Karnataka High Court
Shri Narayan Rao Hebri vs The Assistant Commissioner Of Income … on 20 February, 2026
Author: S.G.Pandit
Bench: S.G.Pandit
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ITA No. 166 of 2025
Reserved on : 20.01.2026
Pronounced on : 20.02.2026
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 20TH DAY OF FEBRUARY, 2026
PRESENT
THE HON'BLE MR. JUSTICE S.G.PANDIT
AND
THE HON'BLE MR. JUSTICE K. V. ARAVIND
INCOME TAX APPEAL No. 166 OF 2025
BETWEEN:
1. SHRI NARAYAN RAO HEBRI,
(PAN: AASPH2926A;
S/O SHRI DHUMANNA,
AGE ABOUT 71 YEARS)
(RESIDING AT No.1,
CHINNA, S. N. NAGAR MAIN ROAD,
SAGAR 577204).
...APPELLANT
Digitally (BY SRI K.K. CHYTHANYA, SENIOR COUNSEL A/W
signed by
VINUTHA B S SRI TATA KRISHNA, ADVOCATE)
Location: AND:
High Court of
Karnataka
1. THE ASSISTANT COMMISSIONER OF
INCOME TAX, CIRCLE-1, SHIMOGA,
I. T. OFFICE, SHIMOGA,
No.75, 100FT ROAD,
GOPAL GOWDA EXTENSION,
SHIVAMOGA, KARNATAKA-577201.
...RESPONDENT
(BY SRI Y.V. RAVIRAJ, SENIOR STANDING COUNSEL)
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ITA No. 166 of 2025
THIS ITA/ INCOME TAX APPEAL IS FILED UNDER
SECTION 260-A OF INCOME TAX ACT 1961, PRAYING TO
DECIDE THE FOREGOING QUESTION OF LAW AS MAY BE
ALLOW THE APPEAL AND SET ASIDE THE IMPUGNED ORDER
(IN SO FOR AS SAME IS PREJUDICIAL TO THE APPELLANT) OF
THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU, C
BENCH IN ITA No.2051/BANG-2024 DATED 22.05.2025 FOR
THE IMPUGNED AY 2017-18 AS ENCLOSED IN ANNEXURE-A.
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT, COMING ON FOR PRONOUNCEMENT THIS DAY,
K.V. ARAVIND J., DELIVERED THE FOLLOWING:-
CORAM: HON’BLE MR. JUSTICE S.G.PANDIT
and
HON’BLE MR. JUSTICE K. V. ARAVINDC.A.V. JUDGMENT
(PER: HON’BLE MR. JUSTICE K. V. ARAVIND)
Heard Sri K.K. Chythanya, learned Senior counsel along
with Sri Tata Krishna, learned counsel for the appellant-
Assessee and Sri Y.V. Raviraj, learned Senior Standing Counsel
for the respondent-Revenue.
2. This appeal is filed by the assessee under Section 260A of
the Income-tax Act, 1961 (for short, “the I.T. Act“), assailing
the order dated 22.05.2025 passed in ITA No.2051/Bang/2024
by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for
short, “the Tribunal”), relating to the Assessment Year 2017-
18.
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ITA No. 166 of 2025
3. The appellant-assessee has raised the following
substantial questions of law:
” (i) Whether on the facts and circumstances of the
case, the tribunal is right in law in perversely
upholding taxation of non-existent income of
Rs.1,14,20,100/- merely based on the statement
obtained under Section 133A and return of
income, without any corroborative evidences or
adverse finding against the appellant?
(ii) Whether on the facts and circumstances of the
case, the Tribunal is justified in refusing to decide
the taxability of non-existent income wrongly
offered during survey and in return, based on
perverse findings?”
4. The facts, in brief, are that the assessee filed its return of
income on 20.11.2017 declaring total income of
Rs.1,91,25,040/-. The Assessing Officer issued a notice under
Section 143(2) of the Income-tax Act, 1961 (for short, “the I.T.
Act“) on 11.08.2018, which came to be served on 23.08.2018,
calling for scrutiny of the assessment. The assessee is engaged
in the business of real estate. The return of income was
selected for scrutiny to verify the payment of tax in cash during
the demonetization period.
