ASSISTANT COMMISSIONER OF INCOME TAX, MADURAI V. JAYARAJ JAISON, TIRUNELVELI

ITA 2512/CHNY/2024

AI Insights

The case revolves around an appeal by the Revenue against the order of the CIT(A) which had deleted the additions made by the AO on account of unexplained sundry creditors amounting to Rs.32,00,000 and unexplained investment in construction amounting to Rs.60,00,000. The assessee, Jayaraj Jaison, had undergone a survey under section 133A of the Income Tax Act, 1961, where he disclosed additional business income of Rs.1,50,60,000, which included the amounts related to the disputed additions. The AO treated these amounts as unexplained under sections 68 and 69B r.w.s 115BBE, leading to the Revenue's appeal. The Tribunal found that the CIT(A) had rightly deleted the additions as the assessee had adequately explained the nature and source of the credits and the investments, and the income had been duly offered and taxed as business income.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708172 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Assessment Year: 2020-2021
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOUTHAMI MANIVASAGAM; J. C.I.T
• Assessee Lawyers: R. VENKATA RAMAN
• Keywords: Set aside; Business income; Unexplained cash credit; Unexplained expenditure; Unexplained investment; Rejection of books of accounts; Income from undisclosed sources; Bogus purchase; Gift; Principle of natural justice; Valuation report; Source of fund; Deemed to accrue or arise in india; Bogus
• Section: 68; 131; 69C

Judgement Text

"आयकर अपीलीय अिधकरण, ‘बी’ Ɋायपीठ, चेɄई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI ŵी मनु क ुमार िगįर, Ɋाियक सद˟ एवं ŵी एस. आर. रघुनाथा, लेखा सद˟ क े समƗ BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.:2512/Chny/2024 िनधाŊरण वषŊ / Assessment Year: 2020-21 The Assistant Commissioner of Income Tax, Central Circle -2, Madurai. vs. Jayaraj Jaison, No.9/10, Prop: Jaison Bkery, Kavalkinaru, Tirunelveli – 625 002. (अपीलाथŎ/Appellant) [PAN:AKGPJ-2821-E] (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से/Appellant by : Ms. Gouthami Manivasagam, J.C.I.T. ŮȑथŎ की ओर से/Respondent by : Shri. R. Venkata Raman,C.A. सुनवाई की तारीख/Date of Hearing : 02.07.2025 घोषणा की तारीख/Date of Pronouncement : 17.07.2025 आदेश /O R D E R PER S. R. RAGHUNATHA, AM: This appeal is preferred by the Revenue against the order dated 30.07.2024 passed by the ld. Commissioner of Income Tax (Appeals)-19, Chennai (‘ld.CIT(A)’ in short), arising out of the assessment order dated 30.09.2022 passed u/s.143(3) of the Income Tax Act, 1961 (‘the Act’ in short) by the Assistant Commissioner of Income Tax, Central Circle - 2, Madurai (‘AO’ in short), for the Assessment Year (‘AY’ in short) 2020-21. 2. The Revenue has raised the following grounds of appeal: 1. The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and in law. 2. The Ld.CIT(A) erred in not sustaining the addition of Rs.32,00,000/- made on account of unexplained sundry creditors u/s.68 r.w.s 115BBE. - 2 - ITA No.2512/CHNY/2024 3. The Ld.CIT(A) erred in accepting the contention of the assessee that as on 31.03.2020 there were no creditors pending and all creditors were settled, without appreciating the fact that during the course of survey the assessee has accepted that the said amount was due for payment by him and therefore the onus is on the assessee to furnish proof for having paid the said amount to the creditor either during the assessment proceedings or during the appeal proceedings, which he failed to discharge. 4. The Ld.CIT(A) erred in deleting the addition of Rs.60,00,000/- made on account of unexplained expenses without appreciating the fact that the assessee during the course of survey in the statement recorded u/s.131 of the Act, had admitted the said expenditure was incurred towards construction of building, for the purpose of business, but not admitted in the asset side of the balance sheet. The assessee gave no explanation for the expenditure made towards construction of building which stands unexplained & taxable u/s.69 r.w.s 115BBE as unexplained investment. 5. For these grounds and any other grounds including amendments of grounds that may be raised during the course of the appeal proceedings, the order of learned CIT(Appeals) may be set aside and that of the Assessing Officer be restored. 3. The brief facts of the case are that the assessee is an individual engaged in the business of operating a bakery under the name and style of M/s.Jaison Bakery, situated in Tirunelveli District. A survey u/s.133A of the Act was conducted at the business premises of the assessee on 28.02.2020. During the course of the said survey, the Authorized Officer identified the following three issues: i. Outstanding liability towards sundry creditors amounting to Rs. 32,00,000/-; ii. Expenditure of Rs. 60,00,000/- incurred towards construction of a building for the business use of the assessee; and iii. Suppression of sales aggregating to Rs. 58,60,000/-. 