Case Law Details
Jasjot Singh Garcha Vs PCIT (ITAT Chandigarh)
ITAT Chandigarh held that transaction not recorded at the time of survey qualify as unrecorded transactions, however, the assessee has provided the necessary explanation about the nature and source of such unrecorded transactions and hence invoking deeming provisions of section 69-69D of the Income Tax Act unjustified.
Facts- During the course of survey operation, certain discrepancies were noticed and as a result, the assessee offered a sum of Rs. 70,00,000/- apart from his normal business income. Subsequently, the assessee filed his return of income on 30/10/2017 showing total income of Rs. 81,22,830/- including the surrendered income of Rs. 70,00,000/-. The case of the assessee was taken up under compulsory scrutiny and notice u/s. 143(2) and 142(1) were issued alongwith detailed questionnaire. The returned income was accepted by the AO and assessment order dt. 28/06/2019 was passed by the AO u/s. 143(3) of the Act.
Subsequently, the assessment records were called for and examined by the Ld. Pr. CIT and a show cause u/s. 263 dt. 22/02/2022 was issued and thereafter, after taking into consideration the submissions so filed by the assessee but not founding the same acceptable, the assessment order passed u/s. 143(3) was held to be erroneous in so far as prejudicial to the interest of the Revenue and the matter was set aside to the file of the AO for passing a fresh order in accordance with law, keeping in view the observation made in the impugned order and after providing reasonable opportunity to the assessee. Against the said findings and directions of the Ld. Pr. CIT, the assessee is in appeal before us.
Conclusion- No doubt, these transactions were not recorded at the time of survey thus qualify as unrecorded transactions satisfying one of the essential conditions, at the same time, the assessee has provided the necessary explanation about the nature and source of such unrecorded transactions and the necessary nexus with assessee’s business has been established, thus, it cannot be said that these are unexplained transactions thus, doesn’t satisfy the second condition for invoking the deeming provisions of section 69-69D of the Act. The AO has duly taken cognizance of the findings of the survey team, the documents found during the course of survey, the statement of the assessee, the surrender letter and the return of income and after examination thereof and due application of mind, the income has been rightly assessed under the head business income.
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