Charging section change needs notice; duplicate purchase-difference additions cannot survive where stock discrepancy is already accounted for.

An appellate authority cannot sustain an excess-stock addition after changing the charging section from section 68 to section 69 without first giving notice and opportunity of hearing under section 251(1); the matter was remanded for fresh consideration, with only statistical relief to the assessee. A separate addition for purchase difference was also remanded because, if the same amount was already included in the stock computation, a further addition would amount to duplication. Section 115BBE was held applicable for Assessment Year 2018-19, so that challenge failed.

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Issues: (i) Whether the appellate authority could sustain the addition on account of excess stock after correcting the charging section from section 68 to section 69 without issuing notice under section 251(1); (ii) whether the separate addition for difference in purchases amounted to double addition when the excess stock issue was remanded; and (iii) whether section 115BBE of the Income-tax Act, 1961 applied to Assessment Year 2018-19.

Issue (i): Whether the appellate authority could sustain the addition on account of excess stock after correcting the charging section from section 68 to section 69 without issuing notice under section 251(1).

Analysis: The addition on account of excess stock arose from survey findings. The assessment order had invoked section 68, while the appellate authority corrected the charging provision to section 69. Such correction was treated as requiring compliance with the appellate notice requirement under section 251(1), because the assessee was entitled to an opportunity before the charging provision was altered. At the same time, the existence of survey evidence meant that the entire addition could not be deleted merely on this procedural defect.

Conclusion: The issue was remanded to the appellate authority for fresh consideration after giving the assessee an opportunity of hearing; the assessee obtained statistical relief.

Issue (ii): Whether the separate addition for difference in purchases amounted to double addition when the excess stock issue was remanded.

Analysis: The purchase difference arose from the comparison between purchases recorded at the time of survey and the final accounts. The reasoning accepted that, if the purchases were ultimately brought into the stock computation, the corresponding excess stock addition would stand reduced to that extent. In that event, a separate addition for the same difference in purchases would result in duplication. Since the excess stock issue itself was sent back, the purchase-difference addition was also required to be reconsidered in the same set of proceedings.

Conclusion: The issue was remanded to the appellate authority, with the direction that no separate addition for purchase difference should survive if the same amount was already reflected in the excess stock computation; the assessee obtained statistical relief.

Issue (iii): Whether section 115BBE of the Income-tax Act, 1961 applied to Assessment Year 2018-19.

Analysis: The year under appeal was Assessment Year 2018-19. The provision was held applicable from that assessment year onward, and therefore the invocation of the special taxation provision was treated as correct for the relevant year.

Conclusion: The application of section 115BBE was upheld against the assessee.

Final Conclusion: The appeal succeeded only to the extent of remand on the excess stock and purchase-difference issues, while the challenge to the applicability of section 115BBE failed.

Ratio Decidendi: An appellate authority cannot alter the charging section and effectively enhance the assessment without giving the assessee notice and opportunity under section 251(1); where two additions are based on the same stock discrepancy, a separate purchase-difference addition cannot be sustained if it would duplicate the stock addition.

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