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06-11-2019, Arora Alloys, Section 133A, 69, 69A, Tribunal Chandigarh

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6 months 3 weeks ago #11340 by amit
Section - 133A, 69, 69A, 115BBE, 70, 80
Order Date - 06-11-2019
Favouring - Assessee Partly
Court - Tribunal Chandigarh
Appellant - Arora Alloys Ltd
Respondent - DCIT
Citation - 1119Taxpundit76
Appeal No. - ITA NO. 1481/CHD/2017
Asstt. Year - 2012-13



Assessee is in appeal before the Tribunal against order of the ld.CIT(A)-1, Ludhiana passed for the Asstt.Year 2012-13.

2. Though the assessee has taken five grounds of appeal, but at the time of hearing, the ld.counsel for the assessee confined his submissions to the issue, whether a sum of Rs.40 lakhs disclosed during the course of survey deserves to be treated as income from other sources, against which no set off on account of business expenditure/loss deserves to be granted to the assessee.

3. Brief facts of the case are that the assessee has filed its return of income on 27.9.2012 declaring total income at Rs.18,67,485/-. A survey under section 133A was carried out at the business premises of the assessee. Return of income was revised on 1. 8.2013 at Rs.21,34,700/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued and served upon the assessee. According to the Assessing Officer, during the course of survey proceedings, certain discrepancies were found To cover-up these discrepancies, the assessee voluntarily disclosed additional income of Rs.40.00 lakhs (Rs.8.00 lakhs on account of excess cash and Rs.32 lakhs on account of unexplained expenditure in building account) for the financial year 2011-12 relating to the Asstt.Year 2012-13. In the revised return, the assessee has shown income at Rs.21,34,700/- including surrendered income at Rs.40.00 lakhs. The ld.AO has passed assessment order on 19.2.2015. He made addition of Rs.40 lakhs after giving credit of brought forward loss. He determined income of the assessee as under:

4. Appeal to the CIT(A) did not bring any relief to the assessee.

5. Short question for our adjudication is, whether this total amount of Rs.40 lakhs is to be assessed as deemed income against which no deduction/set off is available to the assessee. According to the ld.counsel for the assessee, this issue is covered by the decision of ITAT, Chandigarh Benches. He relied upon judgment of the ITAT in the case of Famina Knit Fab Vs.ACIT, reported in 104 306 (ChandiTrib). He further contended that thereafter, recently, the Tribunal has again decided this issue in the case of DCIT Vs.Khurana Rolling Mills P.Ltd., ITA No No.745 and 1134/Chd/2016. Copies of these decisions have been placed on record. On the strength of these decisions, he contended that as far as cash found during the course of survey is concerned, it is to beconstrued as deemed income under sections 69,69A etc. As far as alleged unexplained investment in the building material is concerned, this income derived by the assessee from the business activity, and it is to be treated as business income under normal provision. Therefore, he contended that out of Rs.40 lakhs, Rs.8 lakhs is to be treated as deemed income and Rs.32 lakhs be treated as income from business. The ld.DR on the other hand, relied upon the orders of the Revenue authorities.

6. We have duly considered rival submissions and gone through the record carefully. In the case of Famina Knit Fabs (supra), the Tribunal has examined this issue elaborately and propounded that onus is on the assessee to establish the source of surrendered income. If it failed to demonstrate such source, then, it is to be characterized as deemed income under sections 69,69A/B/C, and if that be happened, then such income to be taxed on the gross amount without setting off any expenditure or allowance against the same under section 115BBE of the Act. The discussion made by the Tribunal is worth to note, and we take note of this findings as under:

“10. The contention of the Revenue, on the other hand, was that the character of the income surrendered was in the nature of deemed income as provided u/ss. 69, 69A, 69B and 69C of the Act, having not been disclosed for tax earlier and accordingly, the said incomes were to be charged to tax as per the provisions of section 115BBE of the Act and the benefit of set off losses was not vailable since the amendment made to section denying the benefit of set off of losses w.e.f. 1.4.2017 was retrospective in nature being curative in character. Alternatively it was contended that the issue was covered by the decision of the Jurisdictional High Court in the case of Kim Pharma Ltd. (supra), as per which these incomes could not be assessed under any heads as provided under the Act and therefore were not eligible to set off any losses against the same.

11. We have heard the rival contentions, perused the orders of the authorities below and have also considered various case laws referred to by both the parties before us.

12. The issues to be addressed in the present case can be summarized as relating to the categorization/characterization of income surrendered by the assessee during survey proceedings, whether from disclosed or undisclosed sources, and the allowability of claim of set off of losses ,both current and brought forward, against the same.

13. The controversy arises on account of the scheme of the Act which mandates incomes to be categorized under specific heads depending on

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