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Income Tax Appellate Tribunal, DIVISION BENCH, ‘B’, CHANDIGARH
Before: SHRI SANJAY GARG & SHRI KRINWANT SAHAY
�नधा�रती क� ओर से/Assessee by : Shri Parikshit Aggarwal, CA राज�व क� ओर से/ Revenue by :Shri Vivek Vardhan, JCIT, Sr.DR सुनवाई क� तार�ख/Date of Hearing : 27.11.2024 उदघोषणा क� तार�ख/Date of Pronouncement : 31.12.2024 आदेश/Order Per Krinwant Sahay, AM:
The present appeal has been preferred by the assessee against the order dated 22.11.2023 passed by the. ld. CIT(A),
27-Chd-2024 PLG Diagnostics Pvt Ltd., Rajpura 2 National Faceless Appeal Centre, Delhi [hereinafter referred to as ‘CIT(A)’], for the Assessment Year 2017-18.
Grounds of appeal are as under: - 1. On the facts and in the circumstances of the case, the order of the 1 d C!T(A) is illegal, without jurisdiction and ab-initio void as he did not have the jurisdiction to decide the appeal in view of para 1(i)(b)(2) of the CBDT's direction in F.No. 279/Misc/M-17/2022-ITJ dated 06.10.2022, the assessment having been completed in pursuance of survey action u/s 133A ci the Income tax Act, 1961 ('the Act'). 2 On the facts and in the circumstances of the case, the order of CIT(A) is contrary to law, facts and circumstances of the case.
3. On the facts and in the circumstances of the case, CIT(A) erred in not giving proper opportunity of being heard before passing of the impugned order which is in violation of the principles of natural justice.
4. On the facts and in the circumstances of the case, the learned CIT(A) failed to appreciate that the provisions of sections 69.69A, 69B, 69C and 115BBE were wrongly applied by the AO on the additional business income offered by the appellant during the course of survey operations u/s 133A conducted at its business premises, ignoring the fact that the same nature of additional income for the assessment year 2016- 27-Chd-2024 PLG Diagnostics Pvt Ltd., Rajpura 3 17 was treated as business income and assessed by the AO at the normal rate of tax.
5. On the facts and in the circumstances of the case, the learned CIT(A) failed to appreciate that during the course of assessment proceedings, the AO had not brought any evidence or material on record to establish that the appellant was engaged in any other activity or was having any other source of income except the business income.
6. On the facts and in the circumstances of the case, the ld. CIT(A) erred in upholding the view of the A.O. relating to amendment to section 115BBE which was brought on the statute vide Taxation Laws (Second Amendment) Act, 2016 dated 15.12.2016 whereas the survey was conducted at the business premises of the appellant on 04.08 2016, i.e. before such amendment came into effect and hence the amended provisions should be applied prospectively and not retrospectively.
7. The appellant craves leave to add, amend, alter or modify any ground(s) of appeal.
Brief facts of the case, as per the order of the ld. CIT(A) are as under: - M/s PLG Diagnostics Private Limited ( Assessee ) had filed its return of income for AY 2017-18 on 27-Chd-2024 PLG Diagnostics Pvt Ltd., Rajpura 4 28/10/2017 declaring total income of Rs. 1,63,54,610/-. The case was selected for compulsory scrutiny under the CASS and notice u/s 143(2) was issued on 17/09/2018. Pursuant to that, the Assessing Officer issued notice u/s 142(1) of the Act dated 27/12/2018 to the appellant seeking details. In response to that notice, appellant filed its reply. It is also noticed that there was a survey proceeding in this case and the appellant, based on the impounded materials found, voluntarily admitted an additional income of Rs. 80,00,000/- for F.Y 2016-17. After, following the due process and considering the facts of the case, the AO concluded the assessment proceedings and passed the order u/s 143(3) of the Income-tax Act, 1961(Act) on 06/11/2019 determining total assessed income of Rs.1,63,54,610/- by treating the unexplained income of Rs.80,00,000/- u/s 68/69/69A/69B/69C and levied tax thereof at Rs.49,85,404/-.
Although the Assessee has taken seven grounds of appeal but the only and relevant ground of appeal is against the application of sections 69, 69A, 69B, 69C and 115BBE by the Assessing Officer. The ld. CIT(A) in his appeal order has relied
27-Chd-2024 PLG Diagnostics Pvt Ltd., Rajpura 5 on the jurisdictional Punjab & Haryana High Court case of M/s Kim Pharma Ltd vs. CIT, 2011 (O&M) dated 27.04.2011 in which the Hon'ble High Court held as under:-
Income from undisclosed sources - Addition under section 69A Income surrendered during survey without disclosing the source thereof - During the course of survey, certain sum of cash was found and the books of account for relevant assessment year were not found to be complete. Assessee surrendered such sum. Thereafter, AO assessed the surrendered income as an income under section 69A and did not allow the set off of loss determined by him against such income. Assessee contended that income surrendered during survey was business income and assessable as such and was adjustable against business losses determined by AO. Held: In respect of cash found during survey which was not reflected in the books of account, no source was declared by the assessee and in the absence of nature of source of cash being proved, the same was not assessable as income from business. In the circumstances, AO was justified in treating the additional income as deemed income under section 69A of the Act and not allowing the 27-Chd-2024 PLG Diagnostics Pvt Ltd., Rajpura 6 benefit of the business losses determined against the said deemed income.
During the proceedings before us, the Counsel of the Assessee has brought on record a portion of the statement recorded by the Assessee during the survey operation.
“Please explain the nature of entries and also intimate whether these have been incorporated in the regular book of accounts.
Q-Do you want to say anything?
Ans- These entries represent cash given to directors out of professional receipts of the company. These entries are in the nature of impressed with directors. However these entries have not been accounted for in the regular books of accounts. Therefore, in order to cover the discrepancy, additional income of Rs.4500000/- in the A. Y. 2016-17 and Rs.73,00,000/- in the A.Y. 2017-18 is being offered. This offer is subject to no penal action.
Here, from the answer of the Assessee in response to the question quoted by the Survey party, it is clear that the Assessee
27-Chd-2024 PLG Diagnostics Pvt Ltd., Rajpura 7 has very categorically in its answer stated that the cash given to director was out of professional receipts of the company. Therefore, findings given by the Assessing Officer as well as the ld. CIT(A) that the Assessee had not brought on record the source of cash is not proved beyond doubt. We also find that the Revenue has not brought on record either in the assessment or in the appeal proceedings any other source of income of the Assessee other than the professional receipts of the company. Keeping in view these two important aspects, the ld. counsel questioned the applicability of sections 69, 69A, 69B and 69C of the Act along with use of applications of section 115BBA in this case.
The ld. DR relied on the order of the CIT(A).
We have considered the findings given by the Assessing Officer in the assessment order and the ld. CIT(A) in his appeal order. We have also considered written submissions and different case laws filed by the counsel of the Assessee during the proceedings before us. We have taken into account arguments put forward by the Counsel of the Assessee as well
27-Chd-2024 PLG Diagnostics Pvt Ltd., Rajpura 8 as the ld. DR during proceedings before us. We find that since the Assessee has clearly replied in response to a question put to him during the survey that the unrecorded cash was out of the professional receipts of the company and the Revenue has not been able to brought on record any other source of income of the Assessee, therefore, applicability of sections 69, 69A, 69B 69C read with section 115BBE is difficult to be sustained Accordingly, Assessee’s appeal on this issue is allowed.
In the result, the appeal of the Assessee is allowed.
Order pronounced on 31.12.2024.