BBE. The charging of tax as per provisions of section 115BBE is automatic. Hence, no separate show cause notice is required for charging tax u/s Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 10 115BBE. Therefore, the argument of the appellant are not found to be acceptable. The arguments of the appellant are against the expressed provisions of the Income Tax Act. Sub-section (2) of section 115BBE of the Income- tax Act, 1961 (Act) provides that where total income of an assessee includes any income referred to in section(s) 68/69/69A/698/69C/69D of the Act, no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed to the assessee under any provisions of the Act in computing the income referred to in section 115BBE (1) of the Act. The issue raised by the appellant is therefore not found to be acceptable and rejected. In view of the above discussion, the addition made by the AO on account of undisclosed expenditure of Rs. 8,90,000/- u/s 69C is found to be justified and upheld This ground of appeal is treated as dismissed. 5. The last Ground of Appeal is that the appellant prays for to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing. 5.1 The appellant has not added, altered, modified or amended any of the above mentioned grounds of appeal on or before the date of hearing. Accordingly such mention by the appellant in its ground is treated as general in nature, no needing any specific adjudication and is accordingly treated as disposed of. 6. In the result, the appeal of the appellant is treated as dismissed.” 5. Feeling dissatisfied from the above order of the ld. CIT(A), the assessee preferred the second appeal before this tribunal. Apropos to the grounds so raised by the assessee, ld. AR of the assessee relied upon the following written submission:- “Brief General Facts: Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 11 1. The admitted facts are that the assessee is engaged in the real estate business of purchasing & selling of plots, lands, construction of properties under M/s Pranati Buildcon at Kota. A survey u/s 133A was carried out on dated 08.11.2017 at the premises of assessee as also at the premises of other group member M/s Parshavnath Associates, Kota during the course of which, statement of the Partner Shri Pradeep Dadhich was recorded u/s 133A wherein the partner admitted that these expenses were not recorded in regular books of accounts (till the date of survey) and offered income of Rs. 8,90,000/-. After close of the year, the assessee firm filed its Return of Income u/s 139 (-1-4) on dt. 29.09.2018 declaring total income of Rs.1,17,31,970/-, which also included such offered additional income of Rs.8,90,000/-. Thereafter, the case was selected for Complete Scrutiny assessment and the impugned assessment was completed vide order dated 11.05.2021 passed u/s 143(3). 2. The AO during the assessment proceedings, accepted the Return of Income filed by the assessee dt. 29.09.2018 as it is, without making any addition to the same and notably even without changing the head of Income. In other words, he assessed income under the head business income only. Yet however, the AOcompleted the assessment by imposing tax at special rates u/s 115BBE of the Act on the income of Rs. 8,90,000/-, holding as under: “The reply of the assessee considered and place on record but not found satisfactory. The assessee submitted that the said expenses are routine expenses and related to the current year. Hence these are regular nature of expenditure and related to routine business and there is no evidence found about the payment of such expenses hence the section 115 BBE shall not attract on the assessee. As the assessee shown all the expenses which have not verifiable at the time of survey incorporated in his regular return of income and paid the normal rate tax. Hence section 115 BBE not applicable on the same case. The submission of the assessee is not acceptable because the assessee has admitted that these expenses were not recorded in its regular books of accounts. Further, assessee has not produced any documentary evidences regarding the sources of these unaccounted expenses of Rs. 8,90,000/- during the survey proceedings as well as assessment proceedings. Hence, these unaccounted and unexplained expenses is covered u/s 69C of the I.T. Act, which reads as under: Unexplained expenditure, etc. 69C. Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the AO, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year.” Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 12 Subject to the foregoing remarks, the total income of the assessee is computed as under: - X X X 3. Further, the ld. CIT(A) after referring to the grounds of appeal raised by the assessee in appeal has upheld the grounds given by the AO and dismissed the appeal as preferred by the assessee by an order dt. 17.12.2024 passed u/s 250 of the Act. “In view of above discussion, when the addition is made in sections 68 and section 69 family. If the addition is made under these sections, the tax has to be charged as per provisions of section 115BBE. The charging of tax as per provisions of section 115BBE is automatic. Hence, no separate show cause notice is required for charging tax u/s 115BBE. Therefore, the argument of the appellant are not found to be acceptable. The arguments of the appellant are against the expressed provisions of the Income Tax Act. Sub-section (2) of section 115BBE of the Income-tax Act, 1961 (Act) provides that where total income of an assessee includes any income referred to in section(s) 68/69/69A/69B/69C/69D of the