4. In connection with the above issues, a sworn statement u/s.131 of the Act was recorded from the assessee on the date of survey, i.e., 28.02.2020. 5. During the survey proceedings, a notebook containing particulars of the outstanding liability of Rs. 32,00,000/- payable to sundry creditors was impounded. The assessee was confronted with the contents of the said notebook by the Authorized Officer. In response to Question No.8 of the sworn statement recorded u/s.131 of the Act, the assessee admitted that the amount of Rs.32,00,000/- represented business liabilities payable to various creditors. However, he expressed his inability to produce supporting documentation or evidence in that regard. Consequently, the assessee - 3 - ITA No.2512/CHNY/2024 voluntarily offered the said sum of Rs.32,00,000/- as additional income over and above the regular business income. 6. With regard to the expenditure incurred on the construction of a building, the Authorized Officer sought clarification regarding the source of funds and supporting documentation for such expenditure. In response to Question No.9 of the sworn statement, the assessee stated that the building along with another house had been gifted to him by his brother two years prior, and he had subsequently undertaken the construction of a new building for business purposes, incurring an expenditure of Rs.60,00,000/-. Accordingly, the assessee agreed to offer the said amount as additional business income. 7. Further, the Authorized Officer inquired into the daily sales figures of the assessee. In response to Question No.10 of the sworn statement, the assessee admitted that the sales data had not been properly recorded or updated in the computer system maintained at the business premises. He further submitted that the average daily sales were approximately Rs.1,60,000/- on normal days, and around Rs.2,25,000/- on holidays and festival days. On the basis of this admission, the assessee offered an estimated amount of Rs.58,60,000/- as additional income on account of unaccounted sales for the relevant assessment year. 8. In light of the aforesaid discrepancies unearthed during the course of the survey, and based on the voluntary disclosures made by the assessee in the sworn statement recorded u/s.131 of the Act, the assessee made an aggregate disclosure of Rs.1,50,60,000/- (comprising Rs. 32,00,000/- towards sundry creditors, Rs. 60,00,000/- towards expenditure on construction, and Rs. 58,60,000/- towards suppression of sales) as additional business income for the assessment year under consideration. The relevant portion of the sworn statement, as extracted by the AO in the assessment order, is reproduced below: “Question no.11. In reply to question nos.8,9 and 10, you have admitted that Rs.32,00,000/-, Rs.60,00,000/- and Rs.58,60,000/- in total Rs.1,50,60,000/- as business income for the A.Y.2020-21 and assured to pay the advance tax accordingly. Please give the date within which the advance tax will be fully remitted? Answer: As admitted by me in reply to question nos.8,9 and 10, for the discrepancies found in our books of accounts, I admit Rs.1,50,60,000/- as - 4 - ITA No.2512/CHNY/2024 business income for the A.Y.2020-21, and I as remit the advance tax before 15-03-2020.” 9. Subsequently, the assessee filed his return of income for the relevant assessment year on 30.12.2020, declaring a total income of Rs.50,69,710/-, which included business income of Rs.52,71,322/-. The said business income was computed after crediting a sum of Rs.1,50,60,000/- to the Profit and Loss Account under the head “Income Offered Before IT Investigation u/s.133A”, corresponding to the voluntary disclosure made during the course of the survey proceedings. The return of income so filed was selected for compulsory scrutiny under CASS, and accordingly, a notice u/s.143(2) of the Act was issued to the assessee on 28.06.2021. 