Surrendered Income will be treated as Income from Medical Profession unless there is clear Evidence to the contrary: ITAT [Read Order]

The Chandigarh bench of the Income Tax Appellate Tribunal (ITAT) has ruled that surrendered income will be treated as income from the medical profession unless there is clear evidence to the contrary and upheld the order of the assessing officer (AO) who had accepted the explanation of the assessee, a doctor, that the surrendered income was from his medical profession, finding no evidence to suggest the income was from an unexplained source.

The Assessee, Bharat Vipan Garg, a doctor, surveyed by the Income Tax Department in September 2016, surrendered Rs.70 lakhs as unexplained income. The AO accepted his explanation and taxed it at the normal rate. However, the Principal Commissioner of Income Tax (PCIT) ruled that the AO had not made sufficient inquiries and that the income could have been from an unexplained source and should have been taxed at a higher rate.

The assessee argued that the surrendered income was from his medical profession, citing his steady income and willingness to surrender it during the survey. He argued that the AO had made sufficient inquiries and examined his bank records. The income was in cash and investments, common in the medical profession, and there was no evidence of an unexplained source.

The Revenue argued that the Assessee’s AO failed to verify the source of the surrendered income, citing insufficient inquiries and lack of documentary evidence. They also suggested the income could be from an unknown source, as it was in cash and investments, often used to conceal unaccounted income.

The Tribunal observed that the assessee surrendered income during the survey, indicating a willingness to disclose and pay taxes. The AO conducted inquiries and examined bank records, but found no evidence of unexplained income sources, indicating cash and investments in the medical profession.

The Two member bench comprising (Judicial Member) and Vikram Singh Yadav (Accountant Member) allowed the appeal of the assessee and quashed the revision order passed by the PCIT. The ITAT held that the PCIT had not given any cogent reasons for interfering with the order of the AO. The ITAT also held that there was no evidence to suggest that the surrendered income was from an unexplained source.

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