2023 (3) TMI 283 - AT - Income Tax

Nature of income surrendered during the course of survey - Addition u/s 69 r/w section 115BBE or business income - income surrendered by the assessee on account of receivables - HELD THAT:- The nature of surrendered income was therefore unrealized sundry receivables generated out of out of book sales undertaken by the assessee. The factum thereof has been accepted by the Survey team and where the AO dispute the nature of such surrender or the findings of department’s own survey team, the AO has to lead positive evidence to arrive at any contrary finding.

Nothing has been brought on record in this regard. Therefore, the picture which is clearly emerging from the material available on record is the nature of surrender is amount of unrealized receivables from the sales undertaken by the assessee as part of his regular business dealings and which have not been recorded in the books of accounts. Where the assessee has subsequently recorded the same in his books of accounts as part of business income, it cannot be said that the said action on part of the assessee is not in accordance with accepted accounting methodology and the nature of such income is other than business income.

As relying on M/S FAMINA KNIT FABS AND M/S MEHTA ENGINEERS VERSUS THE A.C.I.T., CIRCLE-3 [2019 (5) TMI 8 - ITAT CHANDIGARH] the income so surrendered by way of account receivables cannot be brought to tax under the deeming provisions u/s 69 r/w section 115BBE and has been rightly offered by the assessee under the head “business income”. In the result, the matter is decided in favour of the assessee.