Section 115BBE, read with sections 69, 143 and 154 – Amount surrendered, in the course of survey, as undisclosed investment in stock and assessed as business income cannot be subsequently brought to tax u/s 115BBE by passing an order u/s 154

18. [(2020) 117 taxmann.com 178
(Jai.)(Trib.) ACIT vs. Sudesh Kumar Gupta ITA No. 976 (Jp) of 2019 A.Y.: 2014-2015 Date of order: 9^th June, 2020

Section 115BBE, read with sections 69, 143
and 154 – Amount surrendered, in the course of survey, as undisclosed
investment in stock and assessed as business income cannot be subsequently
brought to tax u/s 115BBE by passing an order u/s 154

FACTS

During the course of survey, the assessee surrendered an amount of Rs. 21
lakhs as undisclosed investment in stock. This amount was offered to tax in the
return of income as business income. In the assessment completed u/s 143(3) of
the Act, the returned income was accepted.

Subsequently, the A.O. issued a notice u/s 154 proposing to tax the
undisclosed investment of Rs. 21,00,000 in stock u/s 69 and tax thereon levied
u/s 115BBE at 30%. The assessee submitted that the amount admitted as
undisclosed excess stock was on an estimated basis and it had been accepted by
the A.O. in an assessment made u/s 143(3). The A.O. rejected the submission
made by the assessee and passed an order u/s 154 and levied tax on the amount
of undisclosed investment at 30% in accordance with section 115BBE.

Aggrieved, the assessee preferred an appeal to the CIT(A) who allowed the
appeal holding that the A.O. was not justified in invoking the provisions of
section 69 once he had charged it to tax under the head business income while
passing the assessment order u/s 143(3).

Aggrieved, the Revenue preferred an appeal to the Tribunal.

HELD

The Tribunal noted
that the amount of undisclosed investment in stock surrendered by the assessee
was offered as ‘business income’ in the return of income and was accepted by
the A.O. In the course of assessment, there was no adjustment / variation
either in the quantum, nature or classification of income offered by the
assessee. The A.O. had not called for any explanation regarding the nature and
source of such investment during the course of assessment proceedings. Further,
he had neither formed any opinion, nor recorded any satisfaction for invoking
the provisions of section 69. The Tribunal held that since the provisions of
section 69 had not been invoked at the first instance while passing the
assessment order u/s 143(3), they cannot be independently applied by invoking
the provisions of section 154.

The Tribunal
dismissed the appeal filed by the Revenue.