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4.1 The assessment order records that a survey under
Section 133A of the I.T. Act was conducted on 27.09.2016 and
that, pursuant thereto, the assessee, by letter dated
29.09.2016, volunteered to offer a sum of Rs.1,14,20,100/- as
additional income. The notice under Section 143(2) of the I.T.
Act relates to a cash payment of Rs.24,00,000/- made by the
assessee.
4.2 In addition to the income declared by the assessee, the
Assessing Officer made an addition towards long-term capital
gains and treated the sum of Rs.1,14,20,100/-, so declared,
along with the unexplained cash of Rs.24,00,000/-, as income
from other sources and subjected the same to tax under
Section 115BBE of the I.T. Act. The assessment was completed
by order dated 17.07.2019.
4.3 Aggrieved thereby, the assessee preferred an appeal
before the Commissioner of Income Tax (Appeals)[CIT(A)],
National Faceless Appeal Centre(NFAC), New Delhi. Before the
CIT(A), the assessee raised grounds challenging the addition of
Rs.24,00,000/- and the correctness of invoking the provisions
of Section 115BBE of the I.T. Act in respect of the additional
income of Rs.1,14,20,100/-, and also the levy of tax at the rate
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ITA No. 166 of 2025
of 60%. The CIT(A) dismissed the appeal, confirming the
taxation of both Rs.24,00,000/- and Rs.1,14,20,100/- at the
rate of 60% under Section 115BBE of the I.T. Act.
4.4 The assessee, being further aggrieved, preferred an
appeal before the Tribunal. Before the Tribunal, the assessee
contended that the provisions of Section 115BBE of the I.T. Act
were not applicable insofar as the sum of Rs.1,14,20,100/- was
concerned. With regard to the addition of Rs.24,00,000/-, the
assessee disputed the same as unexplained income. The
assessee further contended before the Tribunal that the
additional income of Rs.1,14,20,100/- was offered in the
absence of any incriminating material or supporting evidence
and, therefore, was not exigible to tax. It was submitted that
the said income was offered solely on the basis of an admission
made during the course of the survey proceedings.
4.5 The Tribunal, however, held that since the said income
was voluntarily offered by the assessee and the return of
income was filed after the survey admitting such income, the
assessee was not entitled to seek exclusion of the admitted
income. The Tribunal also observed that the return of income
had been selected for scrutiny only with reference to the
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ITA No. 166 of 2025
addition of Rs.24,00,000/-. However, insofar as the addition of
Rs.24,00,000/- was concerned, the Tribunal accepted the
contention of the assessee and deleted the said addition.
5. Sri K. K. Chythanya, learned Senior Counsel, along with
Sri Tata Krishna, learned counsel appearing for the appellant-
assessee, submitted that a survey was conducted on
27.09.2016 and that, in the course of the said survey, an
admission was obtained on 29.09.2016 offering a sum of
Rs.1,14,20,100/-. It is submitted that the said amount is not
exigible to tax and that its inclusion in the return of income was
the result of coercion during the course of the survey
proceedings. It is further submitted that the Tribunal is
empowered to delete even the income admitted in the return,
unless it is demonstrated that such income is taxable under the
provisions of the I.T. Act.
6. Per contra, Sri Y. V. Raviraj, learned Senior Standing
Counsel appearing for the respondent-Revenue, submitted that
a survey was conducted on 27.09.2016 and that the assessee,
by communication dated 29.09.2016, agreed to offer a sum of
Rs.1,14,20,100/- as income. It is submitted that the return of
income was thereafter filed on 20.11.2017, more than fourteen
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ITA No. 166 of 2025
months after the date of the survey, and, therefore, the
contention that the income was admitted under coercion is
wholly untenable.
6.1 It is further submitted that the alleged wrongful inclusion
of the said income was never questioned before the Assessing
Officer, even though the return was selected for scrutiny. Such
a ground was not urged even before the CIT(A). On the
contrary, the only contention raised before the CIT(A) was with
regard to the non-applicability of Section 115BBE of the I.T. Act
and a prayer to tax the said income at the normal rate. It is,
therefore, submitted that the Tribunal was justified in
dismissing the appeal filed by the assessee.
