Income surrendered by way of Account Receivables Not Taxable under Deeming Provisions of 69 r/w S. 115BBE: ITAT [Read Order]

The Chandigarh bench of Income Tax Appellate Tribunal (ITAT)has recently held that income surrendered by way of account receivable was not taxable under deeming provisions of Section 69 read with Section 115BBE of Income Tax Act 1961.

Section 115BBE of Income Tax Act 1961 deals with taxation of the income mentioned in section 68,69,69A,69B,69C , and 69D of.

Section 69 of Income Tax Act  provides that when the assessee did not mentioned the investment in the book of account maintained by the assessee ,and the assessee would not explain about the nature and source of the investment ,such income deemed to be consider the income of the assessee of such financial year.

A survey operation was conducted at business premises of M/s Shankar Agro Foods and M/s Bindal Agro Foods Pvt. Ltd. C/o Shankar Rice and  General Mills. Thereafter the assessee, Bal Krishan who is a partner/director in these concerns filed his return of income which was selected for scrutiny.Therefore the assessment completed

The assessment records were called for and examined by the Principle CIT .The Pr. CIT the states that  income returned includes an amount of Rs. 25,00,000/- being the undisclosed income, the tax applicability of the section 115BBE is to be applied for the tax computation purpose whereas in the returned income, the tax was calculated at normal rate which has resulted in short levy of tax and interest of Rs. 13,29,450/- and in view of the same, the assessment order passed by the AO under section 143(3) is apparently erroneous in so far as prejudicial to the interest of the Revenue. Thereafter the Pr .CIT set-aside the assessment order .Against this assessee filed appeal before the tribunal.

Ashwani Kumar,  counsel for the assessee submitted that surrendered income is income from business and therefore there is no question of applicability of Section 69 r.w.s 115BBE of the Income Tax Act as the AO has clearly held that the same is in the nature of business income and once such an opinion has been formed which is a plausible view, the same cannot be substituted for the view taken by the Pr. CIT.

Vivek Nangia,  counsel for the revenue submitted that assessee was neither carrying on nor had any business during the relevant year as proprietor. Further, the assessee has not maintained any books of account and offering such receivables as taxable income in the ITR under the head business income without any corroborating evidence after the survey triggers the primary requirement of explaining the source of such income under section 69/69A of the Income Tax  Act.

The two member bench of tribunal comprising Aakash Deep Jain, (Vice President) and Vikram Singh Yadav, (Accountant Member),  while allowing the appeal held that the income so surrendered by way of account receivables cannot be brought to tax under the deeming provisions u/s 69 r/w section 115BBEFurther  the order of the PCIT under section  263 Income Tax  Act was set-aside and that of the Assessing officer was sustained.

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