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The ITAT Delhi held that the additional income surrendered due to excess stock should be treated as unexplained investment taxable u/s 69 of the Act, not as business income. The assessee's explanation of reduced gross profit due to heavy competition lacked supporting evidence. The surrendered income was not included in the trading account but offered as other income. The AO rightly rejected the books u/s 145(3) and calculated differential gross profit based on the previous year's margin. The varying profit margins and behavior of the assessee justified the addition of Rs. 1,08,51,505. The CIT(A) confirmed this decision, dismissing the assessee's grounds.
The ITAT Delhi held that the additional income surrendered due to excess stock should be treated as unexplained investment taxable u/s 69 of the Act, not as business income. The assessee's explanation of reduced gross profit due to heavy competition lacked supporting evidence. The surrendered income was not included in the trading account but offered as other income. The AO rightly rejected the books u/s 145(3) and calculated differential gross profit based on the previous year's margin. The varying profit margins and behavior of the assessee justified the addition of Rs. 1,08,51,505. The CIT(A) confirmed this decision, dismissing the assessee's grounds.
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