7. Having considered the submissions of learned counsel for
the parties, we notice that a survey under Section 133A of the
I.T. Act, 1961 was conducted on 27.09.2016. Pursuant thereto,
the assessee addressed a letter dated 29.09.2016 to the
Assessing Officer, voluntarily offering a sum of
Rs.1,14,20,100/- as income for the Assessment Year 2017-18.
The said income was admitted in the return of income filed on
20.11.2017 and the corresponding taxes were paid.
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ITA No. 166 of 2025
7.1 The return of income was selected for scrutiny only to
examine the payment of Rs.24,00,000/- made in cash during
November 2016 towards income tax and the source thereof. No
other issue was the subject-matter of scrutiny by the Assessing
Officer. However, the Assessing Officer treated both the
unexplained cash of Rs.24,00,000/- and the sum of
Rs.1,14,20,100/- as income from other sources under Section
115BBE of the I.T. Act and subjected the same to tax at the
rate of 60%.
7.2 The contention of the assessee is that the additional
income was admitted in the return on account of coercion
exercised during the course of the survey and on the basis of
the letter dated 29.09.2016, which, according to the assessee,
was forcibly obtained by the Assessing Officer. The said
submission is untenable for more than one reason. The
assessee filed the return of income on 20.11.2017 under
Section 139(1) of the I.T. Act and had the statutory opportunity
to revise the return under Section 139(5) of the I.T. Act.
Admittedly, the assessee neither retracted the letter dated
29.09.2016 admitting the additional income nor revised the
return of income. The assessee also paid tax on the income so
admitted.
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ITA No. 166 of 2025
7.3 Further, when the assessment was completed by adding
the additional income and subjecting the same to tax at the
rate of 60% under Section 115BBE of the I.T. Act, the
assessee, in the appeal before CIT(A), challenged only the
applicability of Section 115BBE and not the taxability of the
additional income itself. For the first time before the Tribunal,
the assessee contended that the additional income declared
was based solely on a statement recorded during the course of
the survey and was unsupported by any evidence. The Tribunal
rejected the said contention.
7.4 In this context, it is relevant to refer to the grounds
raised by the assessee before the CIT(A), which are as under:
“2. GROUNDS OF APPEAL:-
Aggrieved by the above order, the appellant preferred
an appeal before the Commissioner of Income Tax
(Appeal), with the following grounds of appeal:
“1. The order of the learned A.O. in so far as it is
against the appellant is opposed to law, equity,
weight of evidence, probabilities, facts and
circumstances of the case.
2. The learned A.O, is not justified in adding a
sum of Rs. 24,00,000/- as unexplained cash u/s.
68 of the Act, under the facts and in the
circumstances of the appellant’s case.
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2.1 The addition made by the learned A.O. u/s.68
of the Act is purely on suspicion and surmise,
assumptions and presumptions and is contrary on
the materials available on record and the addition
made requires to be deleted.
3. The learned A.O. is not justified in invoking the
provisions of section 115BBE and taxing the
additional income of Rs. 1,14,20,100/- at the rate
of 60% under the facts and in the circumstances
of the appellant’s case.
4. Without prejudice to the right to seek waiver
with the Hon’ble CCIT/DG, the appellant denies
himself liable to be charged to interest u/s. 234-
A, 234-B and 234-C of the Act, which under the
facts and in the circumstances of the appellant’s
case and the same deserves to be cancelled.
5. For the above and other grounds that may be
urged at the time of hearing of the appeal, your
appellant humbly prays that the appeal may be
allowed and Justice rendered.”
7.5 The Assessee raised the following grounds before the
Tribunal;
“1. The Order of the Learned Commissioner (Appeals)
as far as it is prejudicial to the interest of the Appellant
is not justified in law and on facts and circumstances of
the case.
2. The Assessment Order passed under section
143(3) is bad as the Learned Assessing Officer having
proposed to complete assessment ex-parte, ought to
have passed the said order only under section 144.
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ITA No. 166 of 2025
3. As regards additional income of Rs.1,14,20,100/-.
3.1 The Lower Authorities are not justified in
assessing the additional income of Rs.1,14,20,100/-
declared by the Appellant in his return of income merely
on the basis of statement recorded without any
evidence collected in the course of the said survey.
