Doctor's surrendered income taxed as business income, not unexplained cash credit under section 68 and 115BBE

The ITAT Delhi allowed the assessee's appeal against CIT's revision under section 263. The CIT contended that Rs 1 crore income surrendered during survey should be taxed under section 68 read with section 115BBE at 60% rate rather than as business income. The tribunal held that since the assessee was a doctor and the additional income was offered as business income from her profession, with no evidence suggesting otherwise, the AO correctly assessed it as business income. The income did not constitute unexplained cash credit under section 68, making section 115BBE inapplicable. The CIT's revision jurisdiction was improperly invoked.

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Issues Involved:
The judgment involves the issue of whether the Principal Commissioner of Income Tax was justified in invoking revision jurisdiction u/s 263 of the Income-tax Act, 1961 to tax the income surrendered by the assessee during a survey as unexplained cash credit u/s 68 read with section 115BBE of the Act.

Details of the Judgment:
The appeals in ITA No.34/DDN/2022 and ITA No. 33/DDN/2022 for AY 2017-18 were taken up together as they involved an identical issue. The only issue to be decided was whether the income surrendered by the assessee during a survey should be taxed u/s 68 read with section 115BBE of the Act. The assessee, a doctor by profession, disclosed an additional income of Rs 1 crore during a survey and offered it as professional income in the return of income. The Assessing Officer accepted this income as business income u/s 143(3) of the Act. However, the Principal Commissioner sought to revise this assessment, contending that the income should be taxed at a higher rate of 60%.

The Tribunal noted that the surrendered income was earned by the assessee prior to the amendment prescribing the higher tax rate of 60%. It was argued that the income disclosed during the survey cannot be taxed at the increased rate as it was earned before the amendment. The Tribunal referred to a similar case where it was held that income surrendered before the amendment should be taxed at the pre-amended rate of 30%. As the additional income was offered as business income and duly assessed as such, it did not fall under unexplained cash credit u/s 68. The Tribunal also cited a case where the High Court upheld the Tribunal's decision that income disclosed as business income does not attract section 115BBE of the Act.

Based on the above reasoning and judicial precedents, the Tribunal held that the Assessing Officer's order was not erroneous, and the revision jurisdiction u/s 263 was unsustainable. Therefore, the grounds raised by the assessee were allowed, and both appeals were allowed in favor of the assessee.

The decision for one party was held to apply to the other party with identical facts but differing figures. Both appeals were allowed, and the order was pronounced in open court on 09/05/2024.

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