Act, no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed to the assessee under any provisions of the Act in computing the income referred to in section 115BBE (1) of the Act. The issue raised by the appellant is therefore not found to be acceptable and rejected. In view of the above discussion, the addition made by the AO on account of undisclosed expenditure of Rs. 8,90,000/- u/s 69C is found to be justified and upheld. This ground of appeal is treated as dismissed.” Since, to consider subjected income as income liable for a higher tax rate, is an illegal and unjustified attempt to invoke S. 115BBE, which is clearly not applicable on the facts and circumstances of the present case, hence this appeal. Submission: GOA-1: This ground is general nature may be decided at the time of hearing. GOA-2: Invalid Invocation of Sec 115BBE: Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 13 1. We rely on the submission dt. 04.11.2024 made before the CIT (A) which is as follows: - 1. “The AO completed the assessment by imposing tax at special rates u/s 115BBE of the Act, holding as under: The contention of the assessee is not acceptable for the reason that the survey was conducted on 08/11/2017. The assessee has voluntarily offered unexplained income at the time of survey. Further the assessee promised to pay tax @ higher rate. Accordingly, the assessee has calculated the tax at normal rate on the income admitted at the time of survey. Hence the assessee was requested to show cause as to why the undisclosed income admitted at the time of survey should not be taxed at higher rate as per the amended provision of section 115BBE of the IT Act. The show cause notice was duly served on the assessee on 05.02.2021. However, the assessee has filed reply on dated 18.02.2021. But the Ld A.O. not considered reply and apply the provision of section 115BBE of the IT Act to calculate the tax at higher tax on the income voluntarily admitted at the time of survey amounting to Rs. 8,90,000/-as per the provision of section 115BBE of the IT Act. Accordingly, the order is being passed u/s 143(3) read with section 144B of the IT Act. Total Income admitted which includes income admitted at the time of survey u/s 143(3) Rs.5,69,76,405/- Less Deduction under Chapter VIA Rs.4,52,44,440/- ---------------------- Net Income Rs.1,17,31,965/- Less: Income admitted at the time of Survey to be Calculated separately Rs. 8,90,000/- Regular income Rs.1,08,41,965/- Regular income Rs.1,08,41,965/- @ normal rate. Income under survey Rs. 8,90,000 @ higher rate as per the provision of section 115BBE.” Since, to consider subjected income as income liable for a higher tax rate, is an illegal and unjustified attempt to invoke 115BBE which is not clearly applicable on the facts of the present case and contrary to Article 265 of the Constitution of India. Hence, this ground. Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 14 2. Section 115BBE wrongly invoked and applied even on assessed business income: 1. Legal Position 1.1 At the outset it is submitted that S.115BBE specifically refers to the income which are of the nature as referred in S. 68, 69, 69A of the Act being the income from other sources. Therefore, subjected income has essentially to be classified u/s 14 of the Act as income from other sources and that is possible only when the income is not capable of being classified under any other head being income from salary, house property, capital gain, business or profession. 1.2 A combined reading of S. 14 with S. 56 of the Act makes is evidently clear that for the assessment of an income it must have to be classified under four heads of income as enumerated u/s 14 and if it doesn’t fall under any specific head of income as per item A to E of S.14, such income has to be assessed under the residuary head of income i.e. item F of S.14. Therefore, income added u/s 68 or 69 etc. has to be given a specific head in terms of S.14. 1.3 The Hon’ble Supreme Court in case of Karanpura Development Co Ltd vs. CIT [1962] 44 ITR 362 (SC) held that these heads are in a sense exclusive to one another and income which falls within one head cannot be brought to tax under another head. Further, the Hon’ble Supreme Court in case of Nalinikant Ambalal Mody v CIT [1966] 61 ITR 428, has held that whether an income falls under one head or another is to be decided according to the common notions of practical man because the Act does not provide any guidance in the matter. Of course, lot of judicial precedents are available to a taxpayer to arrive at a conclusion about determination of appropriate head of income. 1.4 It is submitted that whatever, was disclosed was nothing but additional income only and it cannot betermedas excess/undisclosed/unaccounted income for the simple reason that survey was carried out on 08.11.2017 i.e. before close of the relevant previous year ending on 31.03.2018 or in other words, during the currency of the previous year only. The assessee did not yet close the previous year’s books of accounts therefore, unless all the transaction done, are accounted for and the accounts are completely prepared, it can’t be termed as excess-shortage/undisclosed/unaccounted money, quantity etc. Even the return of income was not filed by the assessee on 08.11.2017 committing itself to a particular state of affairs. At the best it was only additional income stated during survey. Moreover, the assessee admittedly accounted for such income also in regularly maintained books of account and also declared the resultant income in Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 15 its ROI. Therefore, once a comparison is