Income Tax Appellate Tribunal - Chandigarh
Shri Harish Sharma, Ludhiana vs Ito , Ludhiana on 11 May, 2021
आयकर अपील य अ धकरण, च डीगढ़ यायपीठ "ए", च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL,
CHANDIGARH BENCH 'A', CHANDIGARH
BEFORE: SHRI N.K. SAINI, VICE PRESIDENT
AND SHRI R.L. NEGI, JUDICIAL MEMBER
आयकर अपील सं./ITA No.327/Chd/2020
नधा रण वष / Assessment Year : 2017-18
Shri Harish Sharma बनाम The Income Tax Officer,
S/o Sh.Brij Mohan Ward-5, Khanna,
C/o Ambica Medicos, G.T. Road, Distt. Ludhiana.
Khanna, Distt. Ludhiana.
थायी लेखा सं./PAN NO: A U R P S 1 3 5 2 C
अपीलाथ /Appellant यथ /Respondent
नधा रती क ओर से/Assessee by : Shri Ashwani Kumar, CA
राज व क ओर से/ Revenue by : Ms.Laganpreet Sidhu, Addl. CIT
सन
ु वाई क तार$ख/Date of Hearing: 18.02.2021
उदघोषणा क तार$ख/Date of Pronouncement: 11.05. 2021
(Hearing through video conferencing)
आदे श/Order
Per R.L. Negi, Judicial Member :
Th e in sta nt a p p ea l ha s b e e n p r e fe r re d b y th e a ss e ssee a ga i nst the or de r of th e Le a r n e d C om mi ss ion e r of I n come Ta x ( Ap p e a l s ) [ i n short the ' Ld . C I T( A ) ] , Lud hi a n a d a te d 25 . 08 . 2 02 0 , pa s se d u /s 2 50 ( 6 )) of t he I nc ome Ta x Ac t, 1 9 6 1 (h e re i n a fte r re fer r e d t o a s 'A ct', f or th e a sse ssme nt ye a r 20 1 7 -1 8, w h e re by the Ld . CI T( A) h a s di smi ss e d the ap pe a l ITA No.327/Chd/2020 A.Y .2017-18 Page 2 of 9 fi le d b y the a s se sse e a g a in st the a s se s sme n t o rd e r pa sse d u/s 1 43 ( 3 ) of th e Ac t.
2. Th e br i e f fa c ts of the ca se a re tha t a sur v e y u /s 1 33 A wa s c a r r ie d ou t on 1 4 .0 9 .2 0 1 6 a t th e b usi n e ss pr e mi se s of the a sse ssee a nd M /s A mbi k a Me di co s. D ur in g the cou r se of sur v e y p r oce e d i ng s, a note b ook p e r ta i ni ng to M/ s Sh a r ma Ov e r se a s Se r v ices w a s fou nd , i n w hi ch e ntr ie s w er e re c or de d re ga r d in g ca s h col l e c tio n of Rs .1 0 la c s d ur i ng th e pe r i od fr om Ap r il , 2 0 16 to Aug us t 2 0 1 6 . The a s se s see c ont e n de d tha t h e wa s t he pr op r ie tor of M /s S h a rma O ve r s e a s S e r vi ce s, wh i ch ca r r i e d ou t i ts bu si ne ss fr om 01 . 0 4 . 2 01 6 to 31 . 08 . 2 01 6 . The a ss e ssee fu r the r a d mitt e d th at th e sa i d note b ook co nta in s e nt rie s r e l a tin g to hi s b us in e s s c onc e r n a nd d e c la re d t he a dd i ti on a l i n come o f Rs .1 0 l a cs d ur in g t he sur v e y a c ti on. The a sse ssee fi led hi s re tur n of i nco me f or the a sse ss me n t ye a r un de r con si d e r a ti on on 22 .0 3. 2 01 8 , de cl a r in g tota l in co me of Rs .1 0 ,5 5 ,6 4 0 /-. The c a se was se le c te d f or sc r uti n y a n d the AO p a s se d a s se s sme n t o rde r u/s 1 43 ( 3 ) a nd a cce p te d t he re t urn. How e ve r , the AO tr e a te d the de cl a r e d a mou nt of R s.1 0 l a cs a s u nd i scl os e d in co me of the a s se s se e u/s 68 of th e Act a nd comp ut e d t he ta x li a b il i ty un d e r the p r ovi si on s of se cti on 1 1 5 B B E o f the A ct. ITA No.327/Chd/2020
A.Y .2017-18 Page 3 of 9
3. Th e a sse ss ee c ha l le nge d the a sse ss me nt or de r b e fore the CI T( A) . Th e Ld .C I T(A ) after he a r i ng the a ss e ssee di smi ss e d th e ap p e a l a nd u phel d th e a cti on of the AO. Aga i n st th e sa i d f in d in gs of the Ld . C I T( A) t he a s se s se e ha s pr e fe r re d the pre se n t a p pe a l.