10. During the course of the assessment proceedings, the AO observed that the assessee had credited the sum of Rs.1,50,60,000/- in the Profit and Loss Account under the head “Income Offered Before IT Investigation u/s.133A” and had accordingly offered the same as business income. The AO further noted that the said amount had been classified as “Other Operating Revenues” in the return of income filed by the assessee and subjected to tax at the normal rates applicable to business income. Upon examining the nature of the disclosure, the AO opined that while the sum of Rs.58,60,000/- being the amount admitted by the assessee towards suppression of sales is clearly in the nature of business income and not in dispute, the remaining sum of Rs.92,00,000/-, comprising of Rs.32,00,000/- towards unexplained sundry creditors and Rs.60,00,000/- representing unexplained investment in construction of a building, cannot be treated as regular business income. The AO was of the view that this portion of the disclosure constituted unexplained cash credits and unexplained investment, respectively, and was therefore liable to be assessed under the provisions of section 115BBE of the Act, which prescribes a higher rate of tax for such unexplained income. Accordingly, the AO issued a show cause notice to the assessee, calling upon him to explain why the sum of Rs.92,00,000/- should not be taxed under the provisions of Section 68 / 69B r.w.s. 115BBE of the Act. The assessee was also specifically required to substantiate the genuineness and creditworthiness of the alleged sundry creditors amounting to Rs.32,00,000/-, and to furnish documentary evidence in support of the source and genuineness of the construction expenses amounting to Rs.60,00,000/-. - 5 - ITA No.2512/CHNY/2024 11. In response to the show cause notice, the assessee submitted before the AO that, as on 31.03.2020, there were no outstanding sundry creditors reflected in the books of account, and that the liabilities previously admitted during the course of the survey had been duly settled out of the voluntarily disclosed business receipts. It was further contended that the income generated from business activities, including the amounts disclosed during the survey, had been subsequently applied towards investment in the construction of the business premises. 12. The AO, however, was not convinced with the explanation of the assessee. The AO observed that the assessee had contended that a sum of Rs.32,00,000/-, reflected under the head \"Sundry Creditors,\" had been duly settled as on 31.03.2020. However, the assessee failed to produce any documentary evidence in support of this contention, such as payment details, relevant bank statements, confirmation letters from the creditors, or any other supporting documentation substantiating the identity, creditworthiness, and genuineness of the claimed creditors. In the absence of such corroborative evidence, the AO concluded that the claim remained wholly unsubstantiated. The AO further observed that the assessee had not reflected any corresponding entries in the balance sheet evidencing the discharge or settlement of the said liabilities. Given the absence of any such entries either on the liabilities or assets side, the AO formed the view that the assessee’s explanation lacked credibility. Consequently, the AO treated the sum of Rs.32,00,000/- as unexplained credit u/s.68 r.w.s.115BBE of the Act. 13. With respect to the issue of construction expenditure amounting to Rs.60,00,000/-, the AO recorded that the assessee, in a sworn statement, had admitted to having incurred the said expenditure towards the construction of a commercial building. However, the AO noted that the balance sheet for the financial year 2019-20 disclosed only an amount of Rs.38,43,378/- under the head \"Land and Building,\" thereby indicating a discrepancy of Rs.21,56,622/-. The assessee did not furnish any explanation or evidence to reconcile this difference. Moreover, no corresponding entries reflecting the said investment either in the form of capital introduced or borrowings were recorded in the books of account. Additionally, no documentary evidence such as vouchers, invoices, or bills was submitted to substantiate the said expenditure. In light of the foregoing, the AO concluded that the - 6 - ITA No.2512/CHNY/2024 entire investment of Rs.60,00,000/- towards construction remained unexplained and accordingly treated the same as an undisclosed investment u/s.69B r.w.s 115BBE of the Act. 14. Accordingly, the assessment of the assessee was completed u/s.143(3) of the Act on 30.09.2022, making the aforementioned additions and subjecting the impugned amounts to tax at the rates prescribed under section 115BBE of the Act. 15. Being aggrieved by the assessment order, the assessee preferred an appeal before the ld.CIT(A), Chennai - 19. 16. During the course of appellate proceedings, the assessee submitted before the ld.CIT(A) that no sundry creditors existed as on 31.03.2020, as all the outstanding liabilities have been duly discharged out of business income. Accordingly, it was contended that the addition of Rs.32,00,000/- made by the AO on account of alleged unexplained sundry creditors is devoid of merit and liable to be deleted. With respect to the addition of Rs.60,00,000/- towards alleged unexplained investment, the assessee further submitted that the provisions of section 69B of the Act are inapplicable to the facts and circumstances of the present case. It was, therefore, urged that the addition made u/s.69B r.w.s 115BBE of the Act be deleted. 