3.2. The Lower Authorities have erred in levying tax
on an additional income offered by the Appellant is in
contravention of the Article 265 of the Constitution of
India, Instruction F. No. 286/2/2003-IT (INV. II), dated
10.03.2003, Letter [F.No. 286/98/2013-IT(INV.II)],
dated 18.12.2014 and Circular No.14(XL-35), dated
11.04.1955.
4. Without prejudice, as regards levying tax &
surcharge by invoking section 115BBE:
4.1. The Learned Assessing Officer’s action of invoking
section 115BBE when the case of the Appellant was
selected for ‘Limited Scrutiny’, is in defiance of Circular
F. No. 225/402/2018/ITA.II, dated 28.11.2018 and
hence levying tax & surcharge under section 115BBE is
void ab initio and bad in law.
4.2. The Learned Commissioner (Appeals) is not
justified in upholding the action of the Learned
Assessing Officer in levying tax & surcharge under
section 115BBE in the appellate proceeding by failing to
appreciate that the Learned Assessing Officer never
proposed to do the same in any of the notices issued
during assessment proceeding.
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4.3. The Lower Authorities have erred in applying
section 115BBE when the amount surrendered during
survey was on account of difference in cash and other
deficiencies and not on account of any of the sections in
Chapter VI.
4.4. Without prejudice to the above, the Learned
Commissioner (Appeals) has erred in upholding the
action of the Learned Assessing Officer in levying tax &
surcharge under section 115BBE by failing to appreciate
that (i) the Learned Assessing Officer never invoked any
of the sections 68, 69, 69A, 69B, 69C & 69D of the IT
Act and (ii) the Learned Assessing Officer levied tax &
surcharge under section 115BBE merely on the basis
that the additional income was offered under the head
income from other sources’.
4.5. Without prejudice to the above, the Learned
Commissioner (Appeals) has erred in upholding the
action of the Learned Assessing Officer in levying tax &
surcharge under section 115BBE, by failing to
appreciate that Section 68 does not get attracted when
the conditions of the said section are not satisfied.
4.6. The Learned Commissioner (Appeals) is not
justified in making various observations which are
purely his ipse dixit, perverse and contrary to the facts,
being based on surmises and conjecture.
5. As regards addition of Rs.24,00,000/-:
5.1. The Learned Commissioner (Appeals) is not
justified in upholding the action of the Assessing Officer
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in making addition of Rs.24,00,000/-representing cash
deposit as unexplained cash credit under section 68,
when the conditions of the said section are not satisfied.
5.2. The Learned Commissioner (Appeals) is not
justified in upholding the impugned addition when the
Appellant established that he had sufficient source for
deposit of cash to the bank account.
5.3. The Lower Authorities are not justified in rejecting
the explanation of the Appellant of cash withdrawals
being the source of Rs.24,00,000/- by taking
unsustainable contentions that the Appellant could not
have held the cash for a long time and ought to have
deposited the cash in the bank, thereby stepping into
the shoes of the Appellant.
5.4. The Lower Authorities, having failed to bring on
record any evidence to establish that the cash drawn
was used for any other purpose, ought to have accepted
the explanation of the appellant that the cash
withdrawn was used for making tax payment.
5.5 Without prejudice and assuming without
conceding that the statement recorded during the
survey under section 133A is reliable, the Lower
Authorities are not justified in failing to read the said
statement wholly and fully but reading the same to their
convenience.
5.6. The Learned Commissioner (Appeals) is not
justified in making various observations which are
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ITA No. 166 of 2025
purely his ipse dixit, contradictory, contrary facts and
based on only surmises and conjecture.
5.7. The Learned Commissioner (Appeals) has failed to
appreciate that having accepted that additional income
offered to tax in survey proceeding, the impugned
addition is duplicating in nature resulting in taxing the
same amount twice over.
5.8. The Lower Authorities have unjustly refused to
grant the benefit of telescoping.
6. As regards levy of interest of Rs.2,97,176/-under
section 234A of the Act:
6.1. The Learned Assessing Officer is not right in law
and on facts in levying interest under section 234A of
Rs.2,97,176/ -.
6.2. The Learned Assessing Officer is not justified in
levying the aforesaid interest when the impugned
addition is not tenable.
For the above Grounds and for such other Grounds
which may be allowed by the Honourable Members to
be urged at the time of hearing, it is prayed that the
aforesaid appeal be allowed.”
