2023 (12) TMI 1325 - AT - Income Tax

Addition u/s 69A r.w.s.115BBE - excess cash found from the business premises of the assessee during the survey - HELD THAT - During statement recorded in survey the assessee clearly declared that the assessee had not made any investment in immovable property within 6 years and the entire amount of the excess cash was generated from undeclared sale of medicine. So, the source of excess cash is from business. Therefore, we are setting aside the impugned appeal order. Accordingly, the application of section 115BBE is bad in law. Hence, the assessee will be assessed related to excess cash under normal rate of tax not U/s 115BBE of the Act. Appeal of assessee allowed.

Summary

Issues involved:
The appeal against the order of the ld. Commissioner of Income-tax (Appeals)-5, Ludhiana, [(in brevity 'the CIT(A)'] order passed u/s 250(6) of the Income-tax Act, 1961 (in brevity the Act) for assessment year 2018-19. The impugned order was emanated from the order of the ld. Asstt. Commissioner of Income Tax, Central Circle, Amritsar (in brevity the AO) order passed u/s 143(3) of the Act.

Grounds of Appeal:
The assessee challenged the addition made under section 69A of the Income Tax Act 1961 for excess cash not directly related to the business. The assessee contended that the excess cash represented sales of medicine in the normal course of business not recorded in the books. Additionally, the assessee disputed the application of Section 115BBE, arguing that the excess cash was from legitimate business activities. The appellant sought leave to amend the grounds of appeal at a later stage.

Case Summary:
The assessee, a trader of medicines, underwent a survey where excess cash was found. The assessee declared a portion of the cash as sales from medicine not recorded in the books. The tax authorities added this amount to the total income u/s 69A and levied tax u/s 115BBE. The ld. CIT(A) upheld this decision, leading to the appeal. The ld. AR argued that the cash was generated from legitimate business activities and relied on legal precedents supporting this argument.

Decision:
The ITAT Amritsar allowed the appeal, setting aside the application of section 115BBE on the excess cash. The tribunal noted that the source of the excess cash was from the sale of medicine in the normal course of business, as declared by the assessee. Relying on legal principles and previous judgments, the tribunal concluded that the excess cash was business income and should be taxed at the normal rate, not under section 115BBE. The appeal was allowed, and the excess cash was to be assessed under the normal rate of tax, not under section 115BBE of the Act.