TMI Blog2023 (3) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... ture 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness income. 2. Briefly the facts of the case are that a survey action under section 133A was conducted at the business premises of the assessee on 15/05/2017. Subsequently, the assessee filed his return of income declaring total income of Rs. 33,68,034/- which included an amount of Rs. 20,00,000/- surrendered during the course of survey. Thereafter, notices under section 143(2) and 142(1) were issued and necessary information was called for and examined by the AO. As per the AO, the income so surrendered is not taxable under the head business income and the same has to be taxed under section 69 r.w.s 115BBE of the Act. 3. Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A) who has sustained the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee, which depicts that surrendered income is certainly related to the business of the assessee which is in addition to the normal business income and declared in the return of income. The said surrendered sum of Rs. 20,00,000/- was duly debited to the receivables account for the year under consideration and credited to the Profit Loss Account. The books of accounts of the assessee are duly audited by a Chartered Accountant. The copy of Audit Report in Form 3CD along with the copy of Profit Loss Account evidencing the sum credited is being filed separately. The assessee filed its Income Tax Return for the year under consideration i.e., AY 2018-19 on 27.10.2018 at an income of Rs. 33,68,034/- which included the sum of 20,00,000/- as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the income surrendered by the assessee on account of receivables, amounting to Rs. 20 Lacs, be assessed under the head Business Income and not be subject to tax under the provisions of section 69 r/w section 115BBE of the Act. 6. Per contra, the Ld. DR has relied on the order of the lower authorities. 7. Heard the rival contentions and purused the material available on record. The limited issue under consideration relates to nature of income surrendered during the course of survey and the explanation so offered by the assessee. In this regard, reference is drawn to the surrender letter dated 15/05/2017 and the contents thereof read as under: The business premises of Sh. Rakesh Kumar Kaura Prop. M/s K. K. Minerals, Ludhiana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. We find that the matter is squarely covered by the decision of the Coordinate Chandigarh Benches in case of Famina Knit Fab vs. ACIT (Supra) wherein it was held as under: 19. In the facts of the case in ITA No. 408/Chd/2018, the income surrendered was on account of unaccounted receivables of the business of the assessee amounting to Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness for RY. 2012-13 relevant to Asstt. Year 2013-14 subject to no penalty and prosecution under the I.T. Act, 1961. Since the company is incurring losses in current FY. 2012-13, the surrendered income will be adjusted against these losses. [Extracted from the impugned assessment order; pages 5 6]. 20. Clearly, it is evident from the above that the surrender was on account of debtors/receivables relating to the business of the assessee only. The Revenue has accepted the surrender as such, as being on account of receivables. It follows that the debtors were generated from the sales made by the assessee during the course of carrying on the business of the assessee, which was not recorded in the books of the assessee. Though the said ..... X X X X Extracts X X X X X X X X Extracts X X X X
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