Income on account of undisclosed sundry debtors surrendered to be considered as deemed income u/s 69

DCIT Vs Khurana Rolling Mills (P) Ltd (ITAT Chandigarh)

Conclusion: Surrender offered by assessee on account of undisclosed sundry debtors was purely related to business carried out by assessee, therefore, same had to be assessed as deemed income under sections 69, 69A/B/C and assessee was entitled to claim the benefit of set off of losses both current and brought forward in accordance with law against the income assessed.

Held: Survey u/s 133A was conducted on the premise of assessee wherein it had surrendered a certain amount on account of some paper slips found during the course of survey. AO however treated the surrendered income as deemed income u/s 69 & 69B and no set off of business loss/depreciation loss or any other expenses was consequently allowed against the same. It was held there was no evidence to show that surrendered income represented any undisclosed income/investment/expenditure, the source of which had not been disclosed by assessee, therefore,  it could not be regarded as deemed income under sections 68, 69, 69A, 69B and 69C. Moreover, surrender offered by assessee on account of undisclosed sundry debtors was purely related to business carried out by assessee, therefore, same had to be assessed as business income and assessee was entitled to claim the benefit of set off of losses both current and brought forward in accordance with law against the income assessed.

FULL TEXT OF THE ITAT JUDGEMENT

Both the above appeals relating to different assessees have been preferred by the Revenue against separate orders of the Commissioner of Income Tax (Appeals)-I, Ludhiana [(in short ‘CIT(A)’] dated 31.3.2016 and 19.8.2016 respectively, passed u/s 250(6) of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’), relating to assessment year 2012-13.

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