made between the income shown in the accounts and those in ROI, there will be no difference. Even the source was explicit and repeatedly submitted as income from Real e-state business. Hence it was not a case of an income without source. Consequently, it cannot be said that there was some excess shortage/undisclosed/ unaccounted income, etc. 2. Undisclosed Income-Business income only: 2.1 It is submitted that the only source of income of the appellant M/s Pranati Buildcon is the income from Real Estate Business as stated by the Partner Shri Pradeep Dadhich in reply to answer to Q3 (PB 31) and as admitted by the Ld. AO at para 1 on Pg. 1 that the appellant firm is engaged in construction business. Admittedly, there is no other known or unknown source of business hence there is no possibility of their being any undisclosed stock, material or any assets being found not relating to the said business. Moreover, the said additional income of Rs.8,90,000/- was only on account of purchase of building construction material made during the year which were pending accounting in the accounts at the time survey and hence such income is directly related to the said real estate business only. In fact, a bare reading of the related questions & answers clearly shows that the partner of assesse firm has also admitted such income as a result of the real estate business activities only. Kindly refer the statement of Shri Pradeep Dadhich recorded u/s 133A on dated 08.11.2017 Q & A no. 11 (PB 39), the concerned officer referred to Annexure-A-1, Ex. 1 asking Shri Pradeep Dadhich as to which firm, these transactions were related, which was replied by him that Annexure-A-1, Ex.1 pages 1 to 2 are related to them building material purchases totaling to Rs. 8,90,000/- made which has not been accounted for hence, unable to get them verified. This is also evident from the copies of the said Annexure-A- 1,Ex.1 pages 1 to 2 (PB 41-43) which relates to purchases of various types of building material being Rubble and Send so on. Thus, undisputedly the entire amount of Rs. 8,90,000/-related to the purchases of construction material pending accounting on the date of survey. For your ready reference the relevant extracts of Q & A from the statements recorded u/s 133A given by Pradeep Dadhich are reproduced herein below: “Q-11 blh izdkj vkids Business Premises ij losZ ds nkSjku esllZ iz.kfr fcYMdkWu ls lEcfa/kar ,d uksVisM (MARBITO) ik;k x;k gS ftldks Annexure-A-1 Ex No.-1 uke fn;k x;k gSA d`Ik;k bls ns[kdj crk;s dh blesa fy[kh foxr D;k gS@ ,oa blds ist ucaj 1 o 2 ij fy[kk fglkc & fdrkc D;k vkidh [kkrk cfg;ks esa banzkt fd;k gqvk gSA Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 16 Ans ;g NOTE PAD (MARBITO) Annexure- A-1 Ex No-1 eSus ns[k fy;k gS ;g gekjh QkeZ eSllZ i.kZfr fcYMdkWu ls lEcaf/kr Land Development ,oa Construction ls lEcaf/kr [kpsZ gs tks April-2017 ,oa May-2017 rd ds gS bu [kpksZa dk dqy tksM :I;s 8,90,000/- gSA ;g [kpkZ gekjh fu;fer Books of accounts esa ntZ ugh gS vr% eSa bl v?kksf\"kr fuos’k dks viuh QeZ dh pkyw foRh; o\"kZ dh vk; ekurs gq;s bl ij fu;ekuqlkj dj vnk dj nwaxkA^^ 2.2 In the present case, the above facts & circumstances rather very clearly indicated and established that the alleged undisclosed income of Rs.8,90,000/- was nothing but real estate business income in case of assessee firm Pranati Buildcon but not income from other sources or in any case falling u/s 69 of the act. 2.3 There is no whisper of this in entire statement of partner Pradeep Dadhich nor any finding recorded in the impugned assessment order u/s 143(3) for AY 2018-19 in case of the appellants that income was something beyond income from business/capital gains etc. or that there was some other source of income giving rise to such alleged undisclosed Income. In these circumstances, the only inescapable conclusion is that the such income was nothing but a business income from the purchase and sale of properties or material from the transactions in real estate. The very source of alleged/undisclosed income emanated from, was well connected with and related to the real estate business transactions alone and not from any other activities or from any other source of income. 3. Accounting: It is submitted that income so admitted in shape of the unrecorded purchase of material was entered in the regular books of accounts. The appellant firm duly credited the additional income of Rs.8,90,000/- in the P&L A/c (PB 22). and debited to the same to the material purchase A/c. Thus, material so purchased was included in the existing stock/WIP and accounting entries pending at the time of survey were completed at the end of the year. These accounting entries were certainly before the AO who duly examined, which furnished a strong ground to him to take a decision that it was a business income only and S. 115BBE was not applicable, but were ignored. Though there was no dispute on the fact that such additional income was duly declared and tax paid yet for the sake of completeness and clarifications, break up/ working of closing stock of Rs. 6.83 Cr., which includes such additional income, is enclosed with this WS. 4. Treatment in Income Tax Return (declared & assessed as business income): Pertinently, in the computation of total income also the assessee disclosed the net profit of Rs. 1,17,31,965/- from the said real estate business and such N. P included aforesaidadditional income of Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 17 Rs.8,90,000/-. Very interestingly and notably even the AO has not specifically computed and assessed the said income as income from other sources. There is no categorical assertion made by himin the computation part on the impugned Assessment Order. He simply states income admitted at the time ofsurvey…. There is no whisper of Sec.56 or the head of income viz. income from other sources. Meaning there by,the AO also assessed the additional income as income from business only. The Ld. Tax Auditor in the tax audit report (PB 5-20) has not disturbed the treatment so given by the appellant firm. 5. Binding judicial guideline: The Hon’ble Rajasthan High Court, ITAT Jaipur and various other courts have held that where the additional income/ undisclosed income declared during the course of survey is relatable to some business activity then it cannot be considered to be income from other sources and consequently S.115BBE cannot be invoked. 