Survey excess stock treated as business income escaped section 115BBE, while suppressed construction cost remained taxable as unexplained investment.

Excess stock found during survey and surrendered as business income was treated as undisclosed business income, so section 69 did not apply and the special rate under section 115BBE could not be invoked; that addition was deleted. By contrast, the admitted suppressed construction cost was treated as unexplained investment under section 69B and remained chargeable under section 115BBE; that addition was sustained. The decision therefore granted only partial relief to the assessee.

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Issues: (i) Whether excess stock found during survey, surrendered and included in the return, could be taxed under section 115BBE as unexplained income under section 69; (ii) Whether the suppressed construction cost of Rs. 2,52,500 could be treated as unexplained investment under section 69B and taxed under section 115BBE.

Issue (i): Whether excess stock found during survey, surrendered and included in the return, could be taxed under section 115BBE as unexplained income under section 69.

Analysis: The excess stock was found in the course of survey and was surrendered as part of business income. Such excess stock represented undisclosed business income and not unexplained investment. On that basis, section 69 was held inapplicable and the special rate under section 115BBE could not be invoked for this amount.

Conclusion: This issue was decided in favour of the assessee.

Issue (ii): Whether the suppressed construction cost of Rs. 2,52,500 could be treated as unexplained investment under section 69B and taxed under section 115BBE.

Analysis: The amount represented suppressed cost of construction admitted during survey. It was treated as unexplained investment within section 69B and, unlike excess stock, fell within the ambit of taxation under section 115BBE.

Conclusion: This issue was decided against the assessee and in favour of the Revenue.

Final Conclusion: The appeal succeeded only to the extent of the addition relating to excess stock, while the addition relating to suppressed construction cost was sustained, resulting in a partial relief to the assessee.

Ratio Decidendi: Excess stock found during survey and treated as undisclosed business income cannot be brought to tax as unexplained investment under section 69 and section 115BBE, whereas admitted suppressed construction cost constitutes unexplained investment chargeable under section 69B and section 115BBE.

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