Presumptive taxation and disclosed receipts: interest income already accounted for could not be added as escaped income.

Interest income disclosed in the assessee's computation and included in gross receipts under the presumptive taxation scheme could not be treated as escaped income when the same figure also appeared in the trading and profit and loss accounts. In the absence of rejection of the books of account under the relevant statutory provision, the tax authority had no basis to isolate the interest amount as undisclosed income. On these facts, the addition was unsustainable and the assessee's substantive grounds were accepted.

---

---

Issues: Whether the addition of interest income as escaped income was justified when the assessee had included the amount in its gross receipts and declared income under the presumptive scheme, and whether the books of account could be disregarded without rejection under the relevant provisions.

Analysis: The assessee's return for the year was filed under the presumptive taxation scheme and the record showed that the disputed interest amount formed part of the total receipts disclosed in the computation. The material placed before the authorities also included trading and profit and loss accounts reflecting the impugned figure, and there was no rejection of books of account under the statutory provision governing such rejection. On these facts, the alleged escaped income was already accounted for in the disclosed turnover and the treatment adopted by the Assessing Officer in isolating the amount as undisclosed income was not sustainable.

Conclusion: The addition of the disputed amount was not justified and the assessee's substantive grounds were allowed.

---