5.1 Because an identical issue came up before the Hon`ble court has also taken view in the case of Pr. CIT vs. Bajargan Traders in DBITA No. 258/2017 dated 12.09.2017 that the investment made in the excess stock forRs.70,04,814/- found during the course of survey should be considered as business income instead of incomefrom other sources liable to be tax under section 69, affirming the decision of the ld. ITAT. The Hon`ble courtadmitted the following, amongst others, substantial question of law: (i) Whether the Tribunal was legally justified in treating the investment in excess stock for Rs.70,04,814 found during the course of survey as business income instead of income from other sources which was to be liable to tax under section 69. 5.2 The Hon’ble ITAT Jaipur, Jaipur in its decision in the case of Shri Ram Narayan Birla in ITA No. 482/JP/2015 dated 30.09.2016 has held that unrecorded/excess investment or expenditure surrendered duringthe course of the survey has to be assessed as business income only and not under the head income from other sources. The Hon’ble ITAT Jaipur followed the case of Choksi Hiralal Mangal vs. DCIT 131 TTJ 1 (Ahd). 5.3 The Hon’ble Gujarat HC has again taken similar view in case of Krishnamegh Yarn Industries vs. ACIT (2015) 376 ITR 561 (Guj.) wherein CIT vs. Shilpa Dyeing & Printing Mills (P) Ltd. (2014) 100 DTR 381 (Guj) has been followed in para 8. (discussed in case of Sanjay Bairathi Gems Ltd. para 14 at TTJ 503. 5.4 The Hon’ble Ahmedabad Tribunal in case of Chokshi Hiralal Maganlal vs DCIT (ITANo.3281/Ahd/2009 AY 2004-05 dated 05.08.2011) held that for invoking deeming provisions under sections 69, 69A, 69B & 69C there should be clearly identifiable investment or Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 18 asset or expenditure (i.e. in our understanding not connected with business so as to make convenient to invoke aforesaid sections). In case source of investment or asset or expenditure is clearly identifiable and has no independent existence of its own where a case arises to claim that it cannot be separated from business then first ‘what is to be taxed is the undisclosed business receipt. Only on failure of such exercise, it would be regarded as taxable u/s 69 on the premises that such excess investment or asset or expenditure is unexplained and unidentified, satisfying the mandate of the law. 5.5 In case of Shri Lovish Singhal vs ITO (ITA No 142 to 146/Jodh/2018 for AY 2014-15 dated 25.05.2018), the Jodhpur Tribunal applying the proposition of law laid down by the Hon’ble Rajasthan High Court in the Bajargan Traders (supra), held that the lower authorities were not justified in taxing the surrender made on account of excess stock and excess cash found U/s 69 of the Act and accordingly held that there is nojustification for taxing such income u/s 115BBE of the Act. 5.6 Useful reference can be made in the case of Smt. Rekha Shekhawat Vs. Principal Commissioner of Income Tax (2022) 219 TTJ (JP)761, which is quite near to the facts available in the present case. In the light of above submissions and the legal position, Sec 115BBE cannot be invoked even remotely. Thus, additional income declared during survey of Rs. 1,15,88,837/- could not be subjected to S. 115BBE of the Act. Hence, the entire impugned additions are bad in law and deserves to be deleted.” GOA-4 Charging of Interest u/s 234A & 234C: is consequential and kindly be decided accordingly. The above submissions have been made based on the instructions and the information provided of/by the client. 2. Moreover, in the case of Nikhaar Fashions v. ACIT (ITA No. 1020/JPR/2024), it was held that “since revenue was not able to submit any evidence to effect that said income was not connected with business income of assessee or was accumulated from non- recognising source, entire addition was certainly without forming proper basis and thus impugned application of section 69Bof the Act upon income disclosed by assessee and taxing same at special rate as per section 115BBE of the Act was improper.” 3. Furthermore, there are other decisions followed in Nikhaar Fashions v. ACIT, which are as follows: - Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 19  PCIT vs. Krishna Kumar Verma [2024] 161 taxmann.com 44 (Madhya Pradesh)  PCIT vs. Parshottambhai Maganlal Ramotia [2024] 169 taxmann.com 372 (Gujarat)  Parmod Singla vs. ACIT [2023] 154 taxmann.com 347 (Chandigarh - Trib.)  