SH. JASPREET SINGH MAUJ,LUDHIANA vs. DCIT/ACIT, CC-1, LUDHIANA
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Income Tax Appellate Tribunal, DIVISION BENCH, “A” CHANDIGARH
Before: SHRI AAKASH DEEP JAINAND SHRI VIKRAM SINGH YADAV
आदेश/ORDER
PER A.D.JAIN, VICE PRESIDENT
This is assessee's appeal for assessment year 2018-19
against the order dated 04.11.2022 passed by the ld. CIT(A)-
5, Ludhiana. The following grounds have been taken : 1. That the Worthy Commissioner of Income Tax(Appeals) - V, has erred in upholding the contention of the Assessing Officer by treating the Surrendered Business Income of Rs.3 0,00,000 under the head Building as Deemed Income u/s 69 of the Income Tax Act, 1961.
ITA 755/CHD/2022 A.Y. 2018-19 2 2. That the Worthy Commissioner of Income Tax (Appeals) - V, has erred in upholding the contention of Assessing Officer by1 not allowing depreciation claim on the said Building. 3. That the Worthy Commissioner of Income Tax (Appeals) - V, has erred in upholding an addition of Rs.2,11,600 on account of addition in the value of Building based on the valuation report of the Department valuer. 4. That the Worthy Commissioner of Income Tax (Appeals) - V, has erred in upholding the action of the Assessing Officer by treating the Business Income surrendered Rs.30,00,000 chargeable to tax under Section 115BBE @60 percent instead of Normal Tax Rate.
The matter was recalled with regard to Ground No.2,
vide order dated 06.10.2023, since in the order dated
21.07.2023, whereby, the assessee's appeal was allowed,
inadvertently, no finding had been given on the said Ground
No.2.
We have heard the parties and have perused the
material on record with regard to Ground No.2. The
Assessing Officer disallowed depreciation on building, of
Rs.3 lacs, against the sun surrendered as investment in the
building. The AO held that since the surrendered income
had been adjudicated as unexplained investment u/s 69 of
the Income Tax Act, deduction of Rs.3 lacs against the same
on account of depreciation could not be allowed. The ld.
CIT(A) confirmed the disallowance, holding that since the
AO’s action in treating the surrendered amount, of Rs.30
ITA 755/CHD/2022 A.Y. 2018-19 3 lacs, under the head of ‘building’, as income u/s 69 of the
Income Tax Act, chargeable to tax @ 60% u/s 115 BBE of the
Act, had been upheld, depreciation could not be allowed to
be claimed, and that as per the provisions of Section
115BBE(2) of the Act, w.e.f. assessment year 2017-18, no
demand of deduction in respect of any expenditure or
allowance can be allowed under any provisions of the Act.
The aforesaid observations and findings of the ld. CIT(A)
no longer hold good. In our order dated 21.07.2023,
concerning the grievance of the assessee against the CIT(A)’s
action of upholding the action of the AO in treating the
surrendered business income of Rs.30 lacs under the head
‘building’, as deemed income u/s 69 of the Act, chargeable to
tax @ 60% u/s 115BBE instead of at the normal tax rate, we
have held that. The ld. Counsel for the assessee had
contended that a perusal of the surrender letter dated
05.10.2017 would reveal that firstly, there was neither any
cash, nor any incriminating material found during the
survey action; that however, a surrender was obtained by the
Department, stating that there might be professional
receipts which may not be included in the income returned
by the assessee; that therefore, to cover up the expenditure
ITA 755/CHD/2022 A.Y. 2018-19 4 incurred on the building and other professional income, the
assessee had surrendered the amount of Rs.30 lacs as his
undisclosed professional income; that the assessee had also
paid due tax thereon, @ 30% plus surcharge etc.; and there
was nothing on record that the assessee had received any
unexplained income; that the surrender had been made just
on estimation basis that the assessee might have received
some professional receipts, it might not have been accounted
for; that even the CBDT has issued instructions that the
income tax authorities at the time of survey/search, should
not harp upon taking a surrender/confession statements
and rather, they should collect the evidence relevant to
unaccounted/unexplained income and the additions should
not be based merely on obtaining surrender statements; that
in the present case, however, the surrender had been
obtained and there was no evidence of any income having
been earned by the assessee from any other source; that in
fact, no such income had been found during the survey
action. The Tribunal held that in view of these facts, the
provisions of Section 115BBE of the Act are not applicable in
this case; that further, addition of Rs.2,11,600/- made by
the AO on account of addition in the value of a building also
ITA 755/CHD/2022 A.Y. 2018-19 5
cannot be held to be justified, since the assessee had
surrendered additional professional income covering the
expenditure on building also.
In view of these findings of the Tribunal, obviously, the
provisions of Section 115BBE of the Act do not get attracted
to the case of the assessee and, therefore, the ld. Counsel
for the assessee went wrong in confirming the action of the
AO in not allowing depreciation claimed by the assessee on
the building.
In view of the above, finding merit therein, Ground No.
2 raised by the assessee is accepted. The AO is directed to
allow the depreciation claimed by the assessee.
In the result, the appeal is allowed.
Order pronounced in the Open Court on 26.02.2024.
Sd/- Sd/-
(VIKRAM SINGH YADAV) (AAKASH DEEP JAIN ) ACCOUNTANTMEMBER VICE PRESIDENT “Poonam”
ITA 755/CHD/2022 A.Y. 2018-19 6
आदेश क� �ितिलिप अ�ेिषत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�/ CIT 4. िवभागीय �ितिनिध, आयकर अपीलीय आिधकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड� फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar
