TaxTMI 
TaxTMI 
TaxTMI 
2022 (1) TMI 872
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.... sources and not recorded in the regular books of accounts? (ii) Whether on the facts and in the circumstances of the case, the CIT(A) was justified in treating the excess cash found and surrendered during the course of survey as business income without appreciating the fact that the excess cash of Rs. 9,84,843/-, surrendered during the course of survey, was income from undisclosed sources and the same was not recorded in the regular books of accounts? (iii) Whether on the facts and in the circumstances of the case, the CIT(A) was justified in holding that the provisions of section 115BBE of the LT. Act, 1961 would not be applicable in the assessee's case as the provisions of sub- section (2) prohibit the assessee from claiming any deduction in respect of expenditure or allowance. These provisions are effective from 01.04.2013. The further amended provision was inserted only in respect of "set off of any loss" with effect from 01.04.2017? The Revenue has raised following grounds of appeal in ITANo.645/Ind/2019: (i) Whether on the facts and in the circumstances of the case, the CIT(A) was justified in treating the unexplained excess stock found and surrendered during t....
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....ises of both the assessees. As the facts of both the appeals are same and so are the issues raised before us, we will adjudicate the common issue raised in the instant two appeals on the basis of facts in the case of Vijay Kumar Surana in ITANo.644/Ind/2019 and our decision in this appeal shall apply mutatis mutandis on the revenue's appeal in the case of another assessee namely Rajendra Kumar Surana in ITANo.645/Ind/2019. 5. Perusal of record shows that the assessee namely Vijay Kumar Surana filed the return of income for A.Y. 2015-16 on 30th September 2015 declaring total income of Rs. 2,19,71,920/-. Case was selected for scrutiny followed by serving of notices u/s 143(2) and 142(1) of the Act. Ld. Assessing Officer called for the details to verify as to whether the assessee had offered undisclosed excess stock and excess cash in the return of income. In reply the assessee submitted that the alleged excess stock and excess cash totalling to Rs. 4,00,00,043/- ( excess cash of Rs. 9,84,843/- + Excess stock of Rs. 3,90,15,200/-) are part of the business income and have been shown in the profit and loss account for the year ended on 31st March 2015. It was also submitted that the ex....
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.... stock found and Rs. 984843/- excess cash found and credited P & L account 40000043/- to bring out all the discrepancies in to regular course of business. The ld. AO disallowed the excess stock debited and income declared under survey which have been offered in trading a/c the Ld. AO one side disallowed the purchases(which has been included for excess stock) and withdraw the credit side the P & L a/c and assumed that by disallowed both the entry there is no impact on the P & L a/c the AO erred by not taking the value of closing stock at lesser price as survey declaration added as purchases with quantity hence same has increase the quantity of the closing stock. 3. So without adjusting the value of closing stock the AO applied section 115BBE so it is the case of double addition one sided income is assessed u/s 115BBE and other side closing stock is the part of Trading & Profit & Loss a/c so the income already declared in P&L a/c. If addition u/s 115BBE is confirm then decrease in the closing stock also Rs. 39015200/- and income from business is Rs. 21137081/- (i) 39015200/- result income Rs. 17878119/-(loss). 9. We have heard rival contentions and perused the records placed ....
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....redited' the entered amount in its; books of account as business income. During the course of assessment proceedings, the appellant had submitted the books of accounts such as cash book, ledger, journal, purchase bills and vouchers of expenses and other documents in support of its business activities. The AO had made addition in the head of income from other sources. The AO had made addition in the head of income from other sources. But he had not brought any evidence on record to establish that the appellant was engaged in the any other activities. 4.3 The Hon'ble Rajasthan High Court in the case CIT vs BajarganTraders DB IT No 25~/2017 dated 12.09.2017 had held asunder:- "2.10.' We have heard the rival contentions and perused the material assailable on .record. During the course of survey, the assessee has surrendered an amount of 'Rs. 7,004814 towards investment in stock of rice which had not been recorded in the books of accounts. Subsequently in the books of accounts, the assessee has incorporated this transaction by debiting the 'purchase account: and crediting the income from undisclosed sources accounts, the purchase of Rs. 7004814 were finally ref....
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....ny other activities other than regular business activity; in such a situation, no addition can be made under the head Income from other sources. 4.5 In the instant case, the question which arises for the determination is that under which head of income the excess. stock/ investment found in survey and offered by the appellant for tax is to be assessed. According to the appellant, such excess stock/investment was a business stock which had arisen out of the unrecorded business activity of the assessee and therefore, the same needs to be assessed under the head of profit and gain of business. During the survey proceedings, the survey team had found unrecorded stock of Dal so found at appellant's premises that the appellant was engaged in its regular business activity only. This stock so found was ,clearly identifiable and was thus related to the regular business stock of the appellant. The facts of this case are identical with the decision of Hon'ble High Court of Rajasthan in the case of CIT vs. Bajargan Traders(supra) so discussed above. The same view was taken by the Hon'ble I.T.A.T. Bench Jaipur in the case of Vasu Singhal vs. ITO with 4 ors. The Hon'ble Bench ....
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....dore, the said section would not apply in the appellants. Case. The same view was taken by the Hon'ble Supreme Court in the case of CIT, Mumbai vs. M/s. Walfort Share & Stock brokers P. Ltd. in Civil Appeal No.4927 of 2010. 4.8 In this Case, the AO had debited trading account by Rs. 39015200 for excess stock found and Rs. 984843 for excess cash found. The appellant has credited the same in P&L A/c of Rs. 400000043. The entries so made by the appellant are correct from both the Accounting and legal point of view. This way of entry by debiting the purchase account by excess stock so found during the course of survey and crediting the P & L account is to regularized the books of account and introduce the unrecorded sock in the regular course of business while at the same time, P & L account is credited by the income so declared representing the excess stock. This view and method of making entry is also supported by Hon'ble High Court of Rajasthan in the case of CIT vs. Bajargan Traders D.B. (supra). The AO had disallowed both the entries while passing assessment order, which was technically wrong. Hence, in view of the above facts and judicial decision so discussed above, i....
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.... view that since the income alleged excess stock and excess cash found during the course of survey is part of the business income, the provisions of section 115BBE of the Act would not be applicable as rightly held by the ld. CIT(A) and also in view of the facts that there was an amendment in the provisions of section 115BBE w.e.f. 1st April 2017 and the assessee's case is pertaining to A.Y. 2015-16, thus, it is not be applicable on the case of assessee. 12. As the excess stock and excess cash are part of the business income we further find that the manner of disclosing the excess stock in the trading account is correct. As it is the only way through which the excess stock can be brought into the regular books. If the Ld. AO was not satisfied with the book results he ought to have first rejected the books results and then estimated the profits. The following finding of the Ld. AO of treating the undisclosed income as income from other sources at Rs. 4,00,00,043/- and calculating the business income of Rs. 2,11,37,081/- is neither here nor there:- "On verification of the Trading account of the assessee as reproduced on page 4, it is clear that the assessee passed "journal entry" ....