17. Considering the submissions made by the assessee during the course of the appellate proceedings, the ld.CIT(A) by the impugned order dated 30.07.2024 deleted the additions made by the AO namely: (i) the addition of Rs.32,00,000/- on account of alleged unexplained sundry creditors u/s.68 r.w.s 115BBE of the Act, and (ii) the addition of Rs.60,00,000/- on account of unexplained investment u/s.69B r.w.s 115BBE of the Act. 18. The observations of the ld.CIT(A) in deleting the addition of Rs.32,00,000/- made by the AO u/s.68 r.w.s 115BBE of the Act, on account of unexplained sundry creditors, are as under: “6.2.4 The issue raised by the appellant has been carefully examined. The appellant in its audited financials for the year under consideration has not claimed any sundry creditors and the appellant has pleaded that the sundry creditors as appearing on 28.02.2020 were duly settled out of the business income generated and disclosed in the return of income for the AY 2020-21. When, the assessee in the balance sheet has claimed sundry creditors - 7 - ITA No.2512/CHNY/2024 payable as a liability and the same was not proved, the amount will be treated as income of the assessee as cessation of liability. In the instant case the appellant has not claimed any sundry creditors in the audited financials. Further the appellant has claimed that the sundry creditors which was found on the date of survey were duly settled out of the income earned. When the appellant himself has not claimed any sundry creditors the question of treating the same as unexplained will never arise. Further, as evident is the assessment order, there exist no finding about the rejection of books of accounts u/s 145(3) of the Act and the AO admittedly has accepted the financials of the assessee for the AY 2020 21. In view of this without there being any claim of sundry creditors, treating the same as unexplained is illogical. Accordingly all the grounds raised by the appellant upon this issue are treated as allowed and the AO is directed to delete the addition of Rs. 32,00,000/- as unexplained credit as per the provisions of section 68 of the Act for the AY 2020-21.” 19. The ld.CIT(A) deleted the addition of Rs.60,00,000/- made by the AO u/s.69B r.w.s 115BBE of the Act, on account of alleged unexplained investment, holding as under: “6.3.1 The Appellant during the course of appellate proceedings has raised an issue by way of additional grounds of appeal. The undersigned in order to uphold the principles of natural justice has admitted the additional ground of appeal and is taken up for adjudication. In this ground the appellant has agitated upon the addition of Rs. 60,00,000/- being the unexplained expenses u/s 69B of the Act. During the course of survey the Authorised Officer has confronted with the appellant about the expenditure of Rs. 60,00,000/- incurred towards towards construction of a building to be utilized for business purposes. As evident in the assessment order, the survey team has not come across any evidence about the incurring of expenditure claimed by the appellant. It is only in the statement recorded u/s 131 of the act, the assessee has admitted about the probable expenditure incurred towards construction of a building. The amount of Rs. 60,00,000/- quantified by the appellant and accepted by the survey team is a only an illusionary figure without any basis for such quantification. The AO in the assessment order has simply accepted the finding of the survey and treated the amount of Rs. 60,00,000/- by invoking the deeming provision of section 69B of the Act. 6.3.2 The AO before invoking the deeming provisions of the section 69B of the Act should have ensured its applicability. Section 69B of the Income Tax Act, 1961, deals with unexplained investments. This section is invoked when the Assessing Officer (AO) finds that an assessee has made investments or is in possession of bullion, jewellery, or other valuable articles, and the amount spent on these investments or the possession of these assets exceeds the amount recorded in the books of account. The difference between the recorded amount and the actual amount is treated as income of the assessee for the financial year in which the investment is made or the possession is acquired. Further, when the value of a property or asset recorded in the books of account is less than its actual market value, without a satisfactory