No Deeming Provision stands when Source of Income explained with Corroborative Evidence: ITAT sets aside Revisional Order [Read Order]

The Income Tax Appellate Tribunal (ITAT), Chandigarh bench has held that no deeming provision can be invoked when the source of the income was explained with the corroborative evidence and set aside the Revisional order by PCIT.

The assessee, Gandhi Ram filed his return of income declaring a total income of Rs. 1,08,53,110/- on 07.11.2017 which was selected for scrutiny and thereafter the assessment was completed at an assessed income of Rs. 1,09,03,261/-.  PCIT has held the assessment order as erroneous as well as prejudicial to the interest of the Revenue and the same has been set aside to the file of the AO for passing a fresh order after giving sufficient opportunity to the assessee.

The assessee contended that the matter has been duly examined by the AO and the returned income has been accepted wherein the amount surrendered has been offered as part of the business income and due taxes have been paid thereon.

Further contended that it was not a case where unexplained credits, assets, investment or expenditure has been found to have been made by the assessee firm by the survey party.

It was settled law that where the nature and source of the income offered by the assessee firm stand explained, no addition can be made under sections 68 to 69C of the Act and the provisions of section 115BBE cannot be invoked. 

In the statement recorded at the time of the survey, the assessee was specifically asked about the source of his income and in response where the assessee mentioned clearly about the source. It was observed that the PCIT has failed to take into consideration these documents which are very much part of the records. 

The Tribunal found that the Assessing officer has duly taken cognizance of the statement of the assessee recorded during the survey, the surrender letter and the return of income, and after examination thereof and due application of mind has not drawn any adverse inference and income has been rightly assessed under the head “business income”.

Smt. Diva Singh, judicial member and Shri Vikram Singh Yadav, accountant member while allowing the appeal held that “the order so passed by the Assessing officer cannot be held as erroneous due to lack of enquiry or for that matter, requisite enquiry on the part of the Assessing officer.”  The Tribunal set aside the order so passed by the PCIT u/s 263 of the Income Tax Act.

The assessee was represented by Shri S.C. Jain and the revenue was represented by Shri Vivek Nangia.

To Read the full text of the Order CLICK HERE

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