Business stock found in survey cannot be taxed as deemed income when unrebutted findings link it to trading activity.

Excess stock found during survey was treated as business stock relatable to business income, not as deemed income under section 69B of the Income-tax Act, 1961. The assessee explained the stock as unrecorded purchases awaiting entry in the books, and the first appellate authority had found that it formed part of trading stock; that finding was unrebutted and the books and audit report were not disturbed. On these facts, section 115BBE had no application because the stock could not be assessed as deemed income. The Revenue's appeal was dismissed.

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Issues: Whether excess stock found during survey was liable to be taxed as deemed income under section 69B of the Income-tax Act, 1961 and subjected to special rate taxation under section 115BBE of the Income-tax Act, 1961, or was to be treated as business stock arising from business income.

Analysis: The assessee was engaged in trading of gold and silver ornaments. During survey under section 133A of the Income-tax Act, 1961, excess stock was noticed on the basis of a tentative trading account, and the assessee explained that it represented unrecorded purchases remaining to be entered in the books. The return was accepted in scrutiny, and the books of account and audit report were not disturbed. The first appellate authority had recorded a categorical finding that the excess stock formed part of the assessee's business stock and emanated from business income. No material was brought to rebut that finding. On identical facts, the referenced precedent also supported the view that excess stock found in survey could not be treated as deemed income under section 69B.

Conclusion: The excess stock was not taxable as deemed income under section 69B of the Income-tax Act, 1961, and section 115BBE of the Income-tax Act, 1961 had no application. The Revenue's appeal was therefore dismissed.

Ratio Decidendi: Where excess stock found in survey is established as business stock relatable to business income and the finding is unrebutted, it cannot be assessed as deemed income under section 69B of the Income-tax Act, 1961 for special taxation under section 115BBE of the Income-tax Act, 1961.

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