explanation, the AO can invoke section 69B of the Act. - 8 - ITA No.2512/CHNY/2024 6.3.3 In the present case the AO has observed that the amount of Rs. 60,00,000/- has been added to the returned income as the unexplained expenditure of the assessee, Obviously , if this perspective of the AO is right he could have opted to invoke the provisions of section 69C of the Act . Section 69C of the Income Tax Act, 1961, pertains to unexplained expenditure. It allows the Assessing Officer (AO) to treat any unexplained expenditure, which is not recorded in the books of accounts and for which the assessee offers no explanation, as deemed income. This expenditure is treated as income for the financial year in which it is incurred. The following are the some of the occasions where the AO can invoke the provisions of section 69C of the Act. Viz.. i. Unaccounted Expenses: When an assessee incurs expenses that are not recorded in the books of account. ii. High-Value Transactions: When there are high-value transactions with no proper documentation or explanation. iii. Discrepancies in Expenditure: When there is a significant discrepancy between reported expenses and actual expenses. iv. Suspicious Cash Payments: When large cash payments are made without adequate documentation or explanation. v. Undisclosed Expenditure: When expenses are incurred but not disclosed in the income tax return. 6.3.4 As evident in the return of income filed by the assessee a sum of Rs. 1,50,60,000/- has been shown as “Other operating revenues”. The sum of Rs.1,50,60,000/- is inclusive of Rs. 60,00,000/- relating to the expenditure incurred by the assessee for construction of the building to be used for business purposes. When expenses incurred are disclosed in the income tax return, obviously the same cannot partake the character of unexplained expenditure to be entangled in the clutches of the deeming provisions of section 69B / 69C of the Act. When the assessee has admitted the expenditure as income in return of income filed there exists no case for the AO to tax the same amount once again as unexplained investment / expense. The AO attempted to tax the same income twice. As per the legal maxim for the principle that the same income or amount should not be taxed twice is \"Nemo debet bis vexari pro una et eadem causa\". This Latin phrase translates to \"No one ought to be vexed twice for the same cause”. In view of the detailed discussion made supra, the undersigned is of the considered view that there exists no case to treat the disclosed amount as unexplained by the AO and to add the same income as unexplained. Accordingly, all the additional grounds raised by the appellant are hereby treated as allowed and the AO is hereby directed to delete the addition of Rs. 60,00,000/- made as unexplained expenses u/s 69B of the Act for the AY 2020-21.” 20. Aggrieved by the order of the ld.CIT(A), the Revenue is in appeal before us. 21. The ld.DR, Ms.Gouthami Manivasagam, JCIT, placing reliance on the grounds of appeal and the assessment order, submitted that during the course of the survey - 9 - ITA No.2512/CHNY/2024 proceedings, the assessee had made a disclosure of Rs.32,00,000/- on account of unexplained sundry creditors and Rs.60,00,000/- on account of unexplained investment in building construction. The ld.DR contended that the said disclosure constituted income over and above the regular business income and, therefore, was liable to be assessed at the special rate of tax as prescribed u/s.115BBE of the Act, and not as part of the normal business income. 22. With respect to the addition u/s.68, the ld.DR submitted that the non-existence of the sundry creditors as on 31.03.2020 does not absolve the assessee of the burden to explain the nature and source of such credits. Since the assessee failed to satisfactorily demonstrate how the alleged liabilities were discharged during the year under consideration, the provisions of section 68 remained applicable. 23. Further, with regard to the unexplained investment of Rs.60,00,000/-, the ld.DR submitted that the assessee had incurred expenditure towards construction of a building and failed to substantiate the source of funds for such investment. Accordingly, the addition was rightly made u/s.69B r.w.s 115BBE of the Act. 24. The ld.DR, therefore, submitted that the ld.CIT(A) erred in law and on facts in deleting the additions made by the AO without proper appreciation of the evidence and circumstances on record. The ld.DR thus prayed that the order of the ld.CIT(A) be set aside and the additions made by the AO be restored by allowing the Revenue’s appeal. 