"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “बी” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE ŵी राजपाल यादव, उपाȯƗ एवं ŵी क ृणवȶ सहाय, लेखा सद˟ BEFORE: SHRI. RAJPAL YADAV, VP & SHRI. KRINWANT SAHAY, AM आयकर अपील सं./ ITA No. 758/Chd/ 2024 िनधाŊरण वषŊ / Assessment Year : 2017-18 Om processors Private Limited K-3, Textiles Colony Ludhiana (East), Millerganj, Ludhiana, बनाम The DCIT Central Circle-3 Ludhiana ˕ायी लेखा सं./PAN NO: AAAC08664P अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Sudhir Sehgal, Advocate राजˢ की ओर से/ Revenue by : Dr. Ranjit Kaur, Addl. CIT, DR सुनवाई की तारीख/Date of Hearing : 30/01/2025 उदघोषणा की तारीख/Date of Pronouncement : 11/04/2025 आदेश/Order PER KRINWANT SAHAY, A.M.: This is an appeal filed by the Assessee against the order of the Ld. CIT(A)-5, Ludhiana dt. 25/06/2024 pertaining to Assessment Year 2017-18 2. In the present appeal Assessee has raised the following grounds: \"1. That the Ld. CIT(A)-5, has erred in confirming the reopening of the assessment u/s 148 and the addition as made by the Assessing Officer. 2. That the Ld. CIT(A) has failed to appreciate that the assessment, as framed by the Assessing Officer deserves to be 2 quashed as no notice u/s 143(2) have been issued on the basis of original return filed by the assessee and, thus, the reopening u/s 148 is bad in law. 3. Notwithstanding the above said ground of appeal, the Ld. CIT(A) has erred in treating the amount of Rs.25 lacs as offered during survey u/s 69B r.w. section 115BBE, which is against the facts and circumstances of the case. 4. That the Ld. CIT(A) has failed to appreciate that no other activity other than the same business as per return of income was being carried on by the assessee and which was confirmed by the assessee during the course of statement of the assessee and, thus, the treatment of income offered during survey u/s 69B read with section 115BBE, is not in order. 5. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.\" 3. The facts, in brief, are that the assessee is engaged in the business of dyeing of fabric and in addition to that, the assessee is also engaged in trading of fabric both dyed and undyed. For this, the assessee has been maintaining complete set of audited books of accounts, which are duly audited by the Chartered Accountant and the returns are being filed on the basis of such books of accounts. 3.1 During the financial year 2017-18, a survey was conducted at the premises of assessee on 12.05.2017. During the course of such survey, the assessee surrendered a sum of Rs. 25 lacs towards the additions in fixed assets of the business of the assessee in Asstt. Year 2017-18 and also stated that the said amount of Rs. 25 lacs, which was offered have not relation whatsoever, to the nature of any incomes referred in section 68,69,69A, 69B, 69C and 69D of the Act and it was further mentioned that the said amount of Rs. 25 lacs shall be incorporated in Asstt. Year 2017-18 in the regular books of accounts. 3 3.2 The return originally was processed u/s 143(1) but then, the case was reopened u/s 148 on account of the fact that the surrendered amount of Rs. 25 lacs during survey was to be taxed as per provisions of section 115BBE. In response to notice 148, the return was filed by the assessee at the same figure and various questionnaires were issued by the department. Replies were submitted by the assessee. The assessee was also asked by the Assessing Officer as to why the surrendered amount should not be taxed u/s 69B of the Act. It was replied by the assessee that the surrendered amount was from the same business and it should be taxed at the normal tax rate. But, the Assessing Officer treated the sum of Rs. 25 lacs as surrendered during survey as deemed income u/s 69 read with the provisions of section 115BBE of the Act. 3.3 Against the order of the AO, the assessee went in appeal before the Ld. CIT(A) and the Ld. CIT(A) by way of order, dated 25.06.2024 upheld the order of Assessing Officer. According to CIT(A), the nexus and source have not been established and the Assessing Officer has rightly treated the surrendered amount of Rs. 25 lacs on account of unaccounted investment during survey and taxed the same as per the provisions of section 115BBE of the Act, since the amount was not recorded in the books of accounts. 