Parshavnath Buildestate Private Limited v. ACIT/DCIT ITA. No. 1357 /JPR/2024  Bharat Associates v. ACIT (OSD) ITA No. 1293/JPR/2024 4. Observation/Submission on the objections of the CIT (A): At the outset, it is pertinent to note that the crucial and jurisdictional facts have been admitted by the CIT(A) himself to the effect that in this impounded notepad, the expenses incurred on development of the land and construction were noted and, in the statement, also, the Partner of the assessee firm, Shri Pradeep Dadhich clearly admitted the same fact (PB 30-40). He also admitted that even in the ITR, the additional income was shown as business income and not income from other sources. These admitted jurisdictional facts are sufficient to reach to a conclusion that the additional income was nothing but business income and could not have been termed as income from other sources by any stretch of imagination. 4.1 The learned CIT(A) was fully unjustified in rejecting the contention that the additional income relating to the expenditure towards the construction expenditure related to the current year only and the survey having taken place mid of the year i.e. that is prior to the close of the year. The same having been duly accounted for in audited accounts (based on which, the income of this year was declared), consequently such additional income remained no more unexplained or unrecorded so as to invoke section 69C. 4.2 The allegation of lack of source is irrelevant and rather misleading in the sense that once there is an additional income to the extent of Rs. 8,90,000/- in the current year which was utilized towards the construction expenses, it can't be said that such incurrence of expenditure was source less so as to invite section 69 C and consequently S.115 BBE was also not applicable. 4.3 Importantly, whatever additional income was shown and ROI was filed, was accepted and assessed at the same figure without any variation therein, meaning thereby the ld. AO did not find anything over and above the additional income which, if made, would have given rise to some unexplained/unrecorded income/expenditure, which is not the case here. But the ld. CIT(A) will ignore this crucial aspect. Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 20 4.4 Further, from pg. 14, he distinguished the decision of the J.K. Synthetics Ltd. v. CTO1994 taxmann.com 370(SC), Gurshai Saigal v. CIT [1963] 48 ITR 1 SC, India United Mills Ltd. v. CEPT [1955] 27 ITR 20 (SC), CIT v. Maliram Ramjidas [1940] 8 ITR 442 (PC) on a purported misreading. The authorities below have utterly failed to demonstrate that the additional income admitted had no connection with the regular business of real estate, or that there was some other hidden source of income that could have led to undisclosed income. 4.5 Furthermore, at pg. 14, the ld. CIT(A) has stated that S. 115BBE is a machinery provision, whereas Sections 68 and 69 are the charging sections, and the later must be interpreted strictly. There can be no dispute on that proposition; however, making a strict interpretation of the provisions of Sections 68, 69, 69A, and 70, additional income does not at all fall within the scope of any of them. Thus, again the authorities below have utterly failed to establish that Section 69C was applicable in this case. Consequently, Section 115BBE, a machinery provision, could not have been involved. 4.6 The observation at pg. 17 that no deduction can be allowed against unexplained income u/s 69C is, again, a height of imagination and an effort not to understand the contentions in the right perspective. Section 69C itself is not applicable, let alone the applicability of the proviso to such a provision. 4.7 A bare reading of the appellate order shows that the ld. CIT(A) repeated the observations, rather made an attempt to stretch things too much. 4.8 In the case of Nikhaar Fashions v. ACIT, (DC 6-19) such decisions have even distinguished. 5. Covered Issue: The issue in hand is directly covered by the decision of this Hon’ble Bench in the case of M/s Parshavnath Associates vs. AO ITA No. 1358/JPR/2024 vide their order dated 19.03.2025 (DC- 20- 48) in as much as both concerned belong to the same groupand the survey was carried out on both entities simultaneously on same date i.e. 08.11.2017. Even the statement of Shri Pradeep Dadhich, who is common partner in Pranati Buildcon (the appellant) and M/s Parshavnath Associates [Q & A - 3(PB-31-32)]. The admission of additional income is also made by Shri Pradeep Dadhich commonly vide [Q & A 12 (PB 40)]. Hence the finding recorded in that case is directly applicable on facts of the present case. The operative part of ITAT order is reproduced hereunder: “……………10. We have heard both the parties and perused the materials available on record. Vide ground no. 1 the assessee challenges the order on general reason for which no separate Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 21 arguments were raised and therefore, the same is not adjudicated. Ground no. 4 is general and it does not require any adjudication. Ground no. 3 raised for the charge of interest under various sections of the Act which are consequential and does not require specific finding. Thus, now the left-over ground no. 2 raised by the assessee vide which the assessee challenges the finding of the lower authority in confirming the levy of tax and consequential surcharge and cess as per provision of section 115BBE of the Act as the assessee has admitted having been incurred the unexplained expenditure and the same are as per provision of section 69C of the Act. The assessee is a firm and engaged in the business of real estate. The brief facts related to the dispute are that there was a survey u/s 133A of the Act at the business premises of the assessee on 08.11.2017. The assessee after survey filed return u/s 139 for the A.Y. 2018-19 on 13.08.2018 at total income of Rs. 4,77,29,130/-. The case of the assessee was manually selected for compulsory scrutiny as per guidelines