25. Per contra, the ld.AR for the assessee, Shri R.Venkata Raman, Chartered Accountant, supporting the order of the ld.CIT(A) made the following written submission: 1. “During the course of survey, no incriminating material was found suggesting that the assessee had booked bogus purchases or the amount payable towards sundry creditors is bogus. 2. Further, no material was found to prove that the assessee had incurred expenses towards construction during the impugned assessment year. 3. Furthermore, no material was found indicating that the assessee had suppressed sales. 4. Thus, the question of recording the statement of the assessee u/s.131 of the Act and offering additional income does not arise. - 10 - ITA No.2512/CHNY/2024 5. Despite of the absence of the incriminating material, the assessee had voluntarily offered to admit the additional business income of Rs.1,50,60,000/- to take care of the probable defects if any towards sundry creditors, construction expenses and sales. 6. As deposed in the statement u/s.131 of the Act, the assessee had duly admitted the sum of Rs.1,50,60,000/- as business income in the return of income filed for the impugned assessment year. 7. Thus, it is most humbly submitted that the additional business income of Rs.1,50,60,000/- voluntarily admitted is to be assessed only as business income and not to be subjected to tax u/s.115BBE of the Act. 8. It is most respectfully submitted that the total income of Rs.50,69,710/- returned by the assessee includes income from business of Rs.52,71,322/- . This business income comprised an additional amount of Rs.1,50,60,000/- , voluntarily offered by the assessee pursuant to the survey proceedings. The AO has not reduced the sum of Rs.1,50,60,000/- from the returned income. Thus, the action of AO making separate addition of Rs.32,00,000/- u/s.68 in respect of sundry creditors and Rs.60,00,000/- u/s.69B in respect of unexplained expenses is a double addition and unwarranted. 9. It is most respectfully submitted that there is no dispute to the fact that the sum of Rs.32,00,000/- noted by the assessee in the note book pertains to sundry creditors of the business of the assessee. That being the case, it is most humbly submitted that the question of treating the business creditors as unexplained u/s.68 of the Act does not arise. 10. It is most humbly submitted that the ld.CIT(A) has rightly noted that there is no outstanding creditors as on 31.03.2020, hence the need for addition towards sundry creditors does not arise. 11. It is most humbly submitted that the AO having accepted the additional sales of Rs.58,60,000/-, ought to have appreciated that the same if telescoped against the sundry creditors of Rs.32,00,000/-, separate addition towards sundry creditors is unwarranted. 12. It is most respectfully submitted that the assessee had not incurred any expenditure towards construction during the impugned assessment year, thus the provisions of section 69B of the Act are not applicable. 13. In view of the above, it is most humbly submitted that the ld. CIT(A) has rightly deleted the additions towards sundry creditors of Rs.32,00,000/- u/s.68 and unexplained expenses of Rs.60,00,000/- u/s.69B. 14. It is therefore most humbly prayed that the order of the ld. CIT(A) does not require any inference and accordingly it is most humbly prayed that the order of the ld. CIT(A) may kindly be upheld and the appeal of the Revenue may kindly be dismissed.” 26. We have carefully considered the rival submissions advanced by both sides and have perused the material available on record, including the assessment order and the written submissions filed before us. - 11 - ITA No.2512/CHNY/2024 27. We note that a survey u/s.133A of the Act was conducted at the business premises of the assessee, during the course of which the assessee made a disclosure of Rs.1,50,60,000/- as additional business income. The disclosure was made to account for various discrepancies identified during the survey, namely: (i) unexplained sundry creditors amounting to Rs.32,00,000/-, (ii) unexplained investment in construction expenditure amounting to Rs.60,00,000/-, and (iii) suppression of sales amounting to Rs.58,60,000/-. 28. Pursuant to the said disclosure, the assessee, in the return of income filed for the relevant assessment year, offered the sum of Rs.1,50,60,000/- as income by crediting it to the Profit and Loss Account under the head “Income Offered Before IT Investigation u/s 133A”. Out of the disclosed amount, the AO accepted Rs.58,60,000/- towards suppressed sales as part of the assessee’s business income, and no dispute exists in respect thereof. 