Income Tax Appellate Tribunal - Chandigarh
Mohan Singh, Kurushetra vs Pr. Cit, Rohtak on 18 December, 2023
आयकर अपीलीय अिधकरण,च डीगढ़ यायपीठ "बी" , च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH "", CHANDIGARH
ी आकाश दीप जैन, उपा य एवं ी िव म सह यादव, लेखा सद य
BEFORE: SHRI. AAKASH DEEP JAIN, VP & SHRI. VIKRAM SINGH YADAV, AM
आयकर अपील सं./ ITA NO. 361/Chd/2022
िनधारण वष / Assessment Year : 2017-18
Mohan Singh बनाम The Pr. CIT
Opp. Old Bus Stand Rohtak
Kurukshetra
थायी लेखा सं./PAN NO: AZRPS4583N
अपीलाथ /Appellant यथ /Respondent
िनधा रती क ओर से/Assessee by : Shri Sudhir Sehgal, Advocate
राज व क ओर से/ Revenue by : Smt. Kusum, CIT, DR
सुनवाई क तारीख/Date of Hearing : 20/09/2023
उदघोषणा क तारीख/Date of Pronouncement : 18/12/2023
आदेश/Order
PER VIKRAM SINGH YADAV, A.M.:
This is an appeal filed by the Assessee against the order of the Ld. Pr. CIT(A), Rohtak dt. 17/03/2022 pertaining to Assessment Year 2017-18.
2. In the present appeal, the Assessee has raised the following grounds of appeal:
1. Order passed by the Ld. PCIT u/s 263 of the IT Act is illegal arbitrary and bad in law.
2. On facts and in the circumstances of the case Ld. PCIT was not justified in passing order under section 263 of the IT Act when the order was passed by the AO after making proper enquiries and after taking the cognizance of amended Finance Act and relied upon the judgment of Hon'ble Supreme Court of India.
3. During the course of hearing, the ld AR submitted that during the financial year 2016-17 relevant to Asstt. Year 2017-18, a survey action u/s 133A of the Act was carried at the business premises of the assessee on 17.08.2016. During the survey action, the assessee surrendered an amount of Rs. 50,00,000/- (Rs.2
40,00,000/- on account of excess stock and Rs. 10,00,000/- on account of excess cash). The said surrender was made by the assessee in order to cover up the discrepancies as encountered during the course of survey and only in order to buy peace of mind. Thereafter, the assessee credited the amount surrendered of Rs. 50,00,000/- during the course of survey in the profit and loss account prepared for the FY 2016-17 and declared a net profit of Rs 57,16,416/- and thereafter, filed his return of income on 31.10.2017 at returned income of Rs. 56,25,630/-.
3.1 It was submitted that thereafter, the case of the assessee was selected for compulsory manual scrutiny and a notice u/s 143(2) of the Act dated 20.09.2018 was issued to the assessee. In response to the said notice, the assessee filed his detailed reply on 09.10.2019. Thereafter, various notices were issued during the course of assessment proceedings and the assessee duly replied to all the notices issued by the Assessing Officer.
3.2 It was submitted that on 11.12.2019, the Ld. AO issued notice u/s 142(1) along with specific questionnaire as to why the provisions of section 115BBE of the Act are not applicable in the case of the assessee. In response to the said notice, the assessee filed a detailed reply dated 11.12.2019, wherein the assessee duly submitted that provisions of section 115BBE are not applicable in the case of the assessee as the assessee has surrendered the said amount only to cover up the discrepancies found during the course of survey action and moreover, the said surrender has been made by the assessee as part of business income for the said year and the provisions of section 115BBE of the Act are not applicable as the said provisions were not applicable as on the date of survey. Thereafter, another notice u/s 142(1) of the Act dated 18.12.2019 was issued to the assessee. The assessee filed his response to the said notice vide his reply letter dated 20.12.2019. Subsequently, the case of the assessee was concluded 3 and the Ld. AO after proper application of mind and taking cognizance of all the material/ detailed explanations submitted during the course of assessment proceedings took a conscious decision and passed the assessment order dated 20.12.2019 u/s 143(3) of the Act and assessed the total income of the assessee at returned income. Hence, the Ld. AO after complete verification of facts and circumstances of the case of the assessee made no variations to the total income of the assessee. Moreover the Ld. AO treated the surrender amount of Rs. 50,00,000/- as the business income of the assessee.
