TaxTMI 
TaxTMI 
2025 (7) TMI 1955
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....e are that assessee is a partnership firm engaged in the business of trading in gold ornaments etc., filed its return of income on 10.11.2020 declaring total income of Rs. 3,61,72,730/-. The return was processed under section 143(1) of the Act, on 29.03.2021. The case was selected for scrutiny under compulsory scrutiny as survey under section 133A of the Act was conducted in the case of the assessee. Accordingly, a notice was issued to the assessee and subsequently other statutory notices were issued to the assessee. During the course of survey under section 133A of the Act on 20.01.202, discrepancy was found in the physical stock available with the assessee and stock recorded in the books of accounts of the assessee. The differences are as under: 18 carat 22 carat As per physical inventory (weight in grams) 12248.03 83979.575 As per books of accounts (weight in grams) 10774.15 76611.74 Difference in stock (weight in grams) 1473.88 7367.835 3. Statements were also recorded on 21.01.2020. As per the statements, assessee has accepted it as additional income and the same was credited into the P & L account as additional income. During t....
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....19 in the case of DCIT Vs. Sri Krishna Diamond and Jewellery vide Order dated 26.07.2023 in favour of the assessee and he strongly submitted that the facts are similar to the facts of the present case and he also submitted that the AO has acknowledged that the excess stock was generated out of previous years sales, so no where the AO has pointed out that it is undisclosed income of the assessee. The assessee has no other business activity except in trading in gold, silver, bullion and jewellery. Therefore, the presumptions made by the AO that it is undisclosed income under section 69B of the Act is wrong. 9. Considering the rival submission and perusing the material available on records and Orders of the authorities below, there are surveys was conducted on 20.01.2020 at the assessee's business premises and difference was noted in the stocks found in the books of accounts and it was quantified in value at Rs. 3,23,08,950/- and the AO made addition under section 69B of the Act and applied section 115BBE of the Act. However, the learned CIT(A) has allowed the appeal of the assessee and treated it as a business income after relying on various judgments. We also noted from the O....
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....es was declared. The stock declared under survey was credited to the capital account of the partners of appellant. Further, the stock was found in the business premises of the appellant for which the source is income from business only. The excess stock found during the course of survey and surrender made thereof was correctly returned under the head "Business and Profession' only in the Return of Income. As stated above, the appellant is dealing in Gold jewellery, Silver articles, Diamond, Platinum and other precious / semi precious, etc., and the excess stock which has been found during the course of survey is stock of Gold jewellery and Silver articles only. Therefore, the investment in procurement of such stock of Gold jewellery and Silver articles is clearly identifiable and related to the profit of regular business of the appellant only. Therefore, the investment in the excess stock has to be brought to tax under the head "Business Income" and not under the head "Income from Other Sources" and provisions of Section 69/115BBE would accordingly be not applicable. 14.2 Even in the statement recorded u/s 133A on 04.01.2018 from the appellant at the time of survey u&#....
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....om 8 (Jaipur- Trib.) In the ITAT Jaipur Bench `A' Hari NarainGattani vs. Deputy Commissioner of Income Tax, Circle-04, Jaipur ● Hon'ble ITAT, Indore Bench, Indore in the case of M/s Shahnai V/s ITO 1(1), Ujjain, vide ITA No. 658/Ind/2014, dated 15-052015. ● ACIT, Circle -1(1), Ujjain V/s M/s. A one Enclave, 3687/1, Hariphatak Road, Ujjain ITA No. 828/Ind/2018 * Chokshi Hiralal Maganlal Vs. Dy. CIT (2011) 9 taxmann.com 300/45 SOT 349 (Ahd-Trib) ● Principal Commissioner of Income Tax vs. Deccan jewellers (P.) Ltd. dated 02- 08-2021(2021) 132 taxmann.com 73 (Andhra Pradesh)/(2021) 438 ITR 13 ( HC of Andhra Pradesh) 9.1 I have heard the AR of the appellant and duly considered the submissions made. The assessing officer has considered excess stock found during the course of survey proceedings amounting to Rs. 2,50,51,072/- as unexplained stock and the same is added back to the income under section 69 of the Income tax Act, 1961. The assessing officer has relied on the decisions of Hon'ble High Court of Rajasthan in the case of PCIT Aiwar vs Bajargan Traders in ITA No. 258/2017 dated 1209-2017 and also on the decision of H....
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....f the assessing authority should be to find out link of undeclared investment/expenditure with the known head, give opportunity to the assessee to establish nexus and if it is satisfactorily established then first such investment should be considered as undeclared receipt under that particular head. It is observed that there is no conflict with the decision of Hon'ble Gujarat High Court in the case of Fakir Mohd. Jajihasan (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 Jany other head. Therefore, the Hon'ble Coordinate Bench held 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. In the present case the excess stock was part of the stock. The revenue has not pointed out that the excess stock has any nexus with any other receipts. Therefore, we do not find any f....
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.... rice and oil seeds, and the excess stock which has been found during the course of survey is stock of rice Therefore, the investment in procurement of such stock of rice is clearly identifiable and related to the regular business stock of the assessee. The decision of the Co-ordinate Bench in case of Shri Ramnarayan Birla (supra) supports the case of the assessee in this regard. Therefore, the investment in the excess stock has to be brought to tax under the head "business income" and not under the head income from other sources" In the result, ground No. 1 of the assessee is allowed. 9.2 The Hon'ble High Court of Rajasthan in the case or PCIT Alwar vs. Bajargan Traders in ITA No. 258/2017 (supra) has affirmed the decisions of ITAT which had held that in a cases where source of investment/expenditure is clearly identifiable and related to the regular business stock of the appellant then the investment in excess stock found during the course of survey has to be brought under the head "Business Income" and not under the head "Income from other sources". 9.3 The appellant has relied on the decision of Hon'ble High Court of Rajasthan in the case of PCIT Alwar....