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Facts
The assessee, a HUF operating a diagnostic center, declared income during a survey. The AO applied Section 115BBE, treating this income as unexplained and taxing it at a higher rate, which was confirmed by the CIT(A). An appeal was filed against this order, with a condoned delay of 432 days.
Held
Following a precedent set by a co-ordinate bench for a related case, the Tribunal ruled that the income declared by the assessee from its diagnostic business was duly explained and constituted business income, not unexplained sources. Consequently, Section 115BBE was not applicable, and the income should be taxed at normal rates.
Key Issues
The primary issue was the applicability of Section 115BBE of the Income Tax Act to income declared during a survey, which the assessee contended was duly explained business/professional income.
Sections Cited
115BBE
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आदेश/Order
The present appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-5 Ludhiana, [in short referred to as CIT(A)] dated 09.12.2022 relating to A.Y. 2018-19.
The assessee in this appeal has contested the action of the CIT(A) in confirming the action of the Assessing Officer (in short ‘the AO’) in charging the tax on the income of the assessee at a higher rate by applying the provisions of A.Y. 2018-19 2 Section 115 BBE of the Income Tax Act, 1961 ( in short ‘the Act’) in respect of the professional income declared by the assessee during the survey action carried out at the premises of the assessee.
The appeal is time barred by 432 days. Separate application for condonation of delay has been filed which is further supported by the duly sworn affidavit by one Mr. Ajay Kaundal, working as an Accountant with the assessee. He has deposed in the affidavit the reasons because of which the delay has happened in filing the present appeal, were mainly, due to the fact that the assessee was not required to deposit any tax and further that he forgot to convey to the assessee the message of the Chartered Accountant that the appeal was required to be filed in this case.
Considering the submissions made in the application, the delay in filing the present appeal is hereby condoned.
The brief facts of the case are that the assessee is a HUF engaged in the diagnostic business at Rajpura under the name and style of ‘Imaging Center’ and is also having rental income, agriculture income and bank interest income, in addition to the business income of the Diagnostic Centre.
ITA No. 408/Chd-2024 A.Y. 2018-19 3 A search action was carried out at the premises of the assessee wherein, the member of the HUF family Dr. Simita Kaur was also covered. She had also offered certain income out of her profession as a Doctor. The assessee had also offered the income earned out of the business of Diagnostic Centre. However, the AO in both the cases, applied the provisions of Section 115BBE and held that the said income was from unexplained sources. The Co-ordinate Bench of the Tribunal in the case of Dr. Simrita Kaur Vs. ACIT in i.e. the member of the assessee HUF, who had offered the income during the same survey action, after considering the submissions, has held that the income from the profession has been duly explained and that the provisions of Section 115BBE were not attracted in the case.
Both the ld. Representatives of the parties have been fair enough to state that the case of the assessee is also on the same footing and the income offered by the assessee was out of business income of Imaging Centre. Therefore, I do not find justification on the part of the lower authorities in invoking the provisions of Section 115BBE of the Income Tax Act. The income of the assessee, thus, is liable to be A.Y. 2018-19 4 charged at normal rates as applicable to income from business or profession. I order accordingly.
The appeal of the assessee is allowed.