3.3 It was submitted that thereafter, a Show Cause notice dated 11.02.2022 was issued to the assessee u/s 263 of the Act by the ld PCIT, Rohtak wherein, it was show caused as why the order dated 20.12.2019 passed u/s 143(3) of the Act should not be treated as erroneous and prejudicial to the interest of revenue and as to why it should not be set aside on the applicability of section 115BBE of the Act. In response to the said notice, the assessee filed his reply. In the said reply, the assessee duly submitted that the provisions of section 263 of the Act are not applicable in the case of the assessee. Furthermore, the amended provisions of section 115BBE of the Act i.e. taxing at higher rate of 60% are not applicable in the case of the assessee. However, the detailed reply of the assessee was not considered and order u/s 263 of the Act dated 17.03.2022 was passed wherein the matter was set-aside to the file of the AO. Against the order of the Ld. CIT(A), the Assessee is in appeal before us.
4. In the aforesaid factual background, the Ld. AR submitted that the case of the assessee was selected for compulsory scrutiny only on the issue of the amount of Rs. 50,00,000/- surrendered during the course of survey action on 17.08.2016. During the course of assessment proceedings, the Ld. AO vide specific questionnaire dated 11.12.2019 has duly asked the assessee about the amount surrendered during the course of survey action. Thereafter, the assessee 4 replied to the specific questionnaire of the Ld. AO and the Ld. AO after taking cognizance of all the replies file by the assessee and after taking a conscious decision assessed the total income of the assessee at the returned income and accepted the said surrendered amount as business income of the assessee. Hence, it is submitted that the AO took a possible view on the taxability of income surrendered by the assessee and accepted the sum surrendered as part of business income of the assessee vide his assessment order dated 20.12.2019 passed u/s 143(3) of the Act.
4.1 It was submitted that the revision proceedings u/s 263 of the Act have been initiated merely on the basis of difference of opinion which cannot be taken as a ground to determine the order passed by the AO as erroneous and prejudicial to the Revenue. Reliance in this regard is placed on the following judgments including the judgment of jurisdiction bench of ITAT wherein, it has been held that the action of the ld PCIT u/s 263 of the Act is bad in law where the AO, after due application of mind during the course of assessment proceeding, took a possible view which is different from the PCIT and has accepted the additional income surrendered as a business income of the assessee:
Sanjay Jain & Sons Vs. PCIT in ITA NO 141/CHD/2021
Dev Raj Hi Tech Machines Ltd. vs. DCIT 83 Taxmann.com 15 (ASR Trib)
PCIT vs. Deccan Jewellers P Ltd. 132 Taxmann.com 73(AP)
CIT vs. Nirav Modi 77 Taxmann.com 15(SC)
M/s Venus Texspin Ltd.. vs. PCIT in ITA No. 793/Chd/2017
Pramod Kesharichand Shah vs. PCIT in ITA no. 43/SRT/2018
4.2 It was further submitted that merely because the AO has not put up the
issue in detail in the assessment order does not mean that the issue has not been verified in detail by him. In the case of assessee, specific queries were raised on the issue under consideration and detailed replies were filed by the assessee 5 which were duly considered by the AO and decision has been taken by him on the basis of the facts of the case which clearly identifies that the surrender pertains to the business income of the assessee and therefore, the same has been taxed at normal rates of tax.
