The Income Tax Appellate Tribunal (ITAT), Delhi bench, held that provisions of Section 115BBE would not be applied to surrendered income, which could not be treated as unexplained money under Section 69A of the Income Tax Act, 1961.
Assessee, Tapesh Tyagi, is a resident individual. A search and seizure operation under Section 132 of the Act was carried out on the assessee on 11.08.2016. In the course of the operation, a loose paper/document was found from the wallet of the assessee, wherein the amount of Rs.30.20 crores was mentioned against the noting “com trade.”
During the proceedings, the assessee stated that the figures mentioned represent profit from offline commodity trading. Accordingly, he surrendered the amount as income in the assessment year 2017-18 and followed it up in the return of income filed for the assessment year under dispute, also paying the taxes.
In the course of assessment proceedings, the Assessing Officer observed that the assessee calculated his tax liability on the surrendered income by applying the normal rate. According to the Assessing Officer, the surrendered income is in the nature of unexplained money under Section 69A of the Act. Subsequently, an order under Section 154 of the Act was passed, applying the rate of tax as prescribed under Section 115BBE.
Aggrieved by the order, the assessee filed an appeal before the CIT(A), who allowed the appeal. Thereafter, the revenue filed a second appeal before the Tribunal.
During the proceedings, Sapna Bhatia, the assessee’s representative, supported the order of CIT(A) and submitted that income subjected to tax under Section 115BBE cannot be treated as income under Section 69A. The tribunal observed that the assessee surrendered the amount as income and offered it in the return of income, explaining the source as profit derived from “commodity trade,” which is business income.
Ajay Wadhwa, Counsel for Revenue, supported the decision of the Assessing Officer. In the facts of the present appeal, there is nothing on record to suggest that the assessee’s explanation regarding the source of the income offered has been doubted or disputed.
If the explanation offered by the assessee regarding the source of money is satisfactory, it cannot be treated as unexplained money under Section 69A. Therefore, the income offered by the assessee cannot be treated as unexplained money under Section 69A, and Section 115BBE would not be applicable.
After reviewing the facts and records, the two-member bench of Dr. B.R.R. Kumar (Accountant member) and Saktijit Dey (Vice-President) held that provisions of Section 115BBE would not be applied to surrendered income not treated as unexplained money under Section 69A. Therefore, the bench dismissed the appeal of the revenue.
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