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Income Tax Appellate Tribunal, PUNE “B” BENCH : PUNE
Before: SHRI RAMA KANTA PANDA & SHRI SATBEER SINGH GODARA
ORDER PER SATBEER SINGH GODARA, J.M.
This assessee’s appeal, arises against the order of the learned CIT(A), Pune-12, Pune’s DIN & Order no.ITBA APL /S/250/2023-24/1059775422(1) dated 16.01.2024 in proceedings u/sec.143(3) of the Income Tax Act, 1961 (in short "the Act").
Heard both the parties. Case file perused.
The Revenue pleads the following substantive grounds in the instant appeal :
2 ITA.No.634/PUN./2024 1. “Whether on the facts and in the circumstances of the case, the Ld. CIT (A) has erred in law and in facts by deleting the tax calculated on special rates as per provisions of section 69B r.w.s.115BBE of the I. T. Act on declaration made of Rs.7,00,00,100/- on account of excess stock found.
2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in law and in facts by not appreciating the facts that the main reason for excess stock found was because of unrecorded purchases.
3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in law and in facts by not appreciating the facts that the assessee has failed to explain the nature and source of income utilized for unrecorded purchases which resulted into excess stock found and failed to produce supporting purchase bill or other relevant documentary evidences.
The appellant craves leave to add, alter, modify, delete and amend any of the grounds, as per the circumstances of the case.”
Both the learned representatives next invited our attention to the CIT(A)-NFAC's impugned lower appellate discussion reversing the assessment findings assessing the assessee’s sec.69B unaccounted stock amount of 3 ITA.No.634/PUN./2024 Rs.7,00,00,100/- in higher rate u/sec.115BBE of the Act as follows :
4 ITA.No.634/PUN./2024 5 ITA.No.634/PUN./2024 6 ITA.No.634/PUN./2024 7 ITA.No.634/PUN./2024 8 ITA.No.634/PUN./2024 9 ITA.No.634/PUN./2024
10 ITA.No.634/PUN./2024 4. Learned CIT-DR vehemently argues in support of the assessment findings that the Assessing Officer had rightly invoked the impugned sec.115BBE higher rate of taxation regarding the assessee’s unaccounted stock conducted during the course of survey as per M/s. SVS Oil Mills vs. ACIT [2020] 113 taxmann.com 388 (Madras). His further case is that once the assessee failed to attribute the impugned unaccounted stock to have been derived from regular business activity(ies); it deserves to be assessed u/sec.115BBE higher rate of taxation only.
We find no merit in the Revenue’s instant sole substantive grievance as this tribunal’s recent coordinate bench’s order in Ashok Kumar Kesherchand Pande vs. ACIT ITA.No.389/PUN./2023 decided on 31.07.2023 has considered the Revenue’s foregoing case law thereby rejecting it’s very stand as under :
“5. The ld. AR submits that the income offered during the course of survey proceedings was also offered to tax by crediting the same to the Trading Account and Profit & Loss Account respectively. He submits that the Assessing Officer assessed the said income under the head “Income from business”. Therefore, he submits that having assessed the additional income under the head “Income from business”, he cannot subject such income to tax u/s 11 ITA.No.634/PUN./2024 115BBE of the Act. He also placed reliance on the decision of the Hon’ble Rajasthan High Court in the case of CIT vs. Bajargan Traders, 86 taxmann.com 295 (Rajasthan).
On the other hand, ld. Sr. DR placed reliance on the orders of the lower authorities.
We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the applicability of provisions of section 115BBE of the Act in respect of income declared during the course of survey proceedings and offered to tax in the return of income. There is no dispute about the amount of addition to be made nor was there any dispute regarding the head of income under which the same was assessed to tax. The dispute is only with regard to the applicability of provisions of section 115BBE of the Act. Admittedly, the income offered during the course of survey proceedings was credited to Profit & Loss Account and the additional income offered on account of deficit in the physical stock was credited to Trading Account. The income offered on account of alleged expenditure incurred on construction of the commercial building was offered to tax by crediting the same amount to the Profit & Loss Account. Thus, the income was offered to tax under the head “Income from business”, the Assessing Officer also assessed the same
12 ITA.No.634/PUN./2024 under the head “Income from business”. Therefore, the presumption is to be drawn that the additional income was derived from the business. Thus, it cannot be said that the source for the additional income remain unexplained and, therefore, the provisions of section 115BBE have no application to the present case. The ratio of the decision of the Hon’ble Rajasthan High Court in the case of Bajargan Traders (supra) is squarely applicable to the facts of the present case. The reliance placed by the ld. CIT(A) on the decision of the Hon’ble Madras High Court in the case of M/s. SVS Oils Mills (supra) have no application to the facts of the present case, inasmuch as, in the said case, no explanation as to the source of excess stock was offered, whereas, in the present case, it is undisputed fact that the additional income was derived from business. Therefore, the orders of the Assessing Officer as well as the ld. CIT(A) are reversed and direct the Assessing Officer not to tax the additional income under the provisions of section 115BBE of the Act. The Assessing Officer shall tax the additional income under the normal rate of income tax. Accordingly, the grounds of appeal filed by the assessee stand allowed.”
13 ITA.No.634/PUN./2024 6. This is indeed coupled with the fact that the assessee’s survey statement dated 26.03.2019 [in question no.13] had also explained the reasons of stock deficiency of non-maintenance proper book results in regular business only. We thus adopt the above detailed reasoning mutatis mutandis to uphold the learned CIT(A)’s detailed discussion reversing Assessing Officer’s action assessing the assessee’s entire stock of Rs.7,00,00,100/- u/sec.115BBE of the Act.
Ordered accordingly.
7. This Revenue’s appeal is dismissed in above terms.
Order pronounced in the open Court on 11.09.2024.