4.3 It was submitted that there is proper and independent application of mind by the Assessing Officer and the same is evident from the assessment order of the Ld. AO wherein, it has been mentioned as under:
"......... The assessee has filed reply online on ITBA portal to the various queries and submitted documents in support of various contentions, which has carefully been perused and considered On perusal of the reply filed by the assessee, nothing adverse was found"
4.4 It was submitted that the assessee has duly submitted all the replies before the Assessing Officer during the course of assessment proceedings and all the issues stands duly examined by the AO during the course of assessment proceedings itself and hence, there is no new issue pointed out by the ld PCIT during the revision proceedings u/s 263 and therefore, the revision proceedings u/s 263 are bad in law and deserves to be quashed and reliance has been placed on the following judgments:
Narain Singla vs. PCIT ITA no. 427/CHD/2015 CIT vs. Anil Kumar Sharma 335 ITR 83 (Del HC) CIT vs. Hindustan Marketing And Advertising Cor. Ltd. 341 ITR 180 Loil Continental Foods Ltd. vs. PCIT in ITA No. 577/CHD/2017 CIT vs. Late. Shri Vijay Kumar Koganti 195 DTR 428 (Madras HC) Shri Varinder Kumar Gupta vs. ITO in ITA No. 754/Chd/2018 Shri Hakam Singh vs. PCIT in ITA No. 597/Chd/2019 Harampal Contractor Hot Mix Plant vs. PCIT in ITA No. 211/Asr/2017 Smt. Savita Goyal vs. ITO, Khanna in ITA No. 438/Chd/2007 Durga Dass Surender Kumar and others in ITA No. 397 & 401/CHD/2022.
4.5 It was further submitted that survey was conducted at the business premises of the assessee on 17.08.2016 i.e. much before the date of 6 announcement of demonetization by the Government on 08.11.2016 as well as prior to the amendment made in section 115BBE of the Act i.e. on 15.12.2016. In this regard, it was submitted that when the surrender was made by the assessee on 17.08.2016, the amended provisions of section 115BBE of the Act were not enacted. Hence, the assessee keeping in mind the then prevailing provisions of section 115BBE of the Act made a surrender of Rs. 50,00,000/- as his additional business income and to buy peace of mind and to cover up the discrepancies. And, now determining the taxability of such surrender on the basis of provisions which came into existence after the date of such surrender is against the principle of natural justice, particularly when the assessee has given due explanation for every item of surrender and has duly paid taxes on such surrendered amount. Reliance in this regard is placed on the following judgment of Delhi Bench of ITAT in the case of Sh. Balvinder Singh in ITA No. 570/DEL/2022 in which it has been held as under:
"9. An amendment has been brought in section 115BBE w.e.f 2017-18 but the same was not there in the statute on the date of survey. Taking a leaf out of the amended provisions, the PCIT was of the opinion that the tax rate should have been 60% instead of 30% because of which the assessment order has become prejudicial to the interest of the revenue.
10. The moot point is whether the amendment is prospective or retrospective, as on the date of survey, the amended provisions were not there in the statute. In our considered opinion, this is a highly debatable issue, which cannot be subject matter of assumption of jurisdiction under section 263 of the Act. Moreover, a perusal of the assessment order clearly shows that the assessing officer has nowhere invoked the provisions of sections 68/69 of the Act to impute the tax rate of section 115BBE of the Act.
13. There is, therefore nothing stated in the pre-amended or post amended provisions of section 115BBE of the Act that where the assessee surrenders undisclosed income during search action for the relevant year, the tax rate has to be charged as per provisions of section 115BBE of the Act. Therefore, the applicability of the amended provisions which prompted the PCIT to assume jurisdiction under section 263 of the Act is highly debatable issue, and therefore, in our understanding of the law, the PCIT has wrongly assumed jurisdiction.
18. Considering the facts of the case in hand, in totality, in light of judicial decisions discussed here in above, we set aside the order of the PCIT and restore 7 that of the Assessing Officer dated 02.10.2019 framed under section 143(3) of the Act.