7.6 The Tribunal has summarized the reasons for rejecting
the appeal filed by the assessee, which are as under:
“i. Survey in this case took place on 27.09.2016,
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ITA No. 166 of 2025
ii. Assessee himself made disclosure giving various
reasons such as omission and commission.
Therefore it is right that only assessee was aware
what for he is disclosing the sum.
iii. ROI was filed on 20-11-2017, In the ROI
assessee himself offered this income as Income
from other sources.
iv. In the computation also assessee did not give any
breakup or basis of such disclosure made.
v. Assessee was silent before Id AO, did not make
any claim of non-taxability of above sum.
vi. Assessment took place and assessee accepted the
same.
vii. Before CIT (A), even did not raise any ground
about the non-taxability of sum disclosed in
survey. Only Ground no.3 was regarding
applicability of section 115 BBE.
viii. This ground was raised in appeal memo before us
though not decided by the lower authorities
against the assessee, as it was not agitated
before them by assessee.
ix. It is disclosure of assessee made voluntarily, he
did not retract it but owned it in ROI and also did
not show or explain any error or omission, which
assessee was only aware about, raising these
issues now after 8 years, that too without
showing what prompted him for disclosure and
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ITA No. 166 of 2025
what prevented him in not retracting it and now
throwing onus on revenue to show the evidence
of disclosure is clearly not acceptable.”
8. It is contended that the assessee is entitled to raise
additional grounds for the first time before the Tribunal and
that the Tribunal is competent to examine such grounds. It is
further contended that, in the present case, the Tribunal failed
to exercise the discretion vested in it in accordance with law.
9. The Hon’ble Supreme Court, in National Thermal
Power Co. Ltd. v. Commissioner of Income Tax [(1998)
229 ITR 383], while dealing with the scope of the powers of
the Tribunal under Section 254 of the I.T. Act, has held as
under:
“4. The Tribunal has framed as many as five questions
while making a reference to us. Since the Tribunal has not
examined the additional grounds raised by the assessee on
merit, we do not propose to answer the questions relating
to the merit of those contentions. We reframe the question
which arises for our consideration in order to bring out the
point which requires determination more clearly. It is as
follows:
“Where on the facts found by the authorities
below a question of law arises (though not raised
before the authorities) which bears on the tax
liability of the assessee, whether the Tribunal has
jurisdiction to examine the same.”
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ITA No. 166 of 2025
Under Section 254 of the Income Tax Act the Appellate
Tribunal may, after giving both the parties to the appeal an
opportunity of being heard, pass such orders thereon as it
thinks fit. The power of the Tribunal in dealing with the
appeals is thus expressed in the widest possible terms. The
purpose of the assessment proceedings before the taxing
authorities is to assess correctly the tax liability of an
assessee in accordance with law. If, for example, as a
result of a judicial decision given while the appeal is
pending before the Tribunal, it is found that a non-taxable
item is taxed or a permissible deduction is denied, we do
not see any reason why the assessee should be prevented
from raising that question before the Tribunal for the first
time, so long as the relevant facts are on record in respect
of that item. We do not see any reason to restrict the
power of the Tribunal under Section 254 only to decide the
grounds which arise from the order of the Commissioner of
Income Tax (Appeals). Both the assessee as well as the
Department have a right to file an appeal/cross-objections
before the Tribunal. We fail to see why the Tribunal should
be prevented from considering questions of law arising in
assessment proceedings although not raised earlier.
5. In the case of Jute Corpn. of India Ltd. v. CIT [1991
Supp (2) SCC 744 : (1991) 187 ITR 688] this Court, while
dealing with the powers of the Appellate Assistant
Commissioner observed that an appellate authority has all
the powers which the original authority may have in
deciding the question before it subject to the restrictions or
limitations if any prescribed by the statutory provisions. In
the absence of any statutory provision the appellate
authority is vested with all the preliminary powers which
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ITA No. 166 of 2025
the subordinate authority may have in the matter. There is
no good reason to justify curtailment of the power of the
Appellate Assistant Commissioner in entertaining an
additional ground raised by the assessee in seeking
modification of the order of assessment passed by the
Income Tax Officer. This Court further observed that there
may be several factors justifying the raising of a new plea
in an appeal and each case has to be considered on its own
facts. The Appellate Assistant Commissioner must be
satisfied that the ground raised was bona fide and that the
same could not have been raised earlier for good reasons.
