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Income Tax Appellate Tribunal, DEHRADUN BENCH, NEW DELHI
THE INCOME TAX APPELLATE TRIBUNAL DEHRADUN BENCH, NEW DELHI Before Sh. C. N. Prasad, Judicial Member AND SHRI M. BALAGANESH, Accountant Member (Through Video Conferencing) ITA No. 205/DDN/2019 (Assessment Year: 2017-18) Rajesh Aggarwal, Vs. DCIT, B-4, New Sabzi Mandi, Vikash Central Circle, Nagar, Distti. Dehradun Dehradun (Appellant) (Respondent) PAN: AANPA7592E Assessee by : Shri Rajiv Sahni, CA Revenue by: Shri A. S. Rana, Sr. DR Date of Hearing 24/08/2023 Date of pronouncement 15/09/2023
O R D E R PER M. BALAGANESH, A. M.: The appeal in ITA No.205/DDN/2019 arises out of the order of the 1. Commissioner of Income Tax (Appeals)-IV, Kanpur [hereinafter referred to as „ld. CIT(A)‟, in short] in Appeal No.CIT(A)-IV/KNP/10518/DCIT-CC/DDN/2018-19/362 A.Y. 2017-18 dated 21.08.2019 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 28.12.2018 by the Assessing Officer, DCIT, Central Circle, Dehradun (hereinafter referred to as „ld. AO‟).
The assessee has raised the following grounds of appeal:-
“1. That the Order passed by the Hon'ble Commissioner of Income Tax(Appeals)-4, Kanpur is bad in law, against the facts of the case and principles of natural justice. 2. That the assessment of income by the Ld AO is illegal since the Assessment Order is based on a time barred revised Return. 3. That the Ld AO has erred in law and on facts in making addition of surrendered income during the course of search operations in this Assessment Year whereas the Appellant has distributed the income surrendered in Ass. Years 2011-12 to 2017-18, thereby the same income has been taxed twice. Page | 1
ITA No. 205/DDN/2019 Rajesh Aggarwal 4. The appellant, therefore, pray that the appeal may be admitted and orders may be passed rendering justice to the appellant.”
At the outset, we find that the appeal of the assessee is delayed by 2 days. The assessee has furnished an affidavit explaining the reasons for the delay. Considering the same, we are inclined to condone the delay and admit the appeal of the assessee for adjudication.
We have heard the rival submission and perused the material available on record. It is pertinent to note that this tribunal has already decided the appeal of the assessee up to AY 2016-17 vide its order dated 23.06.2023 wherein, all the appeals of the assessee for AYs 2011-12 to 2016-17 are allowed. During the course of hearing of those appeals, the bench had also obtained an undertaking from the ld AR that if the appeals of the assessee for AYs 2011-12 to 2016-17 are allowed, then ground No. 3 raised by the assessee for AY 2017-18 should be withdrawn by the assessee. Accordingly, ld AR came forward to withdraw the ground No. 3 raised by the assessee in the present appeal before us. Hence, the regular grounds raised by the assessee are hereby dismissed.
The assessee has raised additional ground Nos. 1 and 2 before us which are reproduced herein:-
“1. That having regard to the facts and circumstances of the case, impugned assessment order passed u/s 143(3) is bad in law more so when the surrendered income has been assessed under Section 69A as against income from business of the Appellant. 2. That having regard to the facts and circumstances of the case, impugned assessment order passed u/s 143(3) is bad in law since the tax on income surrendered on 1.12.2016 has been subjected to rate of 60% under Section 115BBE that became effective only from 15.12.2016 as against the rate of 30% that was applicable from 1.4.2016 to 14.12.2016.” 6. These additional grounds go to the root of the matter, being legal in nature and no verification of facts is required, therefore same are hereby admitted for adjudication in view of the decision of the Hon‟ble Supreme Court in the case of NTPC Ltd reported in 229 ITR 383.
ITA No. 205/DDN/2019 Rajesh Aggarwal 7. The main crux of the Additional Ground No. 1 is that whether the additional income offered by the assessee during the course of search would have to be construed as unexplained income u/s 69A so as to liable to taxed @60% as prescribed in section 115BBE of the Act.
It is admitted fact that the assessee had indeed surrendered Rs. 74,96,096/- as his regular business income earned on commission in the capacity of commission agent. The assessee is a proprietor of M/s. Garhwal Sabzi Bhandar, Vikashnagar. During the course of search operation carried out u/s 132 of the Act on the assessee on 01.12.2016, cash amounting to Rs. 27,54,530/- was found from the assessee. The assessee was able to explain the said cash from his withdrawals only to the tune of Rs. 4,12,000/-. The remaining sum of Rs. 23,42,530/- remain unexplained cash. When this was confronted to the assessee, the assessee explained in his sworn statement u/s 132(4) of the Act that the same was out of undisclosed business receipts. The assessee accordingly worked out the undisclosed business receipts for the whole year at Rs. 74,96,096/- and agreed to offer the same to tax for AY 2017-18 and pay tax thereon. Notice u/s 153A of the Act was issued to the assessee on 20.12.2017. The assessee filed return of income in response to notice u/s 153A of the Act on 13.06.2018 offering Rs. 74,96,096/- as additional business income and paid taxes thereon with applicable interest. The nature of receipt being emanating from business activity of the assessee was clearly stated by him in the search statement recorded u/s 132(4) of the Act. Moreover, this income of Rs. 74,96,096/- was surrendered by the assessee on 01.12.2016 itself, whereas section 115BBE as amended by the Second Amendment Act, 2016 prescribing tax rate @60% got notified only on 15.12.2016. This goes to prove that for income earned up to 14.12.2016, even if the said income is unexplained falling within the nature of income referred to section 68, 69A, 69B, 69C and 696D of the Act, still the said income would be taxed only @30%. However, if such income is earned on or after 15.12.2016, the same would be liable to be taxed @60% as per amended provision of section 115BBE. This aspect has been adjudicated by coordinate bench of Chandigarh Tribunal in the case of Sri Parmod Singhla Vs. ACIT in ITA No. 516/CHD/2022 for AY 2017-18 dated
ITA No. 205/DDN/2019 Rajesh Aggarwal 24.07.2023. Similar view was also taken in by the coordinate Bench of Chandigarh in ITA Nos. 588-599/CHD/2022 dated 27.07.2023 in case of Jain Plywood Vs. DCIT for AY 2018-19 wherein they have held that income surrendered and sought to be taxed under the deeming provision of section 69 which is in the nature of business income could be brought to tax only @30%, as at the time of surrender the applicable rate was only 30% within section 115BBE of the Act. It is also pertinent to note that in the instant case there is absolutely no dispute that the assessee does not have any other income other than business income in the commission agent business. Hence, the only source of receipt for the assessee could be income from the business and that to at the time of surrender, the applicable tax rate was only 30%. Hence we hold that the additional income offered by the assessee in the sum of Rs. 74,96,096/- which is in the nature of business income of the assessee had to be taxed only @30% as per pre-amended provisions of section 115BBE of the Act. Hence, additional grounds No. 1 and 2 raised by the assessee are hereby allowed.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court on 15/09/2023.
-Sd/- -Sd/- (C. N. Prasad) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 15/09/2023 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi