Business income treatment for undisclosed receipts rejected section 69A and 115BBE where business nexus was established.

Undisclosed receipts linked to a regular business activity were held to be assessable as business income where the assessee had no separate unexplained source of income and the business nexus was established. The Tribunal applied the co-ordinate bench view that such amounts cannot be treated as income from unexplained sources merely because they were not fully disclosed. The addition was therefore directed to be taxed as business income and not under section 69A read with section 115BBE.

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Issues: Whether the addition confirmed by the first appellate authority was required to be assessed as business income or as income from unexplained sources under section 69A read with section 115BBE of the Income-tax Act, 1961.

Analysis: The Assessee's only disclosed source of income was business, and no separate unexplained source was shown to exist. Relying on the co-ordinate bench view that income arising from regular business activity, even if brought to tax on account of undisclosed receipts or expenditure, is assessable as business income where the business nexus is established, the Tribunal held that the impugned amount could not be brought to tax as unexplained income attracting section 115BBE. The material on record did not justify treating the amount as a separate unexplained source independent of the business.

Conclusion: The addition was directed to be assessed as business income and not under section 69A read with section 115BBE; the Assessee succeeded on this issue.

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