Parshavnath Buildestate Private Limited Vs ACIT/DCIT (ITAT Jaipur)
The case Parshavnath Buildestate Private Limited vs ACIT/DCIT (ITAT Jaipur) addressed whether unexplained expenditures declared during a survey under Section 69C of the Income Tax Act can be subject to tax under the special provisions of Section 115BBE. The assessee, engaged in real estate business, was subjected to a survey under Section 133A, during which unrecorded expenditures amounting to ₹2,00,10,200 were discovered. The assessee had disclosed ₹2,01,00,000 as income earned from its business, claiming it as the source of the unrecorded expenditures. The Assessing Officer (AO), however, taxed the expenditure under Section 69C, invoking a higher rate under Section 115BBE.
The assessee challenged this assessment, arguing that since the income was disclosed and taxed as business income, the corresponding expenditure could not be categorized as “unexplained” under Section 69C. The tribunal examined the evidentiary basis, including the oral statements made by the assessee during the survey. Relying on precedents, such as the Rajasthan High Court’s decision in Satyaveer Singh vs. CIT(A), the ITAT reiterated that oral evidence, when supported by the factual matrix, holds legal validity in tax assessments.
The ITAT concluded that the source of the expenditure had been adequately explained as business income already subjected to tax. It noted that taxing the expenditure separately under Section 115BBE would lead to double taxation of the same income. Consequently, the tribunal allowed the assessee’s appeal, setting aside the AO’s decision.
Further, the ITAT applied the ruling in this case to a similar appeal involving the assessee for another assessment year. Both appeals were allowed, underscoring the principle that disclosed and taxed business income cannot be treated as unexplained for taxing corresponding expenditures under the stringent provisions of Section 115BBE.
Assessee was represented by Adv. Mahendra Gargieya and Other Advocates