The Appellate Assistant Commissioner should exercise his
discretion in permitting or not permitting the assessee to
raise an additional ground in accordance with law and
reason. The same observations would apply to appeals
before the Tribunal also.
6. The view that the Tribunal is confined only to issues
arising out of the appeal before the Commissioner of
Income Tax (Appeals) takes too narrow a view of the
powers of the Appellate Tribunal [vide e.g. CIT v. Anand
Prasad [(1981) 128 ITR 388 (Del)] , CIT v. Karamchand
Premchand (P) Ltd. [(1969) 74 ITR 254 (Guj)]
and CIT v. Cellulose Products of India Ltd. [(1985) 151 ITR
499 (Guj)] ]. Undoubtedly, the Tribunal will have the
discretion to allow or not allow a new ground to be raised.
But where the Tribunal is only required to consider the
question of law arising from facts which are on record in
the assessment proceedings we fail to see why such a
question should not be allowed to be raised when it is
necessary to consider that question in order to correctly
assess the tax liability of an assessee.”
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ITA No. 166 of 2025
10. In the aforesaid judgment, it is held that the assessee is
entitled to raise additional grounds before the Tribunal for the
first time, provided the relevant facts relating to such grounds
are already available on record. It is further held that where the
Tribunal is required only to consider a question of law arising
from the facts already on record in the assessment
proceedings, it is competent to examine such a question.
11. In the present case, the assessee did not raise the plea of
non-taxability of the additional income either before the
Assessing Officer or before the CIT(A). The ground urged
before the CIT(A) was confined to the applicability of Section
115BBE of the I.T. Act and not to the taxability of the additional
income per se. For the first time before the Tribunal, the
assessee sought to contend that the additional income admitted
was not taxable.
11.1 In such circumstances, the Tribunal did not have the
benefit of foundational facts necessary to examine the said
contention. The issue sought to be raised is not a pure question
of law but involves mixed questions of fact and law. In the
absence of foundational facts on record, the Tribunal could not
have adjudicated upon such issues.
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11.2 Learned counsel for the Assessee has relied on the
following judgments;
(i) Commissioner of Income Tax vs. S. Khader
Khan Son, [2008] 300 ITR 157 (Madras)
(ii) Commissioner of Income Tax, Salem vs.
S. Khader Khan Son, [2013] 352 ITR 480
(SC)
(iii) Pullangode Rubber Produce Co. Ltd. v. State
of Kerala, [1973] 91 ITR 18 (SC)
(iv) The Principal Commissioner of Income Tax-
Central-3 vs. ARN Infrastructure Ltd., 2023-
TIOL-1098-HC-DEL-IT
(v) Commissioner of Income-tax-1 vs. Mantri
Share Brokers (P.) Ltd., [2018] 96
taxmann.com 279 (Rajasthan)
(vi) Kailash Ben Manharlal Chokshi vs.
Commissioner of Income-tax, [2010] 328 ITR
411 (Gujarat)
(vii) Paul Mathews & Sons vs. Commissioner of
Income Tax [2003] 129 Taxman 416 (Kerala)
(viii) Commissioner of Income Tax, Trichy vs. P.
Balasubramanian, [2013] 354 ITR 116
(Madras)
(ix) Public Accounts Committee (1977-78) –
Wealth Tax
(x) Commissioner of Income-tax vs. Shelly
Products, [2003] 129 Taxman 271 (SC)
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ITA No. 166 of 2025
(xi) Commissioner of Income-tax vs.
Mahalakshmi Textile Mills Ltd. [1967] 66 ITR
710 (SC)
(xii) Commissioner of Income-tax vs. H.R.
Basavaraj, [2012] 20 taxmann.com 515
(Karnataka)
(xiii) Commissioner of Income-tax vs. K.
Venkatesh Dutt, [2009] 319 ITR 331
(Karnataka)
(xiv) Commissioner of Income-tax, Madras vs. V.
Mr. P. Firm, Muar, [1965] 56 ITR 67 (SC)
(xv) Peerless General Finance and Investment Co.