4. Th e a s se s se e has ch a ll e n ge d the i mp ugn e d o rd e r pa s se d b y t he Ld . C ou ns e l on t he f ol low i n g g ro un d:
" T h at th e o r d e r pas s e d u / s 2 5 0 (6 ) o f th e In c o m e T ax A c t, 1 9 6 1 b y th e L e ar n e d C o m m is s i o n e r o f In c o me T ax ( A p p e al s ) - 2 , L u d h i an a i s ag ai n s t l a w an d f ac ts o n th e f il e i n as m u c h as h e wa s n o t j u s ti f i e d to ar b i tr ar i l y u p h o l d th e ac ti o n of th e L e ar n e d A s s e ss i n g Of f ice r i n tr e a ti n g th e s u m o f R s .1 0 , 0 0 , 0 00 / - as i n c o m e to b e t ax e d u / s 1 1 5B B E o f th e In c o m e T ax A c t, 1 9 6 1 wh e r e as i t was i n f ac t b u s in e s s i n c o m e of th e ap p e l l an t. "
5. B e f ore u s, the Ld . C ou ns e l f or the a s se sse e su bmi tte d tha t th e imp u gne d or de r pa s se d b y t he Ld .C I T( A ) su ff e r s fr om l e ga l i nf ir mi ty a s the AO ha d w r ong ly tr e a te d the a moun t of Rs .1 0 l a cs de cl a re d by t he a sse ssee du r in g t he sur v e y p r oce e d ings a s un d is cl ose d i n come u nd e r s e ct ion 6 8 of the A ct. Th e L d. C oun se l fu r the r su b mitt e d t hat th is i ss ue is co ve re d i n fa v our o f the a s se sse e b y the de ci si on of t he I TA T C h a n di ga r h B e n ch i n t he ca s e of S h ri Bh u wa n Go y al Vs. D C IT in IT A No. 1 3 85 /Ch d /2 01 9 a n d si n ce the fin d in gs of the Ld. C I T( A ) a r e not in a cc or da nce w it h the de ci si on of t he Jur is d ic ti ona l Tr i bu n a l, th e sa me i s l i a b le to b e s e t a si de . Th e Ld. C o un se l f ur th e r p oi n te d o ut tha t a s p e r th e de ci si on ITA No.327/Chd/2020 A.Y .2017-18 Page 4 of 9 of the De l h i Be nch of the I TA T, i n the c a se of M/ s. Ag son Glo bal Pr iv a te L td . IT A No. 3 7 4 1 - 37 4 6 /D el /2 01 9 , i n come wh i ch i s the p a rt of th e pr of i t an d l oss a c cou nt can no t be tr e a te d a s une xp la i ne d ca s h cre d i t u/s 6 8 of t he A ct.
6. On th e oth e r ha nd , th e L e a r ne d De p a r tme n ta l Re p re se nt a ti ve (D R) s up p or ti ng th e or de r p a ssed by t he Ld. C I T( A) s ub mit te d th a t se ct ion 6 8 of th e A ct, i s a de e mi ng pr ov is io n, a nd any s um cr e di te d i n t he b ook s of a cc oun t of the a s se s se e i s tr e a te d a s u nd i scl os e d i nc ome w he re the a sse sse e f a i ls to e xp l a in the n a tu r e a n d sou r ce the re of or in the op in i on of th e AO the ex pl a n a ti on o ff e re d by the a sse sse e is not sa ti sf a ct or y. In th is ca se , si nc e the e xp la na ti on o ffe re d b y t he a s se sse e re ga r d in g n a tur e a n d sou rc e of the a mou nt in q u e sti on w a s n ot s a ti sf a ctor i l y, t he Ld. C I T( A) ha s r i g ht ly up h e l d the act ion o f th e A O .
7. W e h a ve he a r d th e r i va l s ub mi ssi on s of th e pa r tie s a n d a ls o p e ru se d the ma te r ia l a va i la b l e on re cor d in clud i ng t he ca se s re l ie d u p on b y a u tho ri ti e s be lo w a n d t he c ase s re l ie d up on by Ld . C o u n se l d ur i ng the cour se of a r gume nts of th is ca se . Ad mit te d l y, in t he p re se nt ca se th e note b ook e n tr ie s con ta i ni ng e ntr y p e r ta i n in g to the b u si ne ss of M /s Sh a r ma Ov e r se a s Se r vi ce s w a s r e co ve re d f r om th e p osse ssion of t he a sse sse e . Th e a u thor i ti e s b el ow h a ve n ot r ej e cte d t he ITA No.327/Chd/2020 A.Y .2017-18 Page 5 of 9 con te n ti on of the a sse ssee th a t t he e n tr ie s i n no te bo ok pe r ta ine d to the b u si ne ss con ce r n of th e a sse ssee .