4.6 It was further submitted that during the course of survey action at the business premises of the assessee on 17.08.2016 as well as during the course of assessment proceedings, the Ld. AO has not passed any adverse opinion with respect to any other source of income of the assessee. Hence, the business income is the only source of income of the assessee. And, hence, all the income earned by the assessee is only on account of such business and therefore, needs to be taxed under the business head only. Thus, the Ld. AO was fully conscious about the facts and circumstances of the case of the assessee as well as fully aware about the provision of Section 115BBE but still, he has taken a possible view of charging the surrendered income at normal rate of tax and which is very much correct and reliance was placed on the decision in case of M/s. Arora Alloys vs. DCIT in ITA No. 1481/CHD/2017 wherein the Chandigarh Bench has held as under:
"the assessee, wherein it was alleged that it is for the purpose of the business. Therefore, to the extent the expenditure incurred for construction of the building, out of unexplained source is concerned, it is to be construed as earned from the business and it will take character of the business income. Once this income is to be assessed under the "business income", then all incidental benefits for set off from brought forward loss or any other expenditure is to be given to the assessee."
4.7 It was further submitted that in the statement recorded during the course of survey action, it has been stated by the assessee in response to question no. 4 that the assessee has no other source of income, other than the business income of the assessee and the said fact has been duly accepted by the department. Now, in absence of any other source of income, the assessee duly declared the said surrender amount of Rs. 50,00,000/- in the P & L account prepared for the year ending 31.03.2017. Hence, as the said fact has been accepted by the Department during the survey proceedings as well as during 8 the assessment proceedings wherein no adverse remark has been passed by the Ld. AO with respect to the business of the assessee or any other source of income other than the business of the assessee neither during the survey action nor during the assessment proceedings. Moreover, when during the course of survey, the department compared the actual stock and cash in hand with the stock and cash in hand as per books, it makes it amply clear that the department has accepted that the said stock and cash belongs to the business of the assessee. Hence, excess stock as well as excess cash found are only from the business of the assessee and are not unexplained investments of the assessee. Reliance in this regard is placed on the judgment of Chandigarh Bench in the case of Shri Gurdeep Singh Ubhi, in ITA No. 551/CHD/2022 wherein, is has been held as under:
"6. Considering the overall facts and circumstances of the case, I am of the view that the aforesaid additional income surrendered by the assessee was not from any other unexplained source and same was out of business proceeds of the assessee. Therefore, I do not find justification on the part of the lower authorities in applying the provisions of Section 115BBE of the Act to the surrendered business income of the assessee. Accordingly, the AO is directed to tax the assessee on the surrendered income at normal rates as applicable to the business income. It is made clear that my above findings are given in view of the peculiar facts of this case and the same will not hold any binding precedent."
4.8 Further, with regard to the applicability of explanation 2 to section 263(1) of the Act, it was submitted that the AO has made all the requisite enquiries and has verified all the facts and circumstances of the case of the assessee which is evident from the assessment order itself. The Ld. AO has also issued a specific questionnaire wherein, all the details/ explanations pertaining to the amount surrendered during the course of survey has been required and the assessee has duly replied to the said questionnaire. Hence, the case of the assessee is not at all covered under the provisions of explanation 2 to section 263(1) particularly when all the enquiries and verification stands made by the Assessing Officer during the course of original assessment proceedings and has made a 9 conscious order u/s 143(3) of the Act after taking cognizance of all the details/ information available on record.
