Jaipur: In a significant ruling, the Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) has delivered a judgment favoring the taxpayer, Mrs. Prem Lata Pandya, in the case of Prem Lata Pandya vs. DCIT (ITA No. 1471/JPR/2024). The Tribunal directed the assessing authorities to classify ₹24 lakh, surrendered during a tax survey, as business income instead of unexplained cash under Section 69A of the Income Tax Act, 1961.
The case arose when the taxpayer, along with her family, was intercepted at Jaipur Airport on September 4, 2018, carrying cash. While the assessee explained that the amount was sourced from withdrawals from her proprietary and partnership businesses, the Revenue authorities contended it as unexplained and taxed it at the higher rate under Section 115BBE.
The Hon’ble ITAT disagreed with the Revenue’s stance, stating that the assessee’s explanation regarding the source of cash was consistent and supported by the business accounts. The Tribunal also noted the absence of evidence to suggest that the cash was derived from non-business activities.
This judgment, guided by precedents like Ram Swaroop Singhal vs. ACIT and Bajaj Sons Ltd. vs. DCIT, highlights the importance of examining surrendered income in the context of business activities and discourages arbitrary application of Section 115BBE.
The ruling not only provides relief to the taxpayer but also sets a precedent for future cases involving surrendered income during tax surveys.