Additions U/s 69 Should Not Be Based Merely On Obtaining Surrender Statements: Chandigarh ITAT
Pankaj Bajpai
2 April 2024 1:00 PM IST
On finding that the assessee in clear terms has surrendered the additional professional income covering the expenditure incurred on the building, the Chandigarh ITAT held that the invocation of Section 115BBE of the Income Tax Act, is not applicable and hence deleted the addition made by the AO on account of the addition in the value of building u/s 69. The Bench of the...
On finding that the assessee in clear terms has surrendered the additional professional income covering the expenditure incurred on the building, the Chandigarh ITAT held that the invocation of Section 115BBE of the Income Tax Act, is not applicable and hence deleted the addition made by the AO on account of the addition in the value of building u/s 69.
The Bench of the ITAT comprising of Sanjay Garg (Judicial Member) and Vikram Singh Yadav (Accountant Member) observed while considering the contention of the assessee that “The Central Board of Direct Taxes has also issued instructions that the Income Tax Authorities at the time of survey/search action should not harp upon taking surrender/confession statements, rather they should collect the evidences relevant to unaccounted/unexplained income and that the additions should not be based merely on by obtaining surrender statements. However, in this case, the surrender statement has been obtained and there is no evidence nor any allegation of the Survey Party that the assessee had income from any other source. In fact, no such income has been found during the survey action. However, the assessee to keep his promise, has offered for taxation the surrendered additional professional income of Rs.30 lacs. Under the circumstances, the action of the AO in assessing the aforesaid surrendered income as income from unexplained sources u/s 69 of the Act cannot be held to be justified.” (Para 7)
As per the brief facts of the case, the assessee is a Veterinary Doctor and has been returning his income from profession. A survey action was carried out at the premises of the assessee but neither incriminating documents nor any cash etc. was found during the survey action. However, the Survey Party enquired from the assessee about the expenditure incurred on the building. In response, the assessee surrendered an amount of Rs.30 lacs to cover the building expenses and other unaccounted income. During the assessment proceedings, the AO treated the aforesaid surrendered amount as unexplained income of the assessee and assessed the same u/s 69. Further, the AO invoked the provisions of Section 115BBE and taxed the said income @ 60%. The AO also separately added an amount of Rs.2,11,600/- on account of addition in the value of building.
The Bench noted that the assessee has submitted a perusal of the surrender letter which revealed that there was neither any cash nor any incriminating material was found during the survey action.
The Bench observed that a surrender was obtained by the department stating therein that there might be professional receipts which might not be included in the income returned by the assessee and therefore, to cover up the expenditure incurred on the building and other professional income, the assessee surrendered Rs.30 lacs as his undisclosed professional income.
The Bench further observed that the assessee also paid due taxes, thereupon @ 30% + surcharge etc. and there is nothing on record that the assessee had received any other unexplained income.
Therefore, on finding the addition made by the AO is non justifiable, ITAT allowed the assessee's appeal.
Counsel for Appellant/Taxpayer: Y.K.Sud
Counsel for Respondent/Department: Amanpreet Kaur
Case Title: Shri Jaspreet Singh Mauj verses DCIT/ACIT
Case Number: ITA No.755/CHD/2022