4.9 It was further submitted that the judgment of the Punjab and Haryana High Court in case of Kim Pharma Pvt. Ltd. v CIT 216 Taxman 153 (P&H) as relied upon by the ld Pr. CIT is applicable only in case the source of income being assessed u/s 68 to 69D itself is not explained, however, in the case of the assessee, the assessee has duly explained the source of such income and moreover, reliance in this regard is also placed on the judgment dated 18.02.2021 in the case of Shri Harish Sharma vs. The ITO in ITA No. 327/CHD/2020 wherein, it has been held that that Section 68 doesn't apply when assessee explained nature & source of Income. Hence, when all the incomes earned by the assessee/ assets in the possession of the assessee in the form of cash/ advances are only from the business income of the assessee, there do not arise any question as to application of provisions of section 115BBE of the Act. And it is a settled principle in law that when there is no other source of income identified during the course of survey or during the course of assessment proceedings, any income arising to the assessee shall be treated to be out of the normal business of the assessee only and therefore, the surrender amount of Rs. 50,00,000/- should be treated as the business income of the assessee. Reliance in this regard is placed on the judgment of the Hon'ble Calcutta High Court in the case of DAULATRAM RAWATMULL vs. CIT [1967] 64 ITR 593. In addition to this, reliance is also placed on judgment of the Chandigarh Bench of ITAT in the case of M/s. Bindas Foods Pvt. Ltd. in ITA No. 409/CHD/2021 wherein, the appeal of the assessee has been allowed on the ground that the Ld. AO has taken a view only after due application of mind and therefore, revision assessment u/s 263 are not sustainable in the eyes of law. In the said judgment, the judgment passed in the cases of Kim Pharma Pvt. Ltd. v CIT 216 Taxman 153 (P&H) have been duly considered. In addition to this, reliance is also placed on the judgment of 10 Gandhi Ram vs. Pr. CIT (in ITA No. 121/CHD/2021) which has been duly considered in the judgments of M/s. Bindas Foods Pvt. Ltd. [supra].
4.10 It was accordingly submitted that the order passed by the ld PCIT be set- aside and that of the AO be sustained.
5. Per contra, the Ld. CIT/DR has relied on the findings of the Ld. PCIT. It was submitted that during the course of survey, the assessee had surrendered an amount of Rs. 50,00,000/- which is in the nature of undisclosed cash and undisclosed stock which were not accounted for in the books of accounts. It was submitted that assessee in his return of income has shown the surrendered income as business income and has paid taxes as per normal slab rate. It was submitted that during the course of assessment proceedings, the assessee failed to submit any explanation for showing the surrendered income as normal business income. It was submitted that the amount so surrendered represent the undisclosed income of the assessee which would have never come to light had there been no survey action under section 133A of the Act and the same could not be treated as normal business income and have to be considered as deemed income and the tax rate @ 77.25% should have been applied as per the provisions of Section 115BBE of the Act in terms of amendment to Section 115BBE by taxation laws 2nd Amendment Act, 2016. It was accordingly submitted that in this case, the AO should have considered the amount so surrendered as deemed income and the tax should have been charged under section 115BBE of the Act.
5.1. It was further submitted that this was the only possible view in the facts and circumstances of the present case wherein the provision of Section 115BBE are applicable on surrendered income after taking cognizance of prevalent provisions of law and therefore the contention of the ld AR that the AO has 11 taken a possible view cannot be accepted. It was accordingly submitted that there is no infirmity in the order of the Ld. Pr. CIT wherein the order so passed by the AO has been held as erroneous in so far as prejudicial to the interest of the Revenue.
6. We have heard the rival contentions and purused the material available on record. The foundational requirement before invoking the deeming provisions is not that there were certain survey operations u/s 133A and some undisclosed income has been detected and surrendered by the assessee, rather the requirement is whether the assessee has made any investment in undisclosed stock or has been found in possession and ownership of undisclosed cash and what is the explanation offered by the assessee explaining the nature and source of such undisclosed transaction and the reasonability of the explanation so offered by the assessee keeping into account the facts and circumstances of the present case. Once the deeming provisions are held applicable, the provisions of section 115BBE specifying the specified rate of tax as against normal rate of tax can be held applicable and not otherwise. The same is consistent stand across various of the Benches including this Bench in various decisions and some of which have been quoted at the Bar.
7. In the instant case, in the show cause issued under section 263 of the Act, the Ld. Pr. CIT has stated that during the course of survey proceedings at the assessee's business premises on 17/08/2016, certain discrepancy were observed and confronted to the assessee and in response, the assessee offered a sum of Rs. 50,00,000/- towards excess stock and unexplained cash which is largely in the nature of unexplained income liable to be added u/s 68/69/69A/69B/69C. It was further stated by the Ld. Pr. CIT that the assessee in his return of income has disclosed the surrendered income in the profit/loss account and paid taxes at the rates applicable to normal business income instead of tax payable at the rate of 60% u/s 115BBE. In the said background, the assessee was also asked to 12 justify as to why the tax have not been paid as per the provisions of Section 115BBE of the Act. Basis the above, it was stated by the Ld. Pr. CIT that the assessment seems to be erroneous so far as prejudicial to the interest of the Revenue.
