Case Law Details
Harish Sharma Vs ITO (ITAT Chandigarh)
Admittedly, in the present case the notebook entries containing entry pertaining to the business of M/s Sharma Overseas Services was recovered from the possession of the assessee. The authorities below have not rejected the contention of the assessee that the entries in note book pertained to the business concern of the assessee.
As pointed out by the Ld. Counsel the Coordinate Bench in the case of Shri Bhuwan Goyal (supra), has held that the amount surrendered during the survey action cannot be treated as undisclosed income u/s 68 of the Act in the said case, the assessee had surrendered an amount of Rs.3.64 crores in the statement recorded u/s 132(4) of the Act, which was made on the basis of the entries in the pocket diary found and seized during the course of search. The authorities below computed the tax under the provisions of section 115BBE of the Act. The matter travelled to the ITAT. The ITAT set aside the orders of the authorities below and directed the AO to tax the entire surrendered income of Rs.3.64 crores at the normal rate of tax.
Further, section 68 of the Act, applies where any sum is found credited in the books of account maintained by the assessee for any previous year and the assessee fails offer any explanation about the nature and source thereof or the explanation by the assessee is not satisfactory in the opinion of the AO, the sum so credited may be treated as income of the assessee of that previous year. In the present case the assessee has explained the nature and source of the amount in question and to substantiate his contention submitted cash flow statement. We further note that the AO has not given his findings on this point. We, therefore, find merit in the contention of the assessee that in the absence of any adverse findings by the AO on the source of earning of the assessee, the authorities below have wrongly treated the amount in question as undisclosed income u/s 68 of the Act and computed the Tax liability under the provisions of section 115BBE of the Act.
In the light of the discussions made in the foregoing paras, we are of the considered view, the sole ground raised by the assessee is covered in favour of the assessee by the decision of the coordinate Bench in the case of Shri Bhuwan Goyal (supra) discussed above. Since the findings of the Ld. CIT(A) are not in consonance with the decision of the coordinate Bench, we hold that the Ld.CIT(A) has erred in upholding the action of the AO in treating the amount in question as undisclosed income u/s 68 of the Act. Hence, respectfully following the decision of the coordinate Bench in the case discussed above, we allow the appeal of the assessee and set aside the impugned order passed by the Ld. CIT(A). Accordingly, we direct the AO to compute the Tax on the said amount treating the same as business income of the assessee.
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