Ltd. vs. Commissioner of Income Tax [2019]
416 ITR 1 (SC)
(xvi) National Co-operative Development
Corporation vs. Commissioner of Income Tax,
Delhi-V, [2020] 427 ITR 288 (SC)
(xvii)Commissioner of Income Tax vs. Sumitomo
Corporation [2016] 382 ITR 75 (Delhi)
12. Section 139 of the I.T. Act provides for the filing of a
return of income. In the event of any omission or error in the
return, sub-section (5) of Section 139 enables the assessee to
revise the return within the prescribed time. If the case of the
assessee is that the additional income was wrongly offered,
though otherwise not taxable, and that such offering was based
solely on an admission allegedly obtained under coercion during
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ITA No. 166 of 2025
the course of a survey, the I.T. Act provides adequate remedial
measures to address such a grievance.
13. In the present case, the so-called coercive admission has
not been retracted till date. It is difficult to accept the
contention that the alleged coercion exercised during the
survey on 27.09.2016 continued unabated till the filing of the
return of income on 20.11.2017. Even assuming such coercion,
nothing prevented the assessee from raising the said issue
before the Assessing Officer, which the assessee consciously
chose not to do.
14. Further, when the appeal was preferred before the
CIT(A), the challenge was confined only to the chargeability of
the additional income at the special rate of 60% under Section
115BBE of the Act and not to the taxability of the additional
income itself. If the admitted income is permitted to be
questioned for the first time at the stage of the Tribunal, it
would undermine the finality and sanctity attached to
admissions made in the return of income. When a return of
income is selected for scrutiny, the scope of scrutiny is
ordinarily confined to the verification and disallowance of claims
made by the assessee. A scrutiny assessment to examine the
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correctness of such claims cannot be extended or enlarged to
reduce the income voluntarily admitted by the assessee. The
Assessing Officer is not vested with the power to reduce the
admitted income. If any erroneous admission is made, the
statute provides a specific mechanism to correct such an error.
The assessee, however, has chosen not to avail the remedies
provided under the Act.
15. The reliance placed by learned counsel for the appellant-
assessee on the circulars is of no assistance. None of the
circulars mandates the reversion or withdrawal of income
voluntarily admitted by the assessee in a duly filed return of
income. The various judgments relied upon do not deal with a
situation akin to the present case. Those decisions were
rendered in the context of admissions made during the course
of a survey which were not corroborated, and it was held that
such unsubstantiated admissions could not, by themselves,
form the sole basis for assessment.
16. In the case on hand, as noticed above, the return of
income was filed nearly 14 months after the survey. The letter
dated 29.09.2016, volunteering to offer additional income, is
not the sole basis of the return of income; rather, the income
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was consciously declared in the return subsequently filed. It is
difficult to accept the contention that even after a lapse of 14
months from the date of survey, the assessee continued to be
under coercion or pressure while offering the additional income.
17. Further, the assessee had the statutory opportunity to
revise the return under Section 139(5) of the Income-tax Act,
which was not availed. Significantly, the letter dated
29.09.2016 was never retracted. Apart from this, as observed
hereinabove, no claim was made before the Assessing Officer
seeking exclusion of the additional income. Even in the appeal
before the CIT(A), no such contention was raised.
18. On the contrary, throughout the proceedings, the
assessee consciously canvassed that the additional income be
taxed at the normal rate instead of the special rate of 60%
under Section 115BBE of the Act. Such conduct clearly
demonstrates that the assessee entertained no doubt regarding
the taxability of the additional income voluntarily and
consciously offered in the return of income after due
verification.
19. We further find no justifiable grounds to support the
contention that the additional income offered was not based on
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evidence. In the case of admitted income, it is not for the
Assessing Officer to establish the evidentiary basis thereof. The
income is admitted by the assessee on the basis of self-
assessment, and such burden cannot be shifted to the
Assessing Officer.
20. The findings recorded by the Tribunal are based on the
facts of the case and constitute findings of fact. No perversity is
demonstrated so as to give rise to any substantial question of
law for consideration by this Court. Accordingly, the appeal
stands dismissed.
Sd/-
(S.G.PANDIT)
JUDGE
Sd/-
(K. V. ARAVIND)
JUDGE
MV
