M/S SMS AAMY TOLLWAYS PVT. LTD.,DELHI vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, JAIPUR

2 ITA538/JP/2019 SMS – AAMY TOLLWAYS PVT LTD. VS DCIT, CENTRAL CIRCLE-3, JAIPUR – Assessee ‘’1. On the facts and in the circumstances of the case, the ld. CIT(A) has grossly erred in confirming that the unexplained income of Rs.21,00,00,000/- is covered by the provisions of Section 115BBE of the Income Tax Act, 1961 by upholding the action of AO in invoking the provisions of Section 69A in the instant case. Thus the action of the ld. CIT(A) deserves to be held bad in law and the income declared by the assessee company deserves to be taxed as per normal income,.

Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) is justified in holding that the provision of Section 115BBE is not applicable ignoring the fact that had there been no search in this case, the amount of undisclosed toll receipts would not have been taxed.’’ Brief facts of the case are that the assessee, a private limited company, is engaged in activity of collection of toll from the commercial vehicles entering in the state of Delhi. Search and seizure action was conducted on MRS group on 17.07.2013, whereinassessee company is also one of the member. During the course of search statement of Shri Megh Raj Singh Shekhawat, one of the key person, was recorded wherein he admitted undisclosed income in the different 3 ITA538/JP/2019 SMS – AAMY TOLLWAYS PVT LTD. VS DCIT, CENTRAL CIRCLE-3, JAIPUR hands inter-alia including undisclosed income totalling Rs. 35 crores in the hands of assessee company (Rs. 14 crore for A.Y. 2012-13 and Rs. 21 crore for A.Y. 2013-14), on the basis of various documents found and seized during the course of search. Since, due date of filing of the return u/s 139(1) was not expired as on the date of search, no regular return was filed and therefore in compliance to notice u/s 153A, return of income declaring total income of Rs. 25,62,45,560/- was filed which included Rs. 21 crore as additional income being profit out of undisclosed toll receipts of Rs. 48,46,54,112/-. After scrutinizing the case, the assessment was completed at the same income as filed by the appellant. However, AO observed that undisclosed income is the unexplained money within the meaning of section 69A and invoked the provisions of section 115BBE.

On the other hand ld. AR of the assessee has argued that the aforesaid amount of Rs. 48,46,54,112/- is the undisclosed receipts and same cannot be treated as undisclosed income in toto because expenditure are necessarily incurred for earning the aforesaid receipts and thereby only profit element embedded in it is to be treated as undisclosed income. The appellant has already disclosed Rs. 21 crore as additional income out of these undisclosed toll receipts for the year under consideration.

We have considered the arguments of both the sides. The issue whether entire undisclosed receipts have to be considered as undisclosed income or not, was before us in the appeal of the assessee for A.Y. 2012-13. After carefully considering the arguments of both the sides and facts and in the circumstances of the case as well as considering the legal position on the issue, we have held that undisclosed receipts cannot be considered as undisclosed income in toto and it is the profit element embedded therein which is to be considered as income. Moreover since the appellant has already declared additional income in the return for AY 2012-13 of Rs. 14 crore which is quite more than the estimation of undisclosed income so made by the ld. CIT(A), no separate addition is called for 5 ITA538/JP/2019 SMS – AAMY TOLLWAYS PVT LTD. VS DCIT, CENTRAL CIRCLE-3, JAIPUR over and above Rs. 14 crore so declared by the appellant company in its return of income filed in response to notice u/s 153A. Considering the aforesaid decision in the appellant’s own case in AY 2012-13, in the year under consideration also whole of the undisclosed receipts cannot be considered as undisclosed income and accordingly ground so taken by the department on this issue that entire undisclosed receipts be considered for the purpose of section 115BBE totally lacks merit and is rejected.

Now coming to the appeal of the assessee, it has been argued that provisions of section 69A are not applicable in respect of undisclosed income so offered to tax by the appellant and accordingly provisions of section 115BBE has been incorrectly invoked. The ld. AR has reproduced the relevant portion of section 69A and has argued that when during the course of search assessee is found to be owner of money, bullion or jewellery and same is not explained then only provisions of section 69A can be invoked. In the instant case, neither any money nor any bullion nor any jewellery was found during the course of search and accordingly provisions of section 69A could not be made applicable. The AO has incorrectly observed that additional income earned out of undisclosed receipts comes within the category of ‘money’ within the meaning of section 69A. It was argued that the word ‘money’ used in section 69A refers to the physical money / cash being found