Case Law Details
ACIT Vs Mangal & Mangal (ITAT Chennai)
ITAT Chennai held that once the nature and source of credit found in the books of accounts is linked to business, then any income generated out of such business activity is assessable under the head income from business and profession alone, but not under the provisions of section 68 of the Income Tax Act.
Facts- M/s. Mangal & Mangal is engaged in the business of trading in gold jewellery, silvery ornaments, electronic and home appliances and metal wares. The case was selected for scrutiny under CASS to verify the claim of short term capital gains declared u/s. 111A of the Income-tax Act, 1961 and expenses debited into profit and loss account for earning exempt income as per schedule BP of ITR is significantly lower when compared to investment made to earn exempt income.
During the course of assessment proceedings, AO came to the conclusion that the assessee has suppressed turnover and whatever unaccounted income earned from said turnover has been brought into books as income from discounts and incentives. Therefore, income declared under the head discounts and incentives, amounting to Rs. 50 crores has been considered as unexplained cash credits u/s. 68 of the Act and brought to tax u/s. 115BBE of the Act.
CIT(A) directed AO to compute tax in respect of income declared under the head discounts and incentives without invoking provisions of section 115BBE of the Act. Being aggrieved, revenue has preferred the present appeal.
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