issued by the CBDT and notices as required under law were issued to the assessee from time to time. In the assessment proceeding ld. AO noted that in the survey proceeding, a note pad \"Marbito\" was found and impounded, which was annexed as annexure -A-1, Ex-1 (page no. 1 to 6). On perusal of that exhibit, he noticed that assessee firm had incurred undisclosed expenditure of Rs. 2,00,10,200/- in development of land and construction during the F.Y 2017-18. The partner of the assessee firm Shri Pradeep Dadhich had accepted in his statement recorded during survey proceedings, that these expenses were not recorded in regular books of accounts of the assessee and stated that the same has been incurred out of the unrecorded income of the assessee and thereby he disclosed income of Rs. 2,01,00,000/- for taxation [ page 27 being the audited profit & loss account] under the head “income surrender in survey”. The assessee contended that the source of that expenditure which were found to be unrecorded as on the date of survey for an amount of Rs. 2,00,10,200/- were met from the income of Rs. 2,01,00,000/- disclosed. The assessee contended in a statement that source of that expenditure which was considered as out of book were met from the income earned out of the business activity for which the explanation of the assessee was considered for an amount of Rs. 2,01,00,000/- as business income and there is no separate discussion on that and from that income assessee has incurred such expenditure then that expenditure does not come under the purview of section 69C of the Act. The bench also considered it fit to reproduce the reply of the assessee at time of survey vide question no. 12; X X X As is evident from the above statement that the assessee explained the source of expenditure for Rs. 2,00,10,200/- and unexplained Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 22 investment of Rs. 8,90,000/- for which the ld. AO accepted the source of unexplained investment and did not considered it as amount chargeable to special rate but only Rs. 2,00,10,200/- were considered to be taxed as per provision of section 69C of the Act. Here we note that the assessee’s contention of having earned business income was considered by the ld. AO based on the statement for an amount of Rs. 2,09,00,200 [ for rounded disclosed income of Rs. 2,01,00,000/-] the said income when used for expenditure cannot be considered and added as unexplained expenditure. As regards the oral evidence submitted by the assessee in a statement cannot be ignored and in fact the same have been accepted by the revenue. On this aspect of the oral evidence, we get support from our own jurisdictional high court decision in the case of Satyaveer Singh Vs. CIT(A) [ 154 taxmann.com 619 (Rajasthan) ] wherein the High Court held that that: “6. Be that as it may, we find that all the authorities have appreciated the oral and documentary evidence and recorded their findings of fact on the issue as to what actually was the sale consideration in the matter of transaction of sale of agricultural land. Even though the submission of learned counsel for the appellant would be that there was no proper appreciation of evidence, it is essentially a case of appreciation of evidence and not of substantial question of law. As the appeal does not involve any substantial question of law, we are not inclined to re-appreciate and interfere with the concurrent finding of facts recorded by the all the authorities including the Tribunal.” Considering the discussion so recorded and the facts which are not disputed that income of Rs. 2,01,00,000/- from business already been taxed the subsequent expenditure from that income cannot be considered as unexplained expenditure and therefore we see no reason to sustain the charge of tax as per provision of section 115BBE of the Act. Based on this observation ground no. 2 raised by the assessee is allowed……………...” GOA-3 Charging of interest u/s 234A, 234B, 234C & 234D: Is consequential and kindly be decided accordingly. In the light of above submissions and the legal position, Sec 115BBE cannot be invoked even remotely. Thus, additional income declared during survey of Rs. 8,90,000/- could not be subjected to S.69C of the Act.Hence, the levy of special tax is bad in law and thus, deserves to be deleted. M/SPRANATIBUILDCON AS ON 31.03.2018 CALCULATIONOFCLOSINGSTOCKOFPARSHAVNATHCITYPROJECT Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 23 S.NO. Total Cost of Land Sq.Ft. Amount 1 Land Stock Opening 36,556,414.35 2 Material Purchase 17,245,332.00 3 Material Cost Surrenderin Survey 890,000.00 4 Labour & Wages 5,224,075.00 5 Site Expenses 2,308,326.00 6 RERA Registration fees 92,000.00 7 UIT & Conversion Expenses 2,705,628.00 8 Provisionfor Expenses 19,832,267.00 9 Total Rs.(A) 84,854,042.35 10 Total Plot Area Sq.ft. 116,433.00 11 Cost per Sq.ft.(9/10) 728.78 12 Plot Sale in FY 2017-2018inSq.ft. 22,600.00 13 Cost of Plot Sale(11x12) 16,470,428.12 14 NetClosingStockason31.03.2018(9-13) 68,383,614.23” 5.1 In support of the contention so raised in the written submission and the oral arguments the ld. AR of the assessee relied upon the following evidence / records / judgement:- S. No. Particulars Pg. No. 1. Copy of the Acknowledgement of ITR along with Computation of Income for A. Y. 2018-19 1-4 2. Copy of the Tax Audit Report for A.Y 2018-19 dt. 22.09.2018 5-20 Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 24 3. Copy of Audited balance Sheet and P & L Account. 