2020 (12) TMI 1382 - AT - Income Tax

Categorization of income Surrendered during survey - Excess cash surrendered at the time of survey outside the business income - Addition u/s 115BBE - assessee argued that cash discrepancies are business receipts - HELD THAT - Upon due consideration we find that the surrender was made by the assessee during survey proceedings at business premises. During the survey action discrepancies in stock as well as cash were found by the authorities and to make up the same the assessee made a surrender of the same and duly declared the same in his return of income. It is to be noted that the cash discrepancies were found at the business premises. The assessee does not have any other source of income. Therefore the cash discrepancies would be nothing but the business receipts for the assessee. It could not be said that the said income arose from undisclosed sources since the source of the same was to be accepted as business receipts and nothing else. CIT(A) in our considered opinion was not correct in upholding the action of Ld. AO in taxing the same as per Section 115BBE. We hold that the said receipts would constitute business income to be taxed as per slab rates. Assessee appeal allowed.

Summary

Issues:
1. Invocation of Section 115BBE against surrendered income of Rs. 5 Lacs.

Analysis:
The appeal before the Appellate Tribunal ITAT JODHPUR contested the order of the Commissioner of Income-Tax(Appeals) regarding the invocation of Section 115BBE against the surrendered income of Rs. 5 Lacs for Assessment Year 2014-15. The grounds of appeal included disagreement with the upholding of the provision of Section 115BBE and the treatment of excess cash surrendered outside business income. The Tribunal carefully considered the submissions and material on record, including judicial precedents.

The assessee, a resident individual deriving business income from a proprietorship concern, surrendered income during survey proceedings, including Rs. 5 Lacs on account of excess cash. The Assessing Officer (AO) taxed this amount at 30% under Section 115BBE. Upon appeal, the Commissioner concurred that the excess stock would not fall under Section 69 but upheld the taxation of the excess cash at 30%. The Tribunal noted that the cash discrepancies were found at the business premises, and since the assessee had no other source of income, the cash receipts were considered business receipts, not undisclosed income. Therefore, the Tribunal held that the excess cash constituted business income to be taxed at slab rates, not under Section 115BBE.

In conclusion, the Tribunal allowed the appeal, holding that the excess cash surrendered during survey proceedings at the business premises should be taxed as business income at slab rates, not under Section 115BBE. The order was pronounced in accordance with the Income Tax (Appellate Tribunal) Rules, 1963.