4. Against the order of the Ld. CIT(A) the assessee is in appeal before us. 5. The Ld. Counsel argued during the course of hearing and referred to the statement of Sh. Dhruv Gupta director recorded during survey, copy of which has been placed at page 88 of the 4 Paper Book and referred to Question No.2 regarding the nature of activities of the assessee company to which, the assessee replied as under:- \"Q.No.2 Please explain the nature of activities being done at your business premises here. Ans. Company is primarily into doing the job work of Ready to Dye Fabric received from various customers from in and around Ludhiana. This job work is related to the dyeing & processing of various blends of fabrics and also we are into the trading of fabric whether dyed or undyed.\" 5.1 It was further brought to our notice that during the course of survey as per answer to Question No.3, he was asked to explain the process of the assessee's business of Dyeing and Processing which was explained in detail at pages 89 to 91 of the Paper Book. Similarly, certain other questions regarding the nature of business activity was also asked for, which he replied. It was further stated that during the course of survey, the assessee was found to be carrying on the business of job of dyeing of fabric and trading and no other activity was noticed and, thus, the income so offered was also from the same business. Thus, the CIT(A) has erred in treating the same as deemed income and taxing the same as per the provisions of section 115BBBE of the Act. 5.2 Our attention was also drawn to the amount of Rs. 25 lacs, which was offered in the audited profit and loss account as is evident from page 21 read with page 23 of the audited profit and loss account and its annexure and it was, thus, argued that the Ld. CIT(A) has wrongly confirmed the action of the Assessing Officer in taxing the surrendered income of Rs. 25 lacs as deemed income. 5 5.3 The Ld. Counsel of the assessee invited our attention to the case of M/s DDK Spinning Mills Vs DCIT, where the amount surrendered was on account of construction of building and no other source of income was identified by the department and such surrendered income was held to be business income by the Hon'ble ITAT, Chandigarh Bench, Chandigarh in the decision reported in [2024] 109 ITR (Trib.) 619 (Chd.), wherein, it was held as under: - \"Section 69B, read with section 115BBE, of the Income-tax Act, 1961 Undisclosed investment (Building) - Assessment year 2018-19 - Assessee- firm was engaged in business of spinning mills - During course of survey conducted upon assessee, one of its partners surrendered certain amount on account of addition made to factory building Assessing Officer was of view that said amount was to be considered as unexplained investment under section 69B and was subject to taxation as per provisions of section 115BBE - It was noted that assessee had treated said surrendered amount as normal business income in its P&L account and had paid tax at normal rate on same - There was no material/documentation on record which even remotely demonstrated that assessee had expended certain sum of money on construction of building over and above amount which had been recorded in its books of accounts - Further, only statement of one of partners of assessee firm without any corroborative evidence could not come to aid of Assessing officer for purposes of invoking deeming provisions of section 69B - Even taking into consideration said statement on a standalone basis, it was found that source of investment had been stated to be out of business income and that surrendered amount had been duly honored by assessee while filing return of income wherein said amount was offered to tax under head \"business income\" - Whether, on facts, provisions of section 69B read with section 115BBE could not be invoked in instant case - Held, yes [Paras 8, 10 and 11] [In favour of assessee]\" [ Thus, it was argued that the surrendered income be taxed at the normal rate of tax. 6. The Ld. DR argued that since the source of income has not been identified during the course of such survey and the Id. CIT(A) has very rightly held the sum of Rs. 25 lacs as deemed income and taxed the same as per the provisions of section 115BBE and relied 6 upon the order of Ld. CIT(A) and also relied upon the judgments as quoted by the CIT(A) in his order at page 30 of the order. 