21-29 4. Copy of statement of the appellant recorded u/s 133A dated 08.11.2017 30-40 5. Copy of the Impounded Annexures A-1, Ex-1 (Pg. 1 to 2) 41-43 S. No. Particulars Pg. No. 1. Smt. Rekha Shekhawat vs. PCIT (2022) 219 TTJ (JP) 761 1-2 2. CIT vs Bajargan Traders (2017) 86 taxmann.com 295 (Rajasthan) HC 3-5 3. Nikhaar Fashions v. ACIT (ITA No. 1020/JPR/2024) 6-19 4. Parshavnath Buildestate Private Limited v. ACIT ITA. No. 1357/JPR/2024 6. Before us ld. AR of the assessee vehemently submitted that the amount in question pertained to purchase of construction materials for business purposes and was duly recorded in the books prior to the finalization of accounts. The income was not concealed or independently discovered by the AO but was self- disclosed and subjected to regular tax rates as offered by the assessee. He also submitted that the source of income was clearly identifiable and solely from its business operations. There was no separate or unaccounted activity which could be considered unexplained within the meaning of section 69C. The AO did not reject the books of accounts, nor did he make any separate addition on account of unexplained expenditure. Instead, he merely sought to recharacterize the same income under a deeming provision. The ld. AR of the assessee also submit that the only Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 25 source of income of the appellant M/s Pranati Buildcon is the income from Real Estate Business as stated by the Partner Shri Pradeep Dadhich in reply to answer to Q3 and Q 11 as admitted by the Ld. AO that the appellant firm is engaged in construction business. Admittedly, there is no other known or unknown source of business hence there is no possibility of their being any undisclosed stock, material or any assets being found not relating to the said business. Moreover, the income was of Rs. 8,90,000/- was only on account of purchase of building material and building construction, pending accounting in fact, was directly related to the real estate business only, which facts is also evident from the copies of the impounded material (APB 1-2). The AO completely failed to relate/identify such additional income (w.r.t expenditure), with any other source than the real estate business in stock. It was further clarified that the said additional income of Rs. 8,90,000/- was duly credited to the P&L a/c but at the same time was also debited to the purchase a/c at the end of the year, but while valuing the closing stock all the directed expanses including the said Rs. 8,90,000/- with labor, wages, site expanses totaling to Rs. 8.48 cr. were loaded on the cost of the land. Accordingly, the value of the closing stock was worked out at Rs. 6.83 cr. This way Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 26 additional income was fully declared. It is further submitted that there was no dispute at all between the parties as regard the disclosure and the payment of the tax on such additional income as the AO never doubted this aspect of the not the said assessment order was revised u/s 263. The only dispute brought before the Hon'ble ITAT was the applicability of otherwise of the special tax u/s 115BBE on such additional income of Rs. 8.90 lakh. He citing the judicial decision stated that the issue in hand is directly covered by the decision of the co-ordinate Bench in the case of M/s Parshavnath Associates vs. AO ITA No. 1358/JPR/2024 vide their order dated 19.03.2025 (DC- 20-48) in as much as both concerned belong to the same group and the survey was carried out on both entities simultaneously on same date i.e. 08.11.2017. Even the statement of Shri Pradeep Dadhich, who is common partner in Pranati Buildcon (the appellant] and M/s Parshavnath Associates [Q & A - 3(PB-31- 32)]. The admission of additional income is also made by Shri Pradeep Dadhich commonly vide [Q & A 12 (PB 40)]. Hence the finding recorded in that case is directly applicable on facts of the present case. In addition ld. AR of the assessee also serviced the following decision; Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 27 - Pr. CIT vs. Bajargan Traders [2017] 86 taxmann.com 295 (Raj HC) - Shri Ram Narayan Birla vs. ITO, ITA No. 482/JP/2015 (ITAT Jaipur) - Veer Enterprises vs. DCIT [2024] 206 ITD 289 (Chandigarh ITAT) - Nikhaar Fashions Pvt. Ltd. vs. ACIT, ITA No. 1020/JP/2024 and those cited therein. Based on that he vehemently argued that the consistent position emerging from these decisions is that where the surrendered income is linked to regular business activity and declared before the close of the year, and further included in the books of account, such income must be taxed as business income and not under deeming provisions such as section 69C. Hence, invocation of section 115BBE in such a scenario is legally unsustainable. 7. Per contra, Ld. DR relied upon the orders of ld. CIT(A), while doing so he vehemently submitted that the survey was conducted in the beginning of the financial year and the assessee could not demonstrate the source of such expenditure and thereby he supported the orders of the lower authorities. 