8. We therefore find that the show cause U/S 263 has been issued for the reason that there was a survey operation at the business premises of the assessee and assessee has offered a sum of Rs. 50,00,000/- during the course of survey and since the assessee has paid taxes thereon at normal rate of tax and has not paid taxes as per the provisions of Section 115BBE of the Act, the Ld. Pr. CIT deemed it appropriate to invoke his jurisdiction under section 263 of the Act. In our view, the very basis of invocation of jurisdiction under section 263 suffers from serious fallacies in the sense that the unexplained income found and surrendered during the course of survey proceedings have been sought to be brought to tax straightway under section 115BBE of the Act. And if we look at the provisions of Section 115BBE of the Act, it provides that where the total income of the assessee includes any income refer to in section 68, 69, 69A, 69B, 69C and 69D which is either reflected in the return of income furnished by the assessee or determined by the AO, the income tax payable shall be at the rate specified therein. Therefore, for section 115BBE, which talks about specified rate of tax, to be applicable in the instant case, the deeming provision of Section 68 to 69D needs to be satisfied at first instance and only in those cases where the deeming provisions are applicable, the tax rate as specified in Section 115BBE of the Act can be applied. Further if we look at the deeming provisions, it provides that where the assessee has made any investment which are not recorded in the books of accounts and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not satisfactory in the opinion of the AO, the value of investment may be deemed to be the income of the assessee for such financial year. We therefore find that there is a 13 difference in terms of the undisclosed income and the unexplained income and the deeming provisions are attracted in respect of the undisclosed income which may be found during the course of survey but before the same is assessed and brought to tax under the deeming provision, what is relevant to examine is the sufficiency and adequacy of the explanation so submitted by the assessee explaining the nature and source of such income. There is thus a difference between the undisclosed income and the unexplained income which apparently is absent on the face of the show cause notice. The mere fact that the survey proceedings have been initiated at the business premises of the assessee doesn't by default mandate the AO or for that matter, the ld PCIT to invoke the deeming provisions and before invoking the deeming provision, he has to call for the explanation and only where the explanation so offered is not found satisfactory, he can proceed and invoke the deeming provisions.
9. Moving further, let's look at the findings of the Ld. Pr. CIT as to how he has held that the order so passed by the AO is erroneous in so far as prejudicial to the interest of the Revenue. The Ld. Pr. CIT has stated that survey under section 133A of the Act was conducted at the business premises of the assessee on 17/08/2016 and it appears that the assessee had surrendered income amounting to Rs 50,00,000/- during the course of survey on account of unexplained cash and unexplained stock covered u/s section 68/69/69A/69B/ 69C of the Act and the same is therefore liable to be taxed u/s 60% u/s 115BBE which we find is again mere repetition of the show-cause notice instead of pointing out how the deeming provisions are attracted in the instant case. There is no findings recorded by the Ld. Pr. CIT as to whether any explanation was called for from the assessee in terms of these undisclosed transactions either during the course of survey proceedings or during the course of assessment proceedings and how the explanation so offered was not found acceptable to the Ld. Pr. CIT. As we have held in case of Gandhi Ram Vs. Pr. CIT(supra), the Ld. 14 Pr. CIT has to record specific findings as to the applicability of the relevant deeming provision and how the explanation called for and filed by the assessee is not acceptable in the facts of the present case and which is clearly absent in the instant case. There is no inquiry or investigation which has been conducted by the Ld. Pr. CIT and there is no positive evidence brought on record as to why the deeming provision read with section 115BBE of the Act are applicable in the instant case. Therefore in absence of clear cut findings recorded by the Ld. Pr. CIT as to how the order passed by the AO is erroneous in so far as prejudicial to the interest of the Revenue, the findings of the Ld. Pr. CIT deserves to be set aside.
