TaxTMI 
TaxTMI 
2024 (5) TMI 697
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....ddition of Rs. 2,86,31,392/- as unexplained investment in terms of Section 69B of the Act and consequently erred it confirmation the taxation of such sum at an enhanced rate of tax in terms of Section 115BBE of the Act without assigning proper reasons and justification. 3. The NFAC, Delhi failed to appreciate that that provisions of Section 69B of the Act had no application to the present facts and in circumstances of the case, there by vitiating the findings in relation there to. 4. The NFAC, Delhi failed to appreciate that the pre-requisite conditions required for making an addition in terms of Section 69B of the Act were absent in the present case and in circumstances and further ought to have appreciated that the provisions of Section 115BBE of the Act had no application to the present case and in circumstances of the case, there by negating the findings in relation there to. 5. The NFAC, Delhi failed to appreciate that having offered to tax the said presumed differential sum between the total value of the physical stock and value of the stock as per the books of accounts arrived at (Refer to tabulation prepared by the Survey Party, reflected in Question No.4 of the state....
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....related findings. 11. The NFAC, Delhi failed to appreciate that the entire re-computation forming part of the assessment order was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 12. The NFAC, Delhi failed to appreciate that the assessment order passed by the ACIT, Circle 1, Hosur was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 13. The NFAC, Delhi failed to appreciate that there was no effective/proper opportunity given before passing the impugned order and any order passed in violation of the principles of natural justice is nullity in law. 2. The Ld. AR advanced arguments and submitted that difference in valuation of stock was rightly offered as 'Business income'. The Ld. AR drew attention to the statements made during survey and to support the submissions, Ld. AR relied on various decisions of Tribunal. The copies of the same have been placed on record. The Ld. Sr. DR controverted the arguments of Ld. AR and supported the findings given in the orders of lower authorities. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as u....
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....he return of income and paid due taxes. However, Ld. AO was of the opinion that excess stock was in the nature of unexplained investment u/s 69B which would be subjected to higher rate of tax as per Sec.115BBE. The assessee stated that the said income was out of business income only and therefore, the same was assessable as business income. The assessee bolstered the same by submitting that the firm had carried out this business for past 20 years and there was no scope for any income to be derived from any other source. The excess stock was only an accumulation over the past several years. 3.3 The Ld. AO, considering the deposition made by the assessee, held that the assessee did not bring out any material to show that source of excess stock was from business. The excess sock was an investment which was not fully explained. Therefore, the aforesaid income was to be assessed u/s 69B which would be subjected to special higher rate of tax u/s 115BBE. Appellate Proceedings 4.1 During appellate proceedings, the assessee, inter-alia, submitted that stock was found in the shape of paddy, rice, packing material etc. It was not an investment but a current asset. Sec.69B does not refer to....
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.... material, the valuation of closing stock as on 31-03-2017 was disturbed. The physical stock was valued at Rs. 607.86 Lacs whereas book-stock was Rs. 321.55 Lacs. The difference of Rs. 286.31 Lacs was offered to tax by way of credit to Profit & Loss Account. Upon perusal of question no. 17 as put to assessee during survey, it could be seen that such differential has been arrived at as under: - Closing stock as on 31.03.2017 based on impounded material. Rs. 6,38,02,465 Add: Purchases from 01.04.2017 to 27.02.2018 Rs. 27,34,98,887 Rs. 33,73,01,352 Less: Sales from 01.04.2017 to 27.02.2018 Rs. 32,81,13,732 Rs. 91,87,620 Add: GP @ 7% on sales Rs. 2,29,67,961 Book stock as on 27.02.2018 Rs. 3,21,55,581 Physical stock taken on 27.02.2018 Rs. 6,07,86,973 Excess stock Rs. 2,86,31,392 It could be seen that Ld. AO has disturbed the closing stock of earlier year or opening stock of this year by adopting GP rate of 7% on sales. The computation of differential in stock is based on mathematical formula only. However, no discrepancy in the physical stock vis-à-vis book quantities has been noted by Ld. AO. The assessee has merely accepted the comput....
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....e same would be assessable as 'business income' only in terms of decision of Hon'ble Rajasthan High Court in the case of CIT vs Bajargan Traders (supra) wherein it was held that with respect to such excess stock found during the survey, it could be said that the investment in procurement of such stock was clearly identifiable and related to regular business stock of the assessee. Therefore, the same should be 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.....