29. However, with respect to the balance sum of Rs.92,00,000/-, comprising Rs.32,00,000/- on account of unexplained sundry creditors and Rs.60,00,000/- towards unexplained investment in building construction, the AO held that the said income did not arise from regular business operations and, therefore, could not be assessed as business income. The AO accordingly treated the amount as unexplained under the deeming provisions of sections 68 and 69B of the Act, and subjected it to tax at the special rate prescribed u/s.115BBE of the Act. 30. In appellate proceedings, the ld.CIT(A) deleted the addition of Rs.32,00,000/- made u/s.68 of the Act, holding that as on 31.03.2020, no balance of sundry creditors existed in the books of account, and hence, the requirement of making an addition towards unexplained sundry creditors did not arise. As regards the addition of Rs.60,00,000/- made u/s.69B, the ld.CIT(A) noted that the assessee had already included this amount within additional income of Rs.1,50,60,000/- disclosed in the return of income, categorically reflecting it as offered during survey. The ld.CIT(A) held that once the assessee had voluntarily offered such income to tax by crediting in his profit and loss account and in his return of income, there was no basis for the AO to again treat the same as unexplained investment and subject it to tax u/s.69B r.w.s 115BBE of the Act. Thus, the ld.CIT(A) deleted the additions made by the AO. The - 12 - ITA No.2512/CHNY/2024 issue now arising for our consideration is whether the ld.CIT(A) is right in deleting the additions amounting to Rs.92,00,000/- made by the AO towards unexplained sundry creditors and unexplained investment. 31. Upon careful consideration of the material available on record and the submissions advanced, we find that there is no dispute with respect to the fact that the sum of Rs.32,00,000/-, as recorded in the impounded notebook, represents outstanding liabilities in the nature of sundry creditors related to the business operations of the assessee. These liabilities are directly attributable to purchases and/or expenses incurred in the normal course of the assessee's business of running a bakery and tea stall. Therefore, such liabilities are integrally linked to the business activity and cannot, by any stretch, be construed as unexplained cash credits or income from undisclosed sources. 32. We further observe that in order to address the discrepancies noted during the course of the survey, particularly with respect to the said amount of Rs.32,00,000/- shown as sundry creditors in the impounded records, the assessee voluntarily agreed to offer the said sum as business income as part of the total disclosure of Rs.1,50,60,000/-, and duly credited the same in the Profit and Loss Account for the relevant assessment year. 33. Significantly, in the sworn statement recorded from the assessee u/s.131 of the Act during the course of the survey proceedings, specifically in response to Question No.11, the assessee clearly stated that the additional income being disclosed pertains to business income. This statement has not been found to be false or misleading by the survey team or the AO. On the contrary, the assessee has honoured his commitment by offering the disclosed income of Rs.1,50,60,000/- to tax as business income and crediting the same in the Profit and Loss Account as on 31.03.2020. 34. In such circumstances, the treatment of the amount of Rs.32,00,000/-, which has already been offered to tax as part of the business income, as an unexplained cash credit u/s.68 of the Act, and thereby subjecting it to tax again under the provisions of section 115BBE of the Act, results in a clear instance of double taxation. This not only violates the principles of natural justice but also lacks legal justification, as section 68 is applicable only in cases where the nature and source of a credit entry in the - 13 - ITA No.2512/CHNY/2024 books of account remain unexplained or are not satisfactorily established. Here, the assessee has adequately explained both the nature and source of the amount in question, which pertains to regular business transactions, namely sundry creditors arising out of purchases/expenses. 35. Moreover, we find that there is no finding by the AO or the survey team to indicate that the assessee has engaged in any activity generating income outside the scope of the declared business. There is also no allegation or evidence suggesting that the amount of Rs.32,00,000/- represents any form of unexplained or unaccounted money sourced from outside the business. The entire disclosure has been accepted as emanating from the business activity of the assessee. 