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Income Tax Appellate Tribunal, CHANDIGARH BENCH ‘A’, CHANDIGARH
Before: SHRI SANJAY GARG & SMT.ANNAPURNA GUPTA
Per Annapurna Gupta, Accountant Member:
The present appeal has been preferred by the assessee against the order of the Learned Principal Commissioner of Income Tax, Patiala [(in short the ‘Ld. Pr. CIT dated 31.03.2021 relating to assessment year 2017-18, passed in exercise of his revisionary juri iction u/s 263 of the of the A.Y. 2017-18 Page 2 of 12
Income Tax Act, 1961 (hereinafter referred to as ‘Act’).
The brief facts relating to the case are that the assessee is a Doctor by profession. That during the impugned assessment year a survey u/s 133A of the Act was conducted on his business premises on 30.08.2016. In consequence to the discrepancies found by the survey team
the assessee surrendered a total amount of Rs.50lacs as under:
Unexplained advances made = Rs.40,55,000/- Unexplained cash in hand = Rs. 9,45,000/- Total = Rs.50,00,000/-
The said amount was included as surrendered income
in the Profit & Loss Account of the assessee for the year
and returned to tax under the head ‘income from business
and profession’, paying taxes at the normal rate applicable
to business income. The AO, in scrutiny assessment done
u/s 143(3) of the Act, accepted the same making only an addition of Rs.5,100/- to the returned income.
The Ld. Pr. CIT, on perusing the assessment record
was of the view that the surrendered income being
unexplained, ought to have been taxed at the higher tax rate A.Y. 2017-18 Page 3 of 12
of 77.25% as prescribed u/s 115BBE of the Act for unexplained incomes. He, therefore, issued a show cause
notice u/s 263 of the Act to the assessee as to why the assessment order be not held erroneous and causing
prejudice to the Revenue, for having taxed the surrendered
income at the normal rate as against the higher rate
applicable as prescribed by section 115BBE of the Act. Due
reply was filed by the assessee and after affording due
opportunity of hearing to the assessee the Ld. Pr.CIT held
that the AO having not made necessary enquiries about the surrendered income before determining its taxability, the order passed was erroneous as well as prejudicial to the interest of the Revenue. He accordingly set aside the order
to the file of the AO for passing afresh order in accordance
with law in respect of the impugned issue.
Aggrieved by the same, the assessee has come up in appeal before us challenging the order of the Ld.Pr.CIT on the following grounds:
“1. That the Worthy PCIT, Patiala has erred in assuming the juri iction u/s 263(1) of the Income Tax Act, 1961, and, thereby, setting aside the assessment already framed u/s 143(3) vide order dated 29th March, 2019 to the file of the Assessing Officer.
That the Worthy PCIT, Patiala has failed to appreciate A.Y. 2017-18 Page 4 of 12
that the assessment was completed after due application of mind by the concerned AO and, therefore, the provision of section 263 are not applicable.
That the finding of the PCIT, about the sum of Rs. 50 lacs to the assessed u/s 69A r.w.s. 115BBE and to be charged to a special rate of tax is wholly misconceived and against the facts and circumstances of the case.
That the case laws which have been cited by the PCIT, Patiala are not applicable to the facts of the case.
That the worthy PCIT, Patiala has erred in applying the (Explanation 2) to section 263 inserted w.e.f 01.06.2015 as the concerned Assessing Officer had duly made appropriate enquiries and applied his mind and assessed the income offered during survey as business income.
That the appellant craves leave to add, amend, and alter any of the grounds of appeal or to take any additional grounds of appeal before the appeal is finally disposed off.”
We have heard both the parties and have also gone
through the brief synopsis filed by the Ld.Counsel for the assessee in writing before us dated 26.08.2021 and the documents referred to before us.
The Ld.Pr CIT has held the assessment order passed by the AO in the impugned case u/s 143(3) of the Act as erroneous and causing prejudice to the Revenue for having
accepted the surrendered income of Rs.40,55,000/- as business income, as returned by the assessee, and for having accepted consequently taxes paid thereon at normal A.Y. 2017-18 Page 5 of 12
rates, when there was nothing on record explaining their
source and without conducting any inquiry regarding their
source, which therefore, as per the Ld.Pr.CIT ought to have resulted in the surrendered income being treated as from unexplained sources and taxed at higher rates of 77.25%, as provided u/s 115BBE of the Act.
There is no dispute vis a vis the position of law that income/investments from unexplained sources are taxed at a much higher rate as prescribed under section 115BBE of the Act.
The primary contention of the Ld.Counsel for the assessee while challenging the findings of the Ld.Pr.CIT, was that the documents and material found during survey
revealed the source of the surrender made as being from the medical profession of the assessee itself and the AO having
applied his mind to it and also to the submissions of the assessee before him, had rightly formed the view that the surrendered income related to the profession of the assessee
and assessed it as such. That the AO had also noted that the assessee had paid advance tax at normal tax rates. That therefore the order of the AO was not erroneous on account
of having accepted the treatment of the surrendered income A.Y. 2017-18 Page 6 of 12
as business income of the assessee paying therefore taxes
on the same at normal rates applicable.
We have carefully gone through all the documents and even the case laws referred to by the Ld.Counsel for the assessee and after going through the same we are unable to agree with the Ld.Counsel for the assessee that the source
of the surrendered income, as being from the assessee’s
profession of medical practitioner, stood disclosed to the AO. For that matter, we find that the source has not been disclosed satisfactorily to the Ld. Pr.CIT also during
revisionary proceedings.
