Raama Enterprises Vs ACIT (ITAT Ahmedabad Bench)
Survey Surrender Is Not Automatically “Black Income”: Ahmedabad ITAT Treats ₹1.99 Crore Disclosure as Business Receipts, Rejects Section 115BBE
Summary: The assessee, Raama Enterprises, was a partnership firm engaged in construction, real estate development & related contracting activities. A survey u/s 133A was conducted at its business premises on 16 September 2016. During the survey, the assessee disclosed ₹1,99,45,000 as additional income arising from its business receipts.
The assessee subsequently filed its return on 27 September 2017 declaring total income of ₹2,71,24,680, which included the entire survey disclosure. Thus, the amount surrendered during the survey was not omitted from the return. It was incorporated in the accounts & offered to tax as business income.
The AO accepted the total income returned by the assessee but changed the character of the disclosed amount. Instead of treating ₹1,99,45,000 as business receipts, the AO assessed it as unexplained cash credit u/s 68 & applied the special tax provisions of section 115BBE.
The CIT(A) confirmed the treatment adopted by the AO. The assessee therefore approached the Tribunal, disputing both invocation of section 68 & consequential taxation u/s 115BBE.
Issue before the Tribunal
The principal issue was whether income surrendered during a survey must automatically be treated as unexplained income u/s 68 merely because it had not been recorded in the books before the survey.