8. As po in te d out b y th e Ld . C o un se l the C oord in a te B e n ch i n the c a se of S hr i B h uw a n G oy a l (s up r a ) , ha s h e l d tha t th e a mou n t sur r e nd er e d du r in g t he sur v e y a cti on ca n not b e tre a ted a s un di sc lo se d i nc ome u/s 6 8 of the A ct in th e sa i d ca se , t he a sse ssee h a d su r re nde re d a n a mou nt of Rs. 3. 6 4 c ro re s in the s ta te me n t r e cor de d u/s 1 3 2( 4 ) of t he Act , wh i ch w a s ma d e o n the b asi s of the e n tr ie s in t he poc k e t d ia r y f oun d a nd se i z e d du r in g th e cou r se of s e a r ch . Th e a ut hor i ti e s b e l ow co mpu te d th e t a x u nde r the pr ov is io ns of s e ct ion 1 1 5 BB E of the A ct. The ma tte r t ra vel l e d to t he I TA T. The I TA T s e t a si de t he or de r s of th e a u thor i ti e s be low a nd d i re cte d the AO t o ta x t he e ntir e su rre nde re d in come of Rs. 3. 6 4 cr or e s a t t he nor ma l r a te of ta x. The fi n di n gs of t he coor d i na te Be nc h r e a d a s u nde r:
10. We have considered the submissions of both the parties and perused the material available on the record. In the present case it is not in dispute that the assessee surrendered the income of Rs. 3.64 Crores in the statement recorded under section 132(4) of the Act the said surrender was made on the basis of the entries in the pocket diary found & seized during the course of search in which certain transactions relating to the Real Estate business were noted and profit as well as commission was earned thereon. The aforesaid facts had been mentioned by the A.O. at page no. 4 of the assessment order dt. 30/12/2018 wherein copy of the show cause notice dt. 26/12/2018 has been reproduced. However, the A.O. considered only an income of Rs. 2.64 Crore earned from the Real Estate Business but did not accept Rs. 1 Crore and added the same separately under section 69 of the Act. The A.O. charged the tax @ 60% under section 115BBE of the Act. The provisions contained in the said section i.e; 115BBE of the Act read as under:ITA No.327/Chd/2020
A.Y .2017-18 Page 6 of 9 115BBE. (1) Where the total income of an assessee, -
(a) Includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D and reflected in the return of income furnished under section 139; or
(b) Determined by the Assessing Officer includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, if such income is not covered under clause(a), the income-tax payable shall be the aggregate of-
(i) the amount of income-tax calculated on the income referred to in clause(a) and clause(b), at the rate of sixty per cent; and
(ii) 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(i).
2. Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed to the assessee under any provision of this Act in computing his income referred to in clause(a) and clause (b) of sub-section (1).
From the aforesaid provisions it would be clear that the provisions of Section 115BBE (1)(a) of the Act are applicable to the income which is referred in section 68, 69, 69A, 69B, 69C or 69D reflected in the return of income furnished under section 139 of the Act. However, in the present case no such income was reflected in the return filed under section 139 of the Act rather the income was declared in the return filed under section 153A of the Act after the search. The assessee declared the income under section 132(4) of the Act and disclosed the same in the return of income filed under section 153A of the Act. The assessee explained the source of investment of Rs. 1.10 Crore in the reply to Question No. 11 which has been reproduced at page no. 8 of the impugned order by the Ld. CIT(A) and read as under:
" Q. 11. Do you want say anything else?
Ans: yes, one agreement dated 05/04/2016 was found from residence at the time of search on 31/08/2016 which was executed by Mr. Sumit Thaper on my behalf and Sh. Hernek Singh S/o Sh. Daulat Singh for an amount of Rs. 1,10,00,000/-. Out of this amount of Rs. 10 Lacs was transferred from my bank account to Mr. Sumit Thaper which is duly accounted for (proof of this will be submitted later on) and rest of the amount has been paid in cash. The source of Rs. 1 Cr. Paid in cash are out of commission income and profit earned from real estate transaction in past. However, no documentary evidence is available with me. Hence to BUY peace of mind and to avoid litigation. I hereby voluntarily offer Commission income as well as profit earned on real estate transactions as an additional income of Rs. 1 Cr. (One Crore) over and above my normal income for the F.Y. 2016-17 relevant to A.Y. 2017-18 subject to no penal action. I hereby reiterated that these transactions were entered by me in Individual capacity and nothing to do with the company i.e. M/s A.P. Refinery Pvt. Ltd."
