Income surrendered during survey proceedings – Whether Business income or income form undisclosed sources

Business income—Vis-a-vis income form undisclosed sources—Income surrendered during survey proceedings—Onus is on the assessee to establish the source of the surrendered income failing which it is to be categorized as deemed income under s. 69/69A/69B/69C—In this case, the income surrendered was on account of unaccounted receivables of the business of the assessee—Revenue has accepted the surrender as such, as being on account of receivables—It follows that the debtors were generated from the sales made by the assessee during the course of carrying on the business of the assessee, which was not recorded in the books of the assessee—Though the said income was not recorded in the books of the assessee the source of the same stood duly explained by the assessee as being from the business of the assessee—Even otherwise, no other source of income of the assessee is disclosed by the assessee or unearthed by the Revenue—Therefore, there is no question of treating it as deemed income from undisclosed sources under ss. 69, 69A, 69B or 69C and the same is in the nature of business income of the assessee—Consequently, benefit of set off of losses, both current and brought forward, is allowable to the assessee in accordance with law—Plea of the Revenue that set off of losses is not to be allowed in view of s. 115BBE is rejected Income from undisclosed sources—Vis-a-vis business income—Income surrendered on account of undisclosed investment in property and to cover miscellaneous discrepancies—As far as the surrender made on account of investment in Kothi is concerned neither is the same disclosed in the books of the assessee nor source of the same disclosed—Therefore, the same is to be assessed as deemed income under s. 69—Same applies to the surrender of amount to cover miscellaneous discrepancies in loose paper—Neither the nature of the discrepancies, nor any source relating to the same has been disclosed—Therefore, the same is also to be assessed as deemed income under ss. 69, 69A, 69B and 69C—In the relevant asst. yr. 2014-15, same is to be subjected to tax as per the provisions of s. 115BBE as it stood prior to the amendment by finance Act, 2016 Business income—Vis-a-vis income from undisclosed sources—Amounts surrendered on account of sundry creditors and trade advances and profit on unrecorded sales—Surrender of income made on account of sundry creditors and advances received from customers and income on account of gross profit on sale out of the books, clearly are in relation to the business carried on by the assessee and are thus in the nature of business income—Therefore, set off of business losses, both current and brought forward are to be allowed as per the provisions of law FAMINA KNIT FABS vs. ASSISTANT COMMISSIONER OF INCOME TAX (2019) 33 NYPTTJ 192 (Chd)




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Income surrendered during survey proceedings – Whether Business income or income form undisclosed sources

Business income Vis-a-vis income form undisclosed sources Income surrendered during survey proceedings Onus is on the assessee to establish the source of the surrendered income failing which it is to be categorized as deemed income under s. 69/69A/69B/69C In this case, the income surrendered was on account of unaccounted receivables of the business of the assessee Revenue has accepted the surrender as such, as being on account of receivables It follows that the debtors were generated from the sales made by the assessee during the course of carrying on the business of the assessee, which was not recorded in the books of the assessee Though the said income was not recorded in the books of the assessee the source of the same stood duly explained by the assessee as being from the business of the assessee Even otherwise, no other source of income of the assessee is disclosed by the assessee or unearthed by the Revenue Therefore, there is no question of treating it as deemed income from undisclosed sources under ss. 69, 69A, 69B or 69C and the same is in the nature of business income of the assessee Consequently, benefit of set off of losses, both current and brought forward, is allowable to the assessee in accordance with law Plea of the Revenue that set off of losses is not to be allowed in view of s. 115BBE is rejected

Income from undisclosed sources Vis-a-vis business income Income surrendered on account of undisclosed investment in property and to cover miscellaneous discrepancies As far as the surrender made on account of investment in Kothi is concerned neither is the same disclosed in the books of the assessee nor source of the same disclosed Therefore, the same is to be assessed as deemed income under s. 69 Same applies to the surrender of amount to cover miscellaneous discrepancies in loose paper Neither the nature of the discrepancies, nor any source relating to the same has been disclosed Therefore, the same is also to be assessed as deemed income under ss. 69, 69A, 69B and 69C In the relevant asst. yr. 2014-15, same is to be subjected to tax as per the provisions of s. 115BBE as it stood prior to the amendment by finance Act, 2016

Business income Vis-a-vis income from undisclosed sources Amounts surrendered on account of sundry creditors and trade advances and profit on unrecorded salesSurrender of income made on account of sundry creditors and advances received from customers and income on account of gross profit on sale out of the books, clearly are in relation to the business carried on by the assessee and are thus in the nature of business income Therefore, set off of business losses, both current and brought forward are to be allowed as per the provisions of law

FAMINA KNIT FABS vs. ASSISTANT COMMISSIONER OF INCOME TAX

(2019) 33 NYPTTJ 192 (Chd)

 




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