36. In view of the foregoing analysis and having regard to the facts and circumstances of the case, we are of the considered opinion that the addition of Rs.32,00,000/- made by the AO u/s.68 r.w.s 115BBE of the Act, is unsustainable in law and on facts. The ld.CIT(A) has rightly appreciated the legal position and factual matrix of the case and has correctly deleted the said addition. We, therefore, find no infirmity in the impugned order passed by the ld.CIT(A) and accordingly uphold the same. Consequently, the grounds of appeal raised by the Revenue are devoid of merit and are hereby dismissed. 37. On the issue pertaining to the addition of Rs.60,00,000/- made u/s.69B r.w.s 115BBE of the Act in respect of alleged unexplained investment, we note that the sum of Rs.60,00,000/- was voluntarily offered by the assessee during the course of survey proceedings conducted u/s.133A of the Act. However, it is equally pertinent to note that the disclosure was made purely on the basis of a general, adhoc estimation and was not supported by any documentary evidence, books of account, valuation report, or any form of tangible or verifiable data. No reference was made to the actual measurement or extent of the work allegedly undertaken, nor was any basis provided for the quantification of the amount offered. 38. It is a well-settled position in law, upheld by various judicial precedents, that a mere statement recorded u/s.133A of the Act cannot, by itself, constitute conclusive evidence for making an addition unless supported by corroborative material evidence. Voluntary surrender, in the absence of cogent and credible evidence, does not amount - 14 - ITA No.2512/CHNY/2024 to an admission of concealed income. In the present case, the AO has failed to discharge the initial burden cast upon the Department to prove the existence of any investment actually made by the assessee which remained unrecorded in the books of accounts. No evidence direct or circumstantial was brought on record to show that any construction activity was undertaken during the relevant financial year. Even the survey team did not carry out any physical verification, inspection, or measurement of any construction activity at the business premises of the assessee. Therefore, the addition made is bereft of any evidentiary foundation and is based purely on presumptions and conjecture. 39. It is a cardinal principle of taxation that no addition can be made based on surmises or suspicion. Section 69B of the Act contemplates an addition only when the assessee is found to have made investments which are not recorded in his books of account and for which he fails to offer a satisfactory explanation. In the absence of any unaccounted investment being found or proved, invocation of Section 69B is not justified. 40. Furthermore, it is significant to note that the assessee, voluntarily included the sum of Rs.60,00,000/- as part of the total income declared during the year under the head \"business income.\" This was duly reflected in the Profit & Loss Account, wherein the total disclosure of Rs.1,50,60,000/-, inclusive of the said amount, was credited and offered to tax under normal provisions. The assessee, having no other source of income apart from the declared business activity, rightly categorized the disclosure as business income, which was accepted as such in the return of income. 41. Therefore, once the income offered during the survey has been brought to tax as business income, and there is no contrary finding that it emanated from any other source or constitutes investment from unexplained sources, taxing the same income again under the deeming provisions of Section 69B r.w.s.115BBE of the Act would lead to double taxation and result in manifest injustice. Section 115BBE is not intended to override genuine declarations of business income, particularly when the nature and source of such income have been clearly explained and duly accounted for. - 15 - ITA No.2512/CHNY/2024 42. In view of the foregoing discussions, in the present facts and circumstances of the case, we are of the considered opinion that the addition of Rs.60,00,000/- made by the AO u/s.69B r.w.s 115BBE of the Act is devoid of merit, not supported by evidence, and is liable to be struck down, which the ld.CIT(A) has rightly deleted it. Accordingly, the deletion of the impugned addition does not warrant any interference. Consequently, the grounds raised by the Revenue are bereft of substance and are accordingly dismissed. 43. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open court on 17th July, 2025 at Chennai. Sd/- Sd/- (मनु क ुमार िगįर) (MANU KUMAR GIRI) Ɋाियक सद˟/Judicial Member (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) लेखासद˟/Accountant Member चेɄई/Chennai, िदनांक/Dated, the 17th July, 2025 SP आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3.आयकर आयुƅ/CIT– Chennai/Coimbatore/Madurai/Salem 4. िवभागीय Ůितिनिध/DR 5. गाडŊ फाईल/GF "