The said explanation given by the assessee to the Ld. CIT(A) has not been rebutted, therefore the provisions of Section 69 of the Act were not applicable as the business transactions were recorded in the books of account and the assessee either earned ITA No.327/Chd/2020 A.Y .2017-18 Page 7 of 9 commission or profit on all those Real Estate transactions. The income earned from the Real Estate transactions was claimed to be utilized for making the investment in the property. In the present case it is not brought on record to substantiate that the said income was utilized by the assessee elsewhere and not in the investment of the property. Therefore, we are of the view that the A.O. was not justified in taxing the aforesaid income of Rs. 1 Crore separately particularly when nothing is brought on record to substantiate that the assessee had made separate investment different from the income earned on real estate transactions recorded in the pocket diary found & seized during the course of search. Accordingly, the impugned order passed by the Ld. CIT(A) on this issue is set aside and the A.O. is directed to tax the entire surrendered income of Rs. 3.64 at the normal rate of tax.
9. F ur th e r , se ct ion 68 of the Ac t, ap p l ie s whe re a n y su m is fou nd c re d ite d in th e b ook s o f a c cou nt ma i n ta i n e d b y the a sse sse e for a ny p re vi ous ye a r an d th e a s se s se e f a i ls of fe r a ny e xp la n a ti on a b ou t th e na tu r e a n d s our ce the re of or t he e xp la na ti on b y th e a sse ssee is n ot sa ti sf a ct or y i n t h e op in i on of th e A O, the su m so c re d ite d ma y be tr e a te d as in co me of the a s se s se e o f th a t p r e v iou s ye a r. I n t he p re se nt ca s e t he a sse sse e h a s e xpl a in e d the na tu re a n d so ur ce of th e a mou nt in q u e st ion a nd to s ub st a nti a te h is c ont e n tio n sub mi tte d ca sh f low sta te me n t. We fu r ther n ote tha t the A O h as not giv e n hi s fi nd i ngs on th is p oin t. W e , the re fo re , find me ri t i n the con te n ti on of t he a sse ssee tha t i n the a b se nce of a ny a dv e r se f i nd i ngs b y th e AO on t h e sou rce of e a rn i ng of t he a sse sse e , the au th or iti e s be l ow h a ve w r on gl y tre a te d the a moun t i n q ue s tion a s u nd i scl osed i nc ome u /s 6 8 of the A ct a nd comp ute d th e Ta x li a b il i ty un d e r t he p r ovi si on s of se c tio n 1 15 B B E of t he A ct.
ITA No.327/Chd/2020
A.Y .2017-18 Page 8 of 9 10 . I n the l i gh t of th e d i scu ss ion s ma d e i n t he fore goi ng pa r a s , w e a re of th e c on si de re d vi e w , the s ole gr ou nd r a i se d by t he a s se s se e is cove re d in fa vour of the a s se ssee by t he de ci si on of the coor di n a te Be n ch i n t he ca se of S hri Bh u wa n Go y al ( s up r a ) d i s c uss e d a b ove . Sinc e the fi nd i ng s of th e Ld . C I T( A) are n ot in c ons ona n ce w i th th e de ci sion of t he coor d i na te Be n ch , w e h ol d th a t th e Ld. C I T( A ) ha s e r re d i n up hol d i ng the a cti on of the AO i n t re a ti ng the a moun t i n q ue s ti on a s u nd i sc los e d i nc ome u /s 68 of th e Act . He nce, re spe c tfu l ly fol l ow i ng the de c is ion of the coo rd i nate B e n ch in th e ca se di scus se d a b ove , we a l l ow th e a p pea l of t he a sse sse e a nd se t a s id e the imp u gne d or de r pa s se d b y the Ld . C I T( A) . A cc or di n g l y, we d ire ct t he AO to comp u te t he Ta x on the s a id a moun t t r e a ti ng the sa m e a s b us in e s s in come of t he a sse sse e .
I n the re s ul t, the a p p e a l of t he a sse s se e i s a l lo we d.
Or d e r pr on ou nced o n 11 . 0 5. 2 0 21 .
Sd/- Sd/-
(N. K. SAINI) (R.L. NEGI)
(VICE PRESIDENT) (JUDICIAL MEMBER)
Dated: 11th May, 2021
*रती*
आदे श क त*ल+प अ,े+षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
ITA No.327/Chd/2020
A.Y .2017-18
Page 9 of 9
3. आयकर आयु-त/ CIT
4. आयकर आयु-त (अपील)/ The CIT(A)
5. +वभागीय त न0ध, आयकर अपील$य आ0धकरण, च2डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदे शानस ु ार/ By order, सहायक पंजीकार/ Assistant Registrar