Survey disclosure treated as business income and taxed at the normal rate, not under the special unexplained-income provision.

Additional income disclosed during survey proceedings, where linked to discrepancies in accounts and shown to arise from the assessee's own business activities, was treated as business income. On that basis, it was held not to fall within the special taxation regime under section 115BBE for unexplained income. The amount was therefore directed to be taxed at the normal rate applicable to income from business or profession, rather than at the special rate. The principle stated is that survey-based disclosure will be taxed according to its true character when the record shows a business source.

---

---

Issues: Whether additional income offered during survey on account of discrepancies in accounts was liable to tax at the special rate under section 115BBE of the Income-tax Act, 1961, or at the normal rate applicable to business income.

Analysis: The additional sum was disclosed in the course of survey proceedings and through the post-survey offer as income arising from business activities. The material on record showed that the disclosure was linked to discrepancies found in the accounts and represented business income rather than income of the nature contemplated for special taxation under section 115BBE.

Conclusion: The addition was directed to be taxed at the normal rate applicable to income from business or profession, not at the rate prescribed under section 115BBE. This was in favour of the assessee.

Ratio Decidendi: Where income disclosed during survey is shown to be business income arising from the assessee's own business activities, it is taxable at the normal rate and not under the special rate provision for unexplained income.

---