8. We have heard the rival contentions and perused the materials available on record. Ground no. 1 & 4 raised by the assessee being general the same is not required to be adjudicated. Ground no. 3 raised for the charge of interest under Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 28 various sections of the Act which are consequential and does not require specific finding. Having observed so now the left-over ground is Ground no. 2. Vide that ground the assessee challenges the finding of the lower authority in confirming the levy of tax and consequential surcharge and cess as per provision of section 115BBE of the Act as the assessee has admitted having incurred the expenditure of Rs. 8,90,000/- which were considered as per provision of section 69C of the Act by the ld. AO. Record reveals that the assessee is a firm and engaged in the business of real estate and the related facts to the dispute are that there was a survey u/s 133A of the Act at the business premises of the assessee on 08.11.2017. While the survey proceeding, a note pad \"Marbito\" A-1, Ex-1 (page no. 1 to 2) was found on and noticed that assessee firm had incurred undisclosed expenditure of Rs. 8,90,000/- in development of land and construction during the F.Y 2017-018 (AY 2018-19). The partner of the assessee firm Shri Pradeep Dadhich had accepted in his statement recorded during survey proceedings, that these expenses were not recorded in regular books of accounts of the Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 29 assessee and stated that the same has been incurred out of the unrecorded income of the assessee and hence he disclosed income of Rs. 8,90,000/- for taxation. While filling the ITR u/s. 139 the assessee declared the total income of Rs. 1,17,31,970/- which also included that income of Rs. 8,90,000/- as so disclosed in the survey based on the record found. In the assessment proceeding ld. AO noted that since that expenditure being not recorded it attracts the provision of section 69C r.w.s. 115BBE of the Act. When matter carried before the ld. CIT(A) he confirmed that finding of the ld. AO. Before us having considered the rival contentions and after going through the material available on record, we note that in the present appeal the limited issue before us is whether the income of ₹8,90,000/-, admitted during the survey and subsequently offered to tax as business income, can be taxed under section 115BBE of the Act on the ground that it falls within the scope of section 69C of the Act?. 9. Record reveals that based on a note pad \"Marbito\" A-1, Ex-1 (page no. 1 to 2) it was found on and noticed that assessee firm had incurred undisclosed expenditure of Rs. 8,90,000/- in Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 30 development of land and construction and thereby assessee surrendered income voluntarily and accordingly included that income while filling the ITR. The statement of Shri Pradeep Dadhich, partner of the assessee-firm, clearly establishes that the surrendered sum pertained to purchase of construction material related to ongoing real estate projects. It is not in dispute that the assessee recorded the said amount in its books before the end of the year and credited it to the trading account and included the same while valuing closing stock. The total income was computed and reported under the head 'business income' and taxes thereon were paid. The entry passed in the books of account was not rejected and thus when the entry passed in the books of account being not rejected no separation addition be called for. As serviced in the written submission the decision of the co-ordinate bench in the case of Parshavnath Associates (supra), the Jaipur Bench of this Tribunal held that : \"...In the present case, the assessee has duly recorded the surrendered amount in the books of account and the same is part of business income. The Assessing Officer has not rejected the books of account nor brought any material to suggest that the income was from unexplained sources. The business nature of income having been established, the provisions of section 69C and consequently 115BBE cannot be invoked.\" Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 31 In the present case also, the AO has not brought on record any material to suggest that the surrendered amount was unrelated to the assessee’s business or was sourced from unexplained means. The AO failed to identify any other source than real estate business, to which such income could be related. In fact, the AO merely concluded that since the expense was not recorded as on the date of survey, it qualified as unexplained expenditure. Such a conclusion, in our considered view, is devoid of legal and factual basis. The bench noted that the identical issue was considered by our Jurisdictional High Court in case of Pr. CIT vs. Bajargan Traders [2017] 86 taxmann.com 295 (Raj) HC dt. 12.09.2017 wherein the High Court observed that the investment made in the excess stock of rice found during the course of survey should be considered as business income, from business of trading in food grain and rice instead of income from other sources not liable to be taxed u/s 69, affirming the decision of the ld. ITAT. Therefore, respectfully following the binding precedent as cited before us and the discussion so recorded here in above we hold that the income of ₹8,90,000/- is to be treated as business income Printed from counselvise.com ITA No. 95/JPR/2025 Pranati Buildcon, Kota. 32 and not as unexplained expenditure under section 69C. The consequent application of section 115BBE is thus unsustainable and liable to be set aside. Thus ground No. 2 raised by the assessee is allowed. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 23/09/2025. Sd/- Sd/- ¼Mk0 ,l- lhrky{eh½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kklnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 23/09/2025 *Santosh vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. vihykFkhZ@The Appellant- Pranati Buildcon, Kota. 2. izR;FkhZ@ The Respondent- ACIT/DCIT, Central Circle, Kota. 2. 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. 95/JPR/2025 } vkns'kkuqlkj@ By order lgk;d iathdkj@Asst. Registrar Printed from counselvise.com "