TaxTMI 
TaxTMI 
TaxTMI 
2020 (7) TMI 240
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....based on facts, and in law, is illegal & wrong. 3. The appellant craves leave to add/alter/amend the above grounds of appeal are and when, necessity or occasion arises." 3. Brief facts of the case as culled out from the records are that the assessee is proprietor of two concerns namely M/s. Rajesh Industries and M/s. R.R. Textile Mills which are engaged in the business of textiles, hand loom and power loom. Return of income declaring income of Rs. 1,02,17,110/- for the Assessment Year 2015-16 was filed on 30.09.2013. Case selected under scrutiny followed by serving valid notice u/s 143(2) of the Act. A survey u/s 133A was conducted on 12.12.2014 at the business premises of M/s. Rajesh Industries and M/s. R.R. Textile Mills. During the course of survey various anomalies were found which included excess stock, excess cash and receivable from sundry parties not shown in the books. The assessee surrendered following income stating that he is unable to explain the source for the following :- a) Excess stock Rs. 75,46,114/- b) Excess Cash Rs. 9,60,036/- c) Receivable from sundry parties not shown in books Rs. 7,75,000/- Total Rs. 92,81,150/- Subsequent to survey wh....
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....er sources" since Section 115BBE of the Act is applicable only to income referred to in Section 68, Section 69, Section 69A, 69B, 69C & 69D of the Act. He also submitted that the revenue authorities has not pointed out that the excess stock has any nexus with any other receipts. The excess stock found during the survey operation is not separately and clearly identifiable but is part of mixed lots of stock found at the premises which included declared stock as per books and also the excess stock as computed by the authorised officers during the survey operation at the business premises. Since excess stock is a result of suppression of profit from business over the years and has not been kept identifiable separately but is the part of overall physical stock found, the investment in the excess stock should be treated as business income. Where source of investment/ expenditure is clearly identifiable and alleged undisclosed asset has no independent existence of its own or there is no separate physical identity of such investment/expenditure then what is to be taxed is the undisclosed business receipt invested in unidentifiable unaccounted asset. Ld. Counsel for the assessee has also re....
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.... referred to in clause (i). (2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance [or set off of any loss] shall be allowed to the assessee under any provision of this Act in computing his income referred to in clause (a) 65[and clause (b)] of sub-section (1). Section 68 Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year : Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless- (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature an....
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....reof, or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year.Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income. Section 69D Where any amount is borrowed on a hundi from, or any amount due thereon is repaid to, any person otherwise than through an account payee cheque drawn on a bank, the amount so borrowed or repaid shall be deemed to be the income of the person borrowing or repaying the amount aforesaid for the previous year in which the amount was borrowed or repaid, as the case may be : Provided that, if in any case any amount borrowed on a hundi has been deemed under the provisions of this section to be the income of any person, such person shall not be liable to be assessed again in respect of such amount under the provisions of this section on repayment of such amount. Explanation.-For the purposes of ....
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....ly to questions raised about the source of Excess stock, Excess cash and undisclosed sundry debtors. 14. Now in order to know that whether the assessee has offered any explanation to the excess stock, excess cash or receivable from sundry parties, from perusal of the statements in the reply given by the assessee in Question No.3, 5 and 6 we find that assessee has categorically accepted that "he is unable to explain the source of excess cash, excess stock and unaccounted receivables". There is no other evidence brought on record by the assessee to show that some unaccounted purchases for the year or unaccounted sales or unrecorded sales happened during the year or details of the debtors which can show the nexus of the surrendered income as business income for the year under consideration. 15. The alleged surrendered income is the cumulative total of unrecorded and undisclosed income for preceding years which were not offered to tax during the year when they were earned. Before the insertion of Provision of Section 115BBE of the Act w.e.f. 1.4.2013 during the course of survey u/s 133A of the Act if any excess cash or excess stock was found and then the assessee was subjected to tax....