10. Having said that, let's look at the nature and source of income surrendered and the explanation submitted by the assessee during the course of survey and whether the matter has been inquired into by the AO during the course of assessment proceedings or not.
11. During the course of survey, the statement of the assessee was recorded. In the statement of the assessee so recorded at the time of survey, he has explained that his only source of income is from running the Bikaner Chat Bhandar which he is running since long and has been filing his return of income since 2001 besides agriculture income. In response to Question relating to excess stock, the assessee has admitted that there is excess stock physically found and has explained that the stock has increased in his business over period of time and the same is his own business stock. Regarding source of excess cash so found, he has explained that the source is from his business transactions only. The assessee thereafter filed his return of income disclosing the amount so surrendered in the P&L Account and the same was offered to tax under the head "business income" at the normal rate of tax. During the course of assessment proceedings, the AO in the notice issued under section 142(1) dt. 11/12/2019 has asked the assessee to show-cause why the surrendered income 15 in terms of excess stock of Rs 40 lacs and excess cash of Rs 10 lacs found during the course of survey may not be brought to tax under the deeming provisions read with section 115BBE. In response to the notice so issued, the assessee has filed his submission stating that he has surrendered the excess stock and cash which is related to his business and offer of surrender was accepted by the department team at the time of survey and pursuant thereto, the assessee has not back tracked from his offer and has paid taxes as per law prevailing on the date of survey and this income was duly shown in income tax return and duly reported for tax purposes.
12. The AO taking cognizance of the findings of the survey team, the documents found during the course of survey, the statement of the assessee, and the return of income and after examination thereof and due application of mind, has accepted the explanation so offered by the assessee and the returned income was accepted wherein the surrendered income has been offered under the head business income. We therefore find that the assessee has been asked specific questions during the course of assessment proceedngs, after due examination and being satisfied with the explanation of the assessee, the same has been accepted and thus, it is not a case of lack of enquiry on part of the Assessing officer or for that matter, accepting the explanation of the assessee on face value. The AO has duly enquired in the matter and thereafter, has taken a view in the matter.
13. No doubt, these transactions were not recorded at the time of survey thus qualify as unrecorded transactions satisfying one of the essential conditions, at the same time, the assessee has provided the necessary explanation about the nature and source of such unrecorded transactions and the necessary nexus with assessee's business has been established, thus, it cannot be said that these are unexplained transactions thus, doesn't satisfy the second condition for invoking the deeming provisions of the Act. Thus, the view taken by the AO is 16 clearly a plausible view considering the facts and circumstances of the present case and nothing has been pointed out as to how the view so taken is unsustainable in the eyes of law.
14. In light of the above, we are of the considered view that the order so passed by the AO cannot be held as erroneous due to lack of inquiry or for that matter requisite inquiry on the part of the AO. As we have held above, there is no findings recorded by the Ld. Pr. CIT as to how the deeming provisions are applicable in the instant case and the order so passed by the AO is erroneous. We therefore find that merely stating that there was survey operation at the business premises of the assessee and provisions of Section 115BBE of the Act are attracted, the same can be a basis for exercise of jurisdiction under section 263 of the Act. In view of the same, order so passed by the Ld. Pr. CIT under section 263 is set aside and that of the AO is restored.
15. In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on 18/12/2023.
Sd/- Sd/-
आकाश दीप जैन िव म सह यादव
(AAKASH DEEP JAIN) ( VIKRAM SINGH YADAV)
उपा य / VICE PRESIDENT लेखा सद य/ ACCOUNTANT MEMBER
AG
Date: 18/12/2023
आदेश क ितिलिप अ ेिषत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु / CIT
4. आयकर आयु (अपील)/ The CIT(A)
5. िवभागीय ितिनिध, आयकर अपीलीय आिधकरण, च डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File
आदेशानुसार/ By order,
सहायक पं जीकार/ Assistant Registrar