Additional Income not from any Unexplained Source should be Taxable at Normal Tax Rates as Applicable to Business Income: ITAT [Read Order]

The Chandigarh bench of the Income Tax Appellate Tribunal ( ITAT) held that the additional income which was not derived from the unexplained sources should be taxable at normal tax rates as same as that of the business income. 

Gurdeep Singh, the appellant assessee appealed against the order passed by the Commissioner of Income Tax (Appeals) for confirming the addition made by the assessing officer to the surrendered amount as unexplained income of the assessee and invoked the provisions of Section 115BBE of the Income Tax Act,1961 and thereby taxed the income at a higher rate of 60%. 

Ashwani Kumar, the counsel for the assessee contended that the assessee had surrendered the amount on account of discrepancies confronted by the survey team and submitted that then, he was unable to explain the discrepancies and surrendered the sum as additional business income. 

It was also submitted that the survey team did not doubt the nature and source of the additional income surrendered by the assessee and did not have any other income except the business income. 

Amanpreet Kaur, the counsel for the revenue relied on the decisions made by the lower authorities. It was also contended that there was excess stock found as compared to the books of account and there were loose slips showing receivables and even excess cash was found during the assessment proceedings. Thus the addition made by the assessing officer was as per the law. 

The bench observed that the additional income surrendered by the assessee was not from any other unexplained source and same was out-of-business proceeds of the assessee, thus the bench does not find justification on the part of the lower authorities in applying the provisions of Section 115BBE of the Income Tax Act to the surrendered business income of the assessee. 

A single-member bench comprising Sanjay Garg (Judicial) directed the assessing officer to re-adjudicate the matter for the calculation of tax amount on the surrendered income of the assessee at normal rates as applicable to the business income while allowing the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

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