Anil Prabahkar Korgaonkar (HUF) Vs ACIT (ITAT Pune)
In a recent decision, the Income Tax Appellate Tribunal (ITAT) Pune, in the case of Anil Prabahkar Korgaonkar (HUF) vs. ACIT, Central Circle, Kolhapur (ITA No. 395/PUN/2023), ruled in favor of the assessee regarding the applicability of Section 115BBE of the Income Tax Act, 1961.
Case Background
The assessee, Anil Prabahkar Korgaonkar (HUF), operates a hotel business under the name Hotel Hill Top. A survey was conducted on October 22, 2019, where certain incriminating documents were found, revealing unaccounted cash receipts amounting to ₹13,46,586/-. The Karta of the HUF, Shri Ashish Korgaonkar, accepted these as business receipts and included the amount in the Profit & Loss account, offering it for taxation.
Assessment and Appeal
The Assessing Officer (AO) assessed the income under Section 69 (unexplained income) and applied the higher tax rate under Section 115BBE. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO’s decision, relying on the Madras High Court ruling in SVS Oils Mills vs. ACIT.
The assessee appealed before the ITAT, arguing that the income was part of regular business receipts and had already been included in taxable business income.
ITAT Ruling
The Tribunal observed that:
- The income was declared as business income and credited to the Profit & Loss account.
- The Assessing Officer himself assessed it under “Income from Business.”
- Since the source of income was explained (hotel business), it could not be classified as unexplained income under Section 69.
- Section 115BBE, which applies to unexplained income, was therefore not applicable.
Accordingly, the ITAT allowed the appeal and ruled that the higher tax rate under Section 115BBE could not be imposed.
