Business receipt or Unexplained Cash Receipt can be assessed u/s 69 A of Income Tax Act: ITAT [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) observed that Business receipt or unexplained cash receipt can be assessed u/S 69 A of Income Tax Act 1961. The assesse firm was engaged in building and developing a real estate project of residential flats, underwent a survey action under section 133 of the Income Tax Act,1961, on November 29, 2017. During the survey, certain incriminating loose papers were seized, revealing cash receipts from the sale of flats exceeding the registered values, which had not been recorded in the firm’s books.

The partner of the firm, Shri Raj Manohar Ahuja, acknowledged that these cash receipts constituted undisclosed and unaccounted income of the assessee firm, attributing the omission to a mistake by the accountant. In the income tax return, the assessee included the amount of Rs.2, 26,00,000 as business receipts and paid taxes accordingly. However, in the assessment order dated May 4, 2021, passed under section 143(3) of the Income Tax Act,1961, the Assessing Officer treated the said amount as unexplained under section 69A  of the Income Tax Act,1961, and imposed tax on it at a higher rate as per the provisions of section 115BBE  of the Income Tax Act,1961, Upon further appeal, the Learned Commissioner of Income Tax ( Appeals ) reversed the treatment of the undisclosed receipt under section 115BBE  of the Income Tax Act, 1961,

The counsel for the revenue Rajendra Chandekar, had argued that, according to under Section 69A of the Income Tax Act, 1961, the assessee was required to clarify the nature and source of the cash receipt. Although the nature was explained as a business receipt, the source, specifically, from which flat sale the amount was received, was not specified. The counsel for the revenue had contended that section 69A intended to tax both legs of the transaction, and as the assessee had failed to explain the source, the cash receipt should be assessed under section 69A of the Income Tax Act,1961.

The two member bench of the tribunal comprising Rahul Choudhari ( Judicial member ) and Om Prakash Kant ( Account member ) observed that to categorize those cash receipts as business receipts, the assessee was required to disclose the names and addresses of the parties from whom the cash was received, i.e., the source. Since the assessee had not provided this crucial information, section 69A of the Income Tax Act,1961, was deemed applicable. However, in the interest of justice, it was deemed appropriate to remand that issue to the Assessing Officer, directing the assessee to furnish the details of the names and addresses of the parties from whom the cash receipt of Rs. 2,26,00,000 had been received. In the result, the appeal filed by the Revenue was allowed

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