Search and Survey Surrender During Search or Survey Whether Attracts Deeming Provision Under Section 69 or 69A Automatically

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The Tax Publishers Income Tax--Search and Survey Surrender During Search or Survey Whether Attracts Deeming Provision Under Section 69 or 69A Automatically CA. Nisha Bhandari During search and survey proceedings when certain assets or other incriminating material is found the assessee used to surrender the impugned amount as income. Now a question may arise as to whether the fact that search or survey proceedings have been initiated the assessing officer is empowered to invoke deeming provisions under Section 69 or under Section 69A. The learned author analyses the power of the assessing officer to invoke deeming provisions in case of search and survey proceedings. 1. Applicability of deeming provisions in case of income surrendered during survey The provisions contained in Sections 68 to 69D are deeming provisions and come into play when assessee fails to explain the nature and sources of any item of cash, asset, entry, etc. Before invoking provisions of Sections 69, 69A, 69B and 69C two conditions are required to be satisfied. These are (i) investment or expenditure as the case may be, are not recorded in the books of account of assessee and (ii) the nature and source of acquisition of assets or expenditure are not explained or not explained satisfactorily. The onus is on the assessee to establish the source of the surrendered income and in case of failure, it is to be categorized as deemed income under Section 69/69A/69B/69C of the Act. 2. Deeming provision not to be invoked merely on basis of surrender of income during survey In case of Gandhi Ram (ITA No. 121/CHD/2021 dt. 4-8-2022) : 2022 TaxPub(DT) 5263 (Chd-Trib), it was held that it is like laying a general rule which is beyond the mandate of law that wherever there is a survey and some income is detected or surrendered by the assessee, the deeming provisions are attracted by default and by virtue of the same, provisions of Section 115BBE are attracted and the relevant findings read as under: SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Income Tax--Search and Survey

Surrender During Search or Survey Whether Attracts Deeming Provision Under Section 69 or 69A Automatically

CA. Nisha Bhandari

During search and survey proceedings when certain assets or other incriminating material is found the assessee used to surrender the impugned amount as income. Now a question may arise as to whether the fact that search or survey proceedings have been initiated the assessing officer is empowered to invoke deeming provisions under Section 69 or under Section 69A. The learned author analyses the power of the assessing officer to invoke deeming provisions in case of search and survey proceedings.

1. Applicability of deeming provisions in case of income surrendered during survey

The provisions contained in Sections 68 to 69D are deeming provisions and come into play when assessee fails to explain the nature and sources of any item of cash, asset, entry, etc.

Before invoking provisions of Sections 69, 69A, 69B and 69C two conditions are required to be satisfied. These are (i) investment or expenditure as the case may be, are not recorded in the books of account of assessee and (ii) the nature and source of acquisition of assets or expenditure are not explained or not explained satisfactorily.

The onus is on the assessee to establish the source of the surrendered income and in case of failure, it is to be categorized as deemed income under Section 69/69A/69B/69C of the Act.

2. Deeming provision not to be invoked merely on basis of surrender of income during survey

In case of Gandhi Ram (ITA No. 121/CHD/2021 dt. 4-8-2022) : 2022 TaxPub(DT) 5263 (Chd-Trib), it was held that it is like laying a general rule which is beyond the mandate of law that wherever there is a survey and some income is detected or surrendered by the assessee, the deeming provisions are attracted by default and by virtue of the same, provisions of Section 115BBE are attracted and the relevant findings read as under: