ACIT Vs Devender Rao Gourkanti (ITAT Hyderabad)
Provisions of section 115BBE not attracted when source of income proved
ITAT Hyderabad held that the provisions of section 115BBE of the Income Tax Act are applicable only when the source of income is not disclosed or source of expenditure is not disclosed. Here, as it is proved that unexplained income earned in from real-estate business, provision of section 115BBE.
Facts- The assessee is an individual and partner in M/s. Yashoda Heathcare Services Pvt.Ltd and derives partner’s remuneration and interest on capital. He filed his original return of income declaring total income of Rs.8,56,33,070. A search and seizure operation u/s. 132 of the I.T. Act was conducted in the case of Yashoda Group during which the case of the assessee was also covered. In response to notice u/s. 153A of the I.T. Act, the assessee filed his return of income admitting additional income of Rs.5,07,48,000/- under the head “business & profession”.
During the course of search proceedings, it was noticed that a sum of Rs. 5,08,98,100/- are cash payments pertaining to various concerns and individuals of the Financial Year 2020-2021.
When the assessee was confronted amount of Rs. 5,00,00,000/- was admitted as additional undisclosed income on account of seized evidences gathered during the course of search and seizure proceedings.
However, AO rejected the arguments advanced by the assessee and held that the assessee could not substantiate his claim that the sources for the expenses is from real-estate business. He, therefore, treated the amount of Rs.5,08,98,100/-as unexplained expenditure u/s. 69C of the I.T.Act and brought to tax the same as per the provisions of section 115BBE.
Conclusion- Once the assessee has proved the initial burden that he is engaged into real-estate business and has earned income from such real-estate, therefore, without making any further enquiry to disprove the various evidences filed before him, the AO could not have treated the amount of Rs. 5,08,98,100/- as unexplained expenditure. In our opinion, the provisions of section 115BBE are applicable when the source of income is not disclosed or source of expenditure is not disclosed.
Held that provisions of section 69C r.w.s. 115BBE are not applicable to the facts of the present case. In view of the above discussion and in view of the detailed reasoning given by the ld. CIT(A) on this issue, we do not find any infirmity in his order directing the AO to tax the amount of Rs. 5,08,98,100/- under normal provisions of the Act. Accordingly, the same is upheld and the grounds raised by the revenue are dismissed.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal filed by the assessee is directed against the order dated 16.06.2022 of the Learned Commissioner of Income Tax (Appeals)-12, Hyderabad relating to AY 2021-22.
2. Facts of the case, in brief, are that the assessee is an individual and partner in M/s. Yashoda Helathcare Services Pvt.Ltd and derives partner’s remuneration and interest on capital. He filed his original return of income on 28.12.2021 declaring total income of Rs.8,56,33,070/- A search and seizure operation u/s. 132 of the I.T. Act was conducted in the case of Yashoda Group on 22.12.2020, during which the case of the assessee was also covered. In response to notice u/s. 153A of the I.T. Act, the assessee filed his return of income admitting additional income of Rs.5,07,48,000/- under the head “business & profession”
3. During the course of assessment proceedings, the AO observed that during the course of search proceedings, certain loose sheets were seized vide Annexure YSH/PDR/RES/01. Page number 38 of the Annexure YSH/PDR/RES/01 is a voucher which represents an amount of Rs.1,50,00,000/- paid to Dr. G. Abhinav in cash. Page number 37 represents the details of sale of land at Malakpet, Hyderabad wherein an amount of Rs.2,58,98,100/- was received in cash. Further a loose sheet numbered 31A represents Rs. 1,00,00,000/- in the name of Shri G. Devender Rao. On perusal of the above it was noticed that, a sum of Rs.5,08,98,100/-(Rs.1,50,00,000 + 2,58,98,100 + 1,00,00,000) are cash payments pertaining to various concerns and individuals of the group for the current financial year 2020-21, which are related to Shri G. Devender Rao.
3.1 The AO further noted that when the assessee Shri Devender Rao Gorukanti was confronted with the above details of cash receipts/payments pertaining to current financial year 2020-21, he, in his sworn statement u/s 132(4), Primafacie stated that these payments and receipts are yet to be accounted in the books of accounts and accordingly admitted an amount of Rs. 5,00,00,000/- as his additional undisclosed income for the current year i.e. FY 2020-21 on account of seized evidences gathered during the Course of search and seizure proceedings.
4. The AO therefore, asked the assessee to support his claim of receipt of Rs.5,07,48,000/- from business. In response to the same, the assessee furnished a detailed note in respect of the above said issue which the AO has reproduced in the assessment order and which reads as under:-
“Thus the receipts mentioned above have been reflected in the regular books. The fact that the receipts form part of the regular income is clear from the following facts.
