TaxTMI 
TaxTMI 
2025 (6) TMI 1988
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.... During the course of assessment proceedings the Assessing Officer noted that a survey action u/s 133A of the Act was conducted in the case of the assessee on 15.03.2017 during which certain incriminating documents were found. On the basis of these documents the authorized officer had observed that the assessee has excess stock of Rs. 3,20,25,540/-, excess cash of Rs. 9,55,920/- and excess expenditure made on furniture and fixtures for Rs. 19,98,263/- which were not recorded in the books of account. On being confronted by the survey party regarding these discrepancies, the son of the assessee Shri Sayyed Minhaj Sayyed Baba Patel in his statement recorded on oath u/s 131 of the Act accepted the said discrepancy and agreed to offer the same as additional income all totaling to Rs. 3,49,79,723/- (i.e. Rs. 3,20,25,540/- + Rs. 9,55,920/- + Rs. 19,98,263/-). 4. The Assessing Officer noted that the assessee has offered the additional income disclosed amounting to Rs. 3,49,79,723/- in the return filed u/s 139 of the Act under the head 'Income from other sources' at normal rate of tax. Since there was no explanation offered by the assessee about the source for the expenditure towards fur....
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....ng account of the appellant. There is no finding by the AO in the assessment order that the appellant was engaged in any other activity other than the business of retail of shoes. The AO assessed the excess investment in stock and excess expenditure in the furniture at the business premise under section 69 and section 69C respectively. However, no case or justification of assuming the excess stock / unexplained in furniture to be from unexplained sources other than business income has been made out. In view of this and respectfully following the various judicial pronouncements of higher authorities, it is held that the AO has wrongly assessed the additional income offered by the appellant under section 69 & 69C instead of assessing it as business income. 5.10 Hence, the action of the AO in applying the provisions of section 115BBE to the case of the appellant is held to be based on wrong appreciation of facts. Hence, the AO is directed to assess the income under the head business income only and under normal provisions of the tax. As a result the appellant succeeds on ground No. 1 & 3 and the same are hereby allowed." 7. Aggrieved with such order of the Ld. CIT(A) / NFA....
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....ns. The source of entire cash found is out of business regularly done by me. As per the tentative balance sheet, cash in hand is Rs 30,530/- however excess cash found at Rs. 9,55,920/- is also from my business income. Therefore in this regard, I hereby voluntarily declare the difference amount of Rs. 9,55,920/- as additional income over and above the regular income during the financial year 2016-17 relevant to the assessment year 2017-18. No.17 During the course of survey action under section 133A of the Act in your premises a stock to the extent of Rs. 4,18,80,040/- is inventorised as annexed while as per your tentative trading account closing stock is shown at Rs. 98,54,500/- kindly explain the difference of Rs. 3,20,25,540/- between the same? Ans. The survey team has inventorised the stock physically at Rs. 4,18,80,040/- is correct. However I could not explain the excess stock found at Rs 3,20,25,540/-. Therefore in this regard, I hereby voluntarily declare the difference amount of Rs. 3,20,25,540/- as additional income over and above the regular income during the financial year 2016-17 relevant to the assessment year 2017-18." 11. He submitted that the surv....
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....der rejected the explanation of the assessee that the same be assessed to tax as normal business income and brought the same to tax u/s 69 / 69C r.w.s. 115BBE of the Act. When the assessee challenged the action of the Assessing Officer in bringing to tax the additional income declared during the course of survey u/s 69 / 69C r.w.s. 115BBE of the Act as against the normal business income, the Ld. CIT(A) / NFAC allowed the appeal of the assessee by holding that the Assessing Officer has wrongly assessed the additional income offered by the assessee u/s 69 / 69C of the Act instead of assessing it as business income, the reasons of which have already been reproduced in the preceding paragraphs. 15. We do not find any infirmity in the order of the Ld. CIT(A) / NFAC on this issue. It is an admitted fact that the assessee is engaged in footwear business on retail basis under the name and style of M/s. Patel Shoes Company. The Revenue has no other information or material that the assessee is engaged in any other activity other than the shoe business on retail basis. Under these circumstances, we have to see as to whether the income so offered during the course of survey u/s 133A has to ....
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....ount surrendered under unrecorded stock has to be brought to tax under the head "business income" as the excess stock which has been found during the course of survey is the investment in procurement of such stock is clearly identifiable and related to the regular business stock of the assessee. The Hon'ble High Court clearly held the investment in excess stock has to be brought to tax under the head "business income" but not under the head "income from other sources". The Mumbai Benches of the Tribunal in the case of Govind Godomal Lulla (supra) held undisclosed investment in the case of excess stock found during carrying on business and the same is generated out of business income, no provisions of section 69B of the Act would attract. Further, the Jodhpur Benches of the Tribunal in the case of Shri Lovish Singhal (supra) held the excess stock/cash found during the course of survey is taxable under the business and no provision u/s. 115BBE of the Act is attracted. In the present case as discussed above without any dispute the assessee offered additional income under excess stock during the course of survey and same was entered in the books of account as on the last day of financi....