AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (4) TMI 1108
X X X X Extracts X X X X
X X X X Extracts X X X X
....ome as "business income @ 30%" and based on which assessment order u/s 143(3) was passed by the learned Assessing Officer. 1.2 The Ld. PCIT has erred in law and/or facts in considering that the disclosed income of Rs. 71,50,000/- by way of excess stock found during the course of survey was not assessable under the head "Profit and loss of the business" but as deemed income under section 69 r.w.s. 115BBE of the act. 2. Appellant reserves right to leave to add/delete/alter or substitute all or any of the ground of appeal before passing final appeal order." 3. At the outset, we note that there is delay of 31 days in filing of the present appeal. The assessee has furnished an Affidavit before us, in which it has been submitted that order under Section 263 of the Act was put up on the Income Tax Portal on 13.03.2023 with instruction to the Ld. Assessing Officer to create tax pendency on the ITBA portal. The assessee submitted that he was waiting for a demand notice under Section 156 of the Act, which was not received within a period of 60 days from date of revision order under Section 263 of the Act. It was submitted before us that the order under Section 263 of the Act was uploade....
X X X X Extracts X X X X
X X X X Extracts X X X X
....69 of the Act r.w.s. 115BBE and not as business income as computed by the assessee. Further, the PCIT was of the view that Ld. Assessing Officer never asked the assessee to prove the source of such excess stock and call the assessee to prove that such purchases are made out of undisclosed business income, and therefore, the assessment order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. 6. Before us, the Counsel for the assessee submitted that in the instant fats, a survey under Section 133A of the Act was carried out at the premises of the assessee on 19.02.2018. During the survey, physical stock amounting to Rs. 1,11,28,063/- was found at the premises of the assessee, whereas the stocks as per the books of the assessee was Rs. 39,78,063/-. Accordingly, the statement of the partner of the assessee firm was taken in which the partner of the assessee firm, stated / accepted that excess stock amounting to Rs. 71,50,000/- was unaccounted business income of the assessee firm for the year under consideration. The Counsel for the assessee drew our attention to Question Nos. 12 & 13 of the statement of the partner at Pages 56 & 57 of the Pape....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Act and thereby imposed higher rate of taxed under Section 115BBE of the Act. However, in appeal the Ld. CIT(A) held that the excess stock was undisclosed business stock of the assessee, which is not separately identifiable. The Ld. CIT(A) considered such undisclosed excess stock as business income of the assessee and allowed the appeal in favour of the assessee. The Counsel for the assessee has placed the above order for our perusal and records (refer Pages 119 to 121 of the Paper Book). 9. Fourthly, the Counsel for the assessee relied upon the Ahmedabad ITAT decision in the case of Nilaykumar & Bros. Jewellers vs. PCIT, Vadodara in ITA No. 146/Ahd/2022 in which the ITAT on identical facts has reversed the order of the PCIT by holding that undisclosed stock discovered during the course of survey under Section 133A of the Act is the business income of the assessee. 10. In response, the Ld. D.R. placed reliance on the observations made by the Ld. PCIT in the 263 order. 11. We have heard the rival contentions and perused the material on record. 12. On going through the facts of the instant case, we are of the considered view that this is not a fit case for revising the order ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....39;undisclosed investment' under section 69 and since explanations offered by assessee were fortifiable by said consistent view, no case of perversity or lack of enquiry on part of Assessing Officer was made out so as to render his decision erroneous under Explanation 2 to section 263. In the said case the High Court made the following observations:- "....7. In ITTA No. 14 of 2021, in the course of search under section 132 of the Act, the excess stock valued at Rs. 4,41,46,445/- was declared by the assessee. In return of income, the assessee claimed the additional income was declared under the heading 'other operating income', which was nothing but 'business income'. Upon show-cause notice being served upon it calling for explanation as to why the additional income was not treated as 'undisclosed investment' under section 69 of the Act by applying provision under section 115BBE of the Act, the assessee explained that the additional income was admitted in Schedule L under the heading, 'other operating income' in the relevant columns under the head "Profits and Gains of the Business" in Part A of the Return filed for the relevant Assessment Year.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pted by the Assessing Officer after inviting explanation from the assessee and upon being satisfied on such explanation such view cannot be said to be erroneous. 14. As discussed above, explanations had been given by the assessees with regard to the additional income, which were considered and duly accepted by the Assessing Officer. Assessees relied upon various authorities in support of their explanations which had been duly accepted by the Assessing Officer. Views of the Assessing Officer appear to have been approved by the Joint Commissioner, Income Tax, Central Range, under section 153D of the Act. In this factual matrix, it cannot but be accepted that a possible view on the matter had been followed by the Assessing Officer. In doing so, the Assessing Officer, in fact, followed the consistent view of various judicial authorities binding on him, namely, where excess stock found in the course of search is neither separately identifiable nor had independent physical existence, it cannot be treated as 'undisclosed investment' under section 69 of the Act. ............ 18. As explanations pursuant to the Show-cause notices issued by the Assessing Officer had been submit....