The documents referred to by the Ld.Counsel for the assessee were filed before us Paper Book page Nos.47 to 53
and on going through the same we find that the contention
of the Ld.Counsel for the assessee that the said documents,
found during survey ,themselves revealed the source of the surrender made as being on account of the medical
profession carried out by the assessee, falls flat. A perusal
of these documents reveals that page Nos.47 to 49 contains
names of persons with the amounts noted against them
totaling in all to Rs.40,55,000/- which the assessee had surrendered as unaccounted advances. The contents of the A.Y. 2017-18 Page 7 of 12
pages are as under:
Page no.47) Rajesh Kumar = Rs.12.01 L Page no.48) Baljinder Singh = Rs.9,50,000/- Page no 49) Vishal Gupta = Rs.8,40,000/- Page no 49) Sahil Jindal = Rs.10,64,000/- Total = Rs.40,55,00,000/-
The rest of the pages from 51 to 53 list certain card
numbers with names of persons. The Ld.Counsel for the assessee has stated on the basis of these documents that the amount of Rs.40,55,000/-surrendered, relates to names
of patients mentioned against their card numbers at pages
51 to 53. He has repeatedly asserted there being correlation
between this alleged list of patients and the amount of Rs.40,55,000/- as mentioned above. But there is nothing to suggest even the slightest of interconnection or interrelation
between the two. The documents allegedly listing the card
numbers and names of patients has no figures or amounts
mentioned to suggest any amount having been collected from them, what to say of Rs.40,55,000/- They appear to be just
two different sets of documents, one admittedly listing the advances given by the assessee to various persons and the other being only a list of patients with their card numbers.
There is nothing to suggest any amount allegedly collected
from the patients so listed in the documents what to say of A.Y. 2017-18 Page 8 of 12
Rs.40.55lacs collected. The view of the AO formed from these
documents that the surrender related to the business or profession of the assessee, as argued by the Ld.Counsel for the assessee, we hold cannot be a plausible view. The AO
could not have formed such view in the facts and circumstances as were there before him.
Moreover, we find that before the AO the assessee had not offered any such explanation, nor did he offer any such explanation before the Ld. Pr.CIT. It is only before us that the Ld.Counsel for the assessee has offered this explanation
that too, which we have found to be devoid of any substance/merits. Therefore, the contention of the Ld.Counsel for the assessee that the documents/material
found during survey itself revealed the source of the income
and the AO had accordingly formed a plausible view to tax
the same as business income of the assessee, is we hold not acceptable and is accordingly rejected.
The Ld.Counsel for the assessee has also relied upon the statement made by the assessee during survey to contend that the source of the surrendered income stood
explained as being from his business/profession. The statement
was placed before us at Paper Book page No.20 as under: A.Y. 2017-18 Page 9 of 12 A.Y. 2017-18 Page 10 of 12
The Ld.Counsel for the assessee has tried to drive
home his arguments from the reply of the assessee to the question asked as above to him to explain the amount of Rs.40,55,000/- noted in a notebook found during survey ,as being surrendered as additional income of the assessee, as a pointer to the fact that it had been surrendered as a business income.
We are not convinced with the same. What transpires
from a bare reading of the statement of the assessee is that he had merely made a surrender of Rs.40,55,000/- over and above his normal income for the year. Nothing more can be read into the statement more particularly to the effect, as canvassed by the Ld.Counsel for the assessee, that the surrender specifically was stated to be on account of his
business or profession. Further for the sake of arguments,
even if it is accepted so, the assessee cannot derive any benefit from a mere oral submission/statement made by him
as the same is not sufficient to explain the source of advance. Therefore, this contention of the Ld.Counsel for the assessee is also rejected. A.Y. 2017-18 Page 11 of 12
The other contention of the Ld.Counsel for the assessee that the assessee had paid advance taxes on the surrendered income at the normal rate is also of no relevance, in our view, since merely paying taxes at the normal rates on a particular income will not determine its character as being from explained sources.
In view of the above, we are in agreement with the Ld.
Pr.CIT that the AO had accepted the surrendered income of the assessee as being from the business or profession
without making any enquiries regarding the same despite
the fact that the documents/material found during search
did not reveal the nature of the income at all and no explanation was offered by the assessee during assessment
proceedings, nor in the statement recorded during search.
Even before the Ld. Pr.CIT during revisionary proceedings
when asked to explain the source the assessee, we find, was unable to prove the source as being business and profession. Therefore, the findings of the Ld. Pr.CIT that the order passed by the AO in the light of the above facts and circumstances was erroneous and prejudicial to the interest
of the Revenue, we hold is correct. The order of the Ld.
Pr.CIT passed u/s 263 of the Act is, therefore, upheld. A.Y. 2017-18 Page 12 of 12
In the result, the appeal of the assessee is dismissed.
Order pronounced on 4 th October, 2021. संजय गग" अ"नपूणा" गु"ता (ANNAPURNA GUPTA) (SANJAY GARG) "याय"क सद"य/Judicial Member लेखा सद"य/Accountant Member "दनांक /Dated: 4th October, 2021 *रती*
आदेश क" ""त"ल"प अ"े"षत/ Copy of the order forwarded to : 1. अपीलाथ"/ The Appellant
""यथ"/ The Respondent 3. आयकर आयु"त/ CIT 4. आयकर आयु"त (अपील)/ The CIT(A)
"वभागीय ""त"न"ध, आयकर अपील"य आ"धकरण, च"डीगढ़/ DR, ITAT, CHANDIGARH गाड" फाईल/ Guard File 6. आदेशानुसार/ By order, सहायक पंजीकार/