DCIT Vs Akriti Sales Pvt. Ltd. (ITAT Kolkata)
Survey Disclosure Treated as Business Income – No Scope for s.68 Addition; Entire Exercise Tax-Neutral
In this case, survey u/s 133A on 30.10.2014 revealed cash advances of ₹4,21,39,900 received by Assessee (a real-estate developer) towards sale of flats & cash expenses of ₹1,35,40,555 incurred for construction outside the books. Assessee disclosed entire amount as income: ₹2,85,99,365 was credited in books (net of cash expenses) & balance ₹1,35,40,535 was added in computation. AO nevertheless treated full ₹4,21,39,900 as unexplained cash credit u/s 68 r/w s.115BBE. CIT(A) partly accepted Assessee’s stand by holding only ₹2,85,99,365 as business income & applying s.115BBE to the balance.
Tribunal noted that survey papers clearly established that cash receipts were advances for sale of flats—accepted by AO himself. Once the source is established as business receipts, s.68 has no application because there is no cash credit in books; the income arises from business activity evidenced during survey, attracting presumption u/s 292C. Tribunal held that entire ₹4,21,39,900 must be assessed only as business income, irrespective of whether part of it appeared in turnover. Assessee had in fact offered more than required by not claiming corresponding cash expenses. Also noted: tax on business income & tax u/s 115BBE for LLP for this AY was same (30%), making the exercise tax-neutral.
