TaxTMI 
TaxTMI 
2010 (11) TMI 1126
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....tion as per section 40(b). 3. The facts of the case are that assessee firm is engaged in the business of purchase of standard gold for manufacturing of new gold ornaments. Old gold ornaments, are also purchased for refining and making jewellery. The assessee firm filed return of income declaring total income of Rs.30,26,120/- on 4.7.2006. It claimed deduction under section 40(b)(v) at Rs.21,04,912/- and of Rs.17,58,457/- being the remuneration and interest payments made to partners. 4. The department had carried out survey under section 133A on the assessee firm on 10th January, 2006. During the course of survey excess quantity of gold ornaments weighing 5256.000 gms. and valued at Rs.37,68,700/- was found and in addition excess cash ....
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....ppellant. The disclosed income was from excess stock of gold and jewellery, cash and withdrawals by the partners and recorded in the books of account. From the content of the disclosed income it is crystal clear that the concealed income was out of business activities. The departmental authority having accepted the disclosed income as business income at the time of survey cannot take different stand during the assessment proceeding. The excess stock can never be treated as other source of income. Considering the factual matrix of the case I am inclined to hold that the appellant has correctly adopted the disclosed amount at the time of survey as business income. I direct the AO to modify the taxable income accordingly. It was also brought t....
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.... hand of Rs. 5,256 grams' value amounting to Rs. 37,68,700/-. I declare the same as additional business income our firm. It means, the said income is additional income over and above our regular income and are prepared to pay tax which is payable thereon."(emphasis supplied) Since there is no contrary material to what has been stated by the partners, there is no reason to hold that disclosed amount does not relate to business. Further the excess gold or cash were found out of integrated corpus of gold at the time of survey and the authorities have not identified as to which gold or cash were actually unaccounted. Once the declared gold ornaments/cash and not declared gold/cash are integral part of business assets and not a single ite....
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....ax the difference between book-stock and physical-stock as unaccounted investment under section 69 without considering the claim of the assessee that first the business receipt has to be considered and then investment should be treated as coming out of such unaccounted income. The difference in stock so worked out by the authorities below had no independent identity of its own and it is part and parcel of entire lot of stock. The difference between declared stock in the books and what is physically found would only be a mathematical expression in terms of value and not a separate independent identifiable asset. Therefore, it cannot be said that there is an undisclosed asset existed independently. Once this is so then what is not declared to....
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....t instance without giving opportunity to the assessee to establish nexus. Therefore, there is no conflict with the decision of Hon. Gujarat High Court in the case of Fakir Mohmed Haji Hasan (supra) where investment in an asset or expenditure is not identifiable and no nexus was established then with any head of income and thus was not available for set off against any loss under any other head. Therefore, we hold that where asset in which undeclared investment is sought to be taxed is not clearly identifiable or does not have independent identity but is integral and inseparable (mixed) part of declared asset, falling under a particular head, then the difference should be treated as undeclared business income explaining the investment. ....