Narayana Rao Hebri Vs ACIT (ITAT Bangalore)
Assessee, a real estate businessman, was subjected to a survey u/s 133A on 27.09.2016, during which he voluntarily offered ₹1,14,20,100 as additional income to “cover up omissions & accounting errors.” He later filed his return including this amount & paid regular tax.
The assessment was selected for limited scrutiny only to verify “payment of tax in cash during demonetization.” During demonetization, Assessee had paid ₹24 lakh income tax in cash, & explained that the source was cash withdrawn (₹28.30 lakh) from bank + rent receipts + advances. AO, however, held that Assessee had no cash withdrawals close to the payment date & treated ₹24 lakh as unexplained cash credit u/s 68, taxing it at 115BBE. He also treated the survey disclosure of ₹1.14 crore as income taxable u/s 115BBE at the higher rate, even though Assessee had already offered it as “income from other sources” & paid normal tax.
On appeal, the CIT(A) confirmed both additions.
Before the ITAT, Assessee raised three main issues:
Assessment should have been u/s 144 (best judgment) instead of 143(3): ITAT held that Assessee had partially complied with notices u/s 142(1), so AO was right to complete assessment u/s 143(3).