7. In rejoinder to the argument of the (DR), the Ld. Counsel of the assessee stated that all the judgments in the cases quoted by the Ld. CITA) in his order like Kim Pharma Pvt. Ltd. v CIT 216 Taxman 153 (PEtH), Famina Knit Fab v ACIT 176 ITD 246 (Chandigarh Trib.), Pr. CIT v. Khushi Ram & Sons Foods (P) Ltd. have been discussed and analyzed in the judgment of M/s Khurana RollingMills Pvt. Ltd., in ITA No. 745/Chd/2016 as well as another judgment of Hon'ble Bench of the ITAT in the case of M/s Bindas Foods Pvt. Ltd. in ITA No.409/Chd/2021 and copies of the judgments of M/s Khurana Rolling Mills Pvt. Ltd. and M/s Bindas Foods Pvt. Ltd. have been placed before us in the Judgement Set. 8. We have gone through the order of Ld. Assessing Officer and CIT(A) and arguments of both sides and have also gone through the Brief Synopsis, Paper Books, judgement set filed by the Ld. Counsel of the assessee during the course of proceedings before us and arguments of Ld. DR. We have also gone through the statement of one of the director as recorded during survey, in which, he has explained the nature of business of the assessee. As no other activity was noticed either during the course of survey or during the course of assessment proceedings by the department. We find that all the judgments as cited by the Ld.CIT(A) have been considered by the Chandigarh Bench of the ITAT in the case of M/s Khurana Rolling Mills Pvt. Ltd. and M/s Bindas Foods Pvt. Ltd. as quoted 'supra'. Under similar facts and circumstances, the amount surrendered was spent on the factory building in the case 7 of M/s DDK Spinning Mills as cited above. We find that issue is also squarely covered by the judgment of Sh. Gandhi Ram in ITA. 121/Chd/2021. Further reliance on the other judgments as cited by the Ld. Counsel of the assessee are also quite apt as under:- i). Smt. Renu Singla Vs PCIT in ITA No.58/Chd/2021, vide order, dated 26/11 /2024. ii). M/s Veer Enterprises as reported in [2024] 158 Taxmann.com 655 (Chd.Trib.) iii). Sh. Krishan Kumar, as reported in [2024} 162 taxmann.com 518 (Chd.Trib.) iv). Judgement in the case of Sh. Gandhi Ram in ITA. 121/Chd/2021. In the case of M/s Veer Enterprises, the following findings have been given by Tribunal as under:- \"Section 69A, read with sections 69B and 28(i), of the Income-tax Act, 1961 - Unexplained money (Amount disclosed at survey) - Assessment year 2019-20 - During course of survey under section 133A, assessee surrendered excess stock, cash and receivables, stating that same was to be taxed as business income - Assessing Officer, however, treated said surrendered amount as unexplained investment under sections 69A and 69B and charged same to tax as per provisions of section 115BBE - Whether since during survey proceedings, assesse was confronted not only with discrepancies found but also with nature and source thereof and it had emerged that source of income of assessee was from its business operations, income surrendered by assessee during survey could not be brought to tax under deeming provisions of section 69A and 69B and same had been rightly offered to tax by assessee under head of business income - Held, yes [Paras 29 and 30] [In favour of assessee].\" 8.1 Thus, as per the findings given in the above cases and in the case of Sh. Gandhi Ram as cited supra, we hold that the amount surrendered to the tune of Rs. 25 lacs during survey was to be taxed as per the normal business income of the assessee. 8 9. The assessee has also taken ground of appeal No.1 with regard to the reopening of the assessment u/s 148 and also for non-service of notice u/s 143(2) since the appropriate relief has been allowed to the assessee, the said ground of appeal have become academic in nature and not adjudicated. 10. In the result, appeal of the Assessee is allowed. Order pronounced in the open Court on 11/04/2025 Sd/- Sd/- राजपाल यादव क ृणवȶ सहाय (RAJPAL YADAV) (KRINWANT SAHAY) उपाȯƗ/VICE PRESIDENT लेखा सद˟/ ACCOUNTANT MEMBER AG 11/04/2025 आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "