9th Street Architects Vs DCIT (ITAT Ahmedabad)
Survey Disclosure Already Taxed as Business Income – AO Cannot Invoke 69A & 115BBE Through 154 Rectification- Debatable Issue Beyond Scope of 154 -Rectification Cannot Become Reassessment
A survey u/s 133A was conducted in the case of Assessee-firm engaged in architectural consultancy. During survey, Assessee admitted that ₹1,50,00,000 was not recorded in the regular books. Assessee explained that these receipts were professional consultancy fees from its regular business, duly offered to tax as business income in the return, & the assessment was completed accordingly.
Later, AO invoked rectification u/s 154 by holding that the said ₹1.50 crore was unexplained money u/s 69A & should have been taxed at special rate u/s 115BBE instead of normal business rate. AO treated the omission as a “mistake apparent from record” & rectified the assessment. CIT(A) upheld the rectification by holding that mere disclosure of nature as business income was not enough; Assessee also had to prove the source of funds. Relying on various decisions, CIT(A) held that 69A & 115BBE were rightly applied.
Before Tribunal, Assessee argued that whether the survey disclosure is business income or unexplained income u/s 69A is a highly debatable issue involving interpretation of law & facts. Hence, such a matter cannot be rectified u/s 154. It was submitted that income was already recorded in the books as business turnover & accepted in the original assessment. Changing the head of income is a change of opinion & beyond the scope of 154. Reliance was placed on Supreme Court in T.S. Balaram v. Volkart Brothers & Saurashtra Kutch Stock Exchange holding that only patent & obvious mistakes can be rectified u/s 154, not debatable issues. Further reliance was placed on Mohit Sukhija (Delhi ITAT) & S. Balaji Mech-Tech (Delhi ITAT) holding that when receipts are already recorded in books as business income, sections 68/69A/115BBE cannot be invoked.
