2020 (11) TMI 934

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....the Assessment Year (A.Y.) 2017-18. 2. All the grounds of appeal are against to the order passed by the Pr.CIT, Visakhapatnam u/s 263 of the Income Tax Act, 1961 (in short 'Act'). In this case, search u/s 132 was conducted in the group cases of M/s Khan Mohammed Diamonds & Jewellers Pvt. Ltd., Guntur on 20.09.2016. The assessee filed return of income, originally, declaring total loss of Rs. 45,81,242/-. Subsequently, the Assessing Officer (AO) issued notice u/s 142(1) calling for return of income and the assessee filed the revised return of income on 06.11.2017 admitting the same loss of Rs. 45,81,242/-. The case was taken up for scrutiny and the assessment was completed on total income of Rs. 3,34,42,013/- and out of which the und....

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.... the parties and perused the material placed on record. On going through the assessment order, we find that though the AO made the addition of Rs. 20,32,581/- as undisclosed income, no addition was made u/s 69 of the Act. The AO did not invoke section 68/69 separately in the assessment order. The income required to be taxed @60% in case the undisclosed income representing section 68 to section 69C of the Act. In this case, the AO has not invoked any such section. The assessee placed paper book and as per paper book page No.58, it is seen that the AO called for the information regarding excess stock of Rs. 7,74,270/- and excess cash of Rs. 9,37,170/- and also called for explanation of the assessee as to why both the items should not be ta....

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....xed 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 search operation at the premise. 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 provisions of section 69 cannot be made applicable as primary condition for invoking the provisions of the section is that the asset should be separately identifiable and it should have independent physical existence of its own. Since excess stock is a result of suppression of profit from business other the years and has not been kept identifiable separately but i.e. the ....

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....ly, but is the part of overall physical cash found, the provisions of section 69 cannot be made applicable as primary condition for invoking the provisions of the section is that the asset should be separately identifiable and it should have independent physical existence of its own. Since excess cash is a result of suppression of profit / sales from business over a period and has not been kept identifiable but i.e. the part of over all cash found and therefore the excess cash has to be treated as business income. It is an undisputed fact from the record that at the time of search excess cash was found. It is also not disputed that we are engaged in the business of jewellery. In view of our admissions, acceptance of excess cash as undeclare....

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....led issue that on difference of opinion, the CIT is not permitted to make revision u/s 263 of the Act. This view is supported by the decision of Hon'ble A.P. High Court in the case of Spectra Shares and Scrips (P) Limited Vs. Commissioner of Income Tax - III, Hyderabad reported in (2013) 36 taxmann.com 348 (Andhra Pradesh). Hon'ble jurisdictional High Curt in the case laws cited supra held that merely because of difference of opinion, Pr.CIT cannot invoke his powers u/s 263 of the Act. For the sake of clarity and convenience, we extract relevant part of the order of the Hon'ble Andhra Pradesh High Court in para No.59 which reads as under : "59.......... The contention of the Revenue that the Assessing Officer had not ap....