TaxTMI 
TaxTMI 
2023 (9) TMI 542
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.... effectively taxed the same sum of money twice in the hands of the Appellant 5. The Learned CIT(A) failed to understand the feet that if excess stock is found at the premises of the Appellant during survey, the same ought to be treated as profit earned over the years of business conducted, and part of the business income. 6. The Learned CIT(A) has failed to realize that the Appellant has only offered the said sum to income to buy peace with the department. 7. The Learned CIT(A) overlooked a plethora of cases in favour of the Appellant's claim and dismissed the appeal without going into the relied case laws 8. The Learned CIT(A) has failed to understand the facts of the case and passed the arbitrary order. For these and other grounds that may be rendered at the tone of hearing it is most humbly prayed that the Hon'ble Tribunal may be pleased to allow the Appellants claim and thus render justice. 3. The brief facts of the case are that the assessee is an individual and engaged in the business of purchase and sale of gold, silver & diamond jewellery in the name and style of M/s.Shanthi Swarna Mahal, a proprietary concern. In this case, a survey u/s. 133A of the Inco....
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....d sustained assessment of additional income under the head 'income from other sources' u/s. 69B of the Act r.w.s.115BBE of the Act. The relevant findings of the Ld.CIT(A) are as under: 7. Decision along with reasons: 7.1 I have considered the submissions of the appellant. The assessee has disclosed the excess stock amounting to Rs. 49,20,771/- and unaccounted marriage expenditure of Rs. 25 lakhs as his undisclosed income during the survey; such disclosure was backed by stock inventory taken at the time of survey and from the statement recorded during survey. Therefore, the disclosure is not just based on a bald statement, but has been backed by the physical stock inventory and. inquiries based on the books of accounts of the assessee. The assessee has also duly shown it as income (Rs.74,20,771/-) in its return of income. The assessee has come up with this appeal primarily because he is of the opinion that the excess stock found during survey was generated out of his business and hence it has to be taxed as business income (subject to 30% tax), whereas the AO has taxed it as undisclosed investment (subject to tax rate of 60% u/s 115BBE). Similarly, the assessee is of the opinion....
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....e that the unaccounted stock and source for unaccounted expenditure were generated out of his business only. Such assumption is not possible without any backing evidence tendered by the assessee to that effect. In the lack of positive evidence for business income as source, the only possibility is to assess excess stock as income from other sources - unexplained investment u/s 69B arid the unexplained marriage expenditure as unexplained expenses u/s. 69C. In fact, the financials of the assessee supports this stand of revenue: Sri Santhilal Jain Vijay Kumar 19/21, Asaliamman Koil Street, Tiruvannamalai AY 2018-19 PAN: AADPV 0516 B V-5a Profit & Loss A/c for the year ending 31st March, 2018 Particulars Amount Particulars Amount To interest paid 4,43,940.00 By interest from - Karur Vysya Bank 18,717.00 To Misc. Expenses 3,71,010.00 By weighing Charges 15,980.00 By net profit trs. From: - M/s.Shanthi Swarna Mahal A/c 28,37,583.00 By valuation and appraiser charges received 45,200.00 By car rent 92,250.00 To Net Profit 21,94,780.00 Total 30,09,730.00 Total 30,09,730.00 Capital....
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....ple of law that if there is conflicting views rendered by different High Courts, the view taken by the jurisdictional High Court is binding in the jurisdictional area of the respective High Court. The Hon'ble Bombay High Court in the case of Subramaniam -vs.- Siemens India Ltd. (1985) 156 ITR 11 (Bom.) held that so far as the legal position is concerned, the ITO would be bound by a decision of the Supreme Court as also by a decision of the High Court of the State within whose jurisdiction he is functioning, irrespective of the pendency of any appeal or special leave application against the judgment. He would equally be bound by a decision of another High Court on the point, because not to follow that decision, would be to cause grave prejudice to the assesses. However, in the case where there is conflict of views between different. High Courts, ITO must follow the decision of the High Court, within whose jurisdiction he is functioning. In view of the above settled law, I am bound to follow the jurisdictional Madras High. Court in the case of SVS Oil Mills and have no other alternative except to confirm the order of the AO assessing the unaccounted excess stock as unexplained invest....
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....ock found during the course of survey u/s. 69B of the Act, as unexplained investment on the ground that the assessee could not explain source for excess stock found during the course of survey. We find that the excess stock found during the course of survey was mixed with regular stock in trade employed by the assessee in his business. The stock was not separately identified so as to assess it under the head 'unexplained investment'. The assessee is having only one source of income i.e. income from trading in gold jewellery and silver articles. From the above, it is very clear that the entire stock found during the course of survey was available for trade at the business premise of the assessee and it was part and parcel of the regular business stock. Once, it is considered as regular business stock, then, obviously the source for acquisition of said stock is out of business income earned for the relevant assessment year, because, it is a general practice in business that whatever excess income earned is kept in the form of stock and debtors. Since, the excess stock found during the course of survey was not separately identified and was mixed with regular business income, the asses....
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.... considered as 'Business Income only. In the present case, the stock difference has arisen in the course of day-to-day business activity only and not otherwise. The entire stock was available as trading stock at the business premises and it was part and parcel of regular business stock. The decision of Hon'ble Supreme court in the case of Lakshmichand Baijnath vs CIT (supra) also support the said conclusion. It was held by Hon'ble Court that when an amount is credited in the business books, it is not an unreasonable inference to draw that it is a receipt from business. Therefore, the impugned income, in our considered opinion, would be assessable as 'Business Income' only. Similar view has been taken in the decision of Chennai Tribunal in M/s Overseas Leathers vs. DCIT (ITA No.962/Chny/22 dated 05.04.2023). We find that facts in that case are quite identical to the facts of the present appeal before us. 4. After going through the case law of Hon'ble High Court of Madras in the case of M/s SVS Oil Mills vs. ACIT (supra), we find that said case is distinguishable on facts. In that case, though stock was added in the stock register but there was no corresponding credit in the books ....