Rajiv Kumar Vs ITO (ITAT Chandigarh)
Assessee, proprietor of M/s Sunil Sweets, appealed against the order of CIT(A), NFAC, challenging the levy of tax at 60% u/s 115BBE on additional income of ₹35 lakhs offered during a survey action. The amount represented excess cash, excess stock, unaccounted advances, & investment in building disclosed during & after the survey. Revenue had treated it as deemed income u/s 69/69A–69D & taxed it at the higher rate prescribed u/s 115BBE.
Assessee argued that the disclosure was part of his regular business income arising from the sweets & confectionery trade & not income falling under the deeming provisions of sections 69 to 69D. The statement recorded during the survey & subsequent post-survey correspondence established that the disclosure represented business discrepancies & not unexplained investments or assets. Hence, the tax should have been levied at the normal business rate.
Tribunal, after examining the records, agreed with Assessee’s contention. It observed that the surrendered sum arose from business-related discrepancies & was rightly treated as business income. Since the case did not fall within the ambit of sections 69 to 69D, the provisions of section 115BBE were inapplicable. AO was directed to compute tax at normal business rates on the disclosed amount.
