2025 (4) TMI 793 - AT - Income Tax

Determine the head of additional income as surrendered by the assessee during survey proceedings - assessee is stated to be running a nursing home - additional income was offered to make up for excess cash construction expenditure and gifts as stated to be made by the assessee - AO rejected the same and assessed additional income u/s 69A which would be taxable at higher rates as specified u/s 115BBE - HELD THAT - From the computation of income it clearly emerges that the substantial source of income for the assessee is business income only. The statement as recorded from the assessee during survey has been placed. Upon perusal of replies to Q. Nos.12 13 and 14 it could be seen that the additional income has been offered over and above the normal business profits only but not out of unknown sources. The usage of additional income in our considered opinion is not a relevant factor but it is the source which is relevant factor to determine the head of income. On these facts the assessee s claim is to be accepted. AO is directed to accept the additional income as normal business income only. Assessee appeal allowed.

Summary

The ITAT Chandigarh adjudicated an appeal concerning the assessment year 2018-19, involving M/s Simrita Nursing Home. The appeal arose from an order by the CIT(A), NFAC, Delhi, which upheld the AO's decision to assess additional income under Section 69A of the Income Tax Act, taxable at higher rates under Section 115BBE, following a survey under Section 133A. The assessee had declared additional income of Rs. 25 Lacs as business income to account for excess cash, construction expenditure, and gifts, which the AO rejected.The tribunal noted a delay of 432 days in filing the appeal, which was condoned based on the principles from "Collector, Land Acquisition vs. Mst. Katiji & Ors." The tribunal emphasized that the source of income, rather than its usage, is crucial in determining the head of income. It found that the additional income was derived from business activities, not unknown sources, and directed the AO to treat it as normal business income. Consequently, the appeal was allowed, and the order was pronounced on April 4, 2025.