TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 263
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....ed assessing officer for undisclosed stock u/s. 69B of the Act instead of business income. 3. Hon'ble CIT(A) erred in law and on facts in confirming the addition made by Learned assessing officer towards alleged unaccounted stock separately, over and above the net profit offered as business income. 4. Hon'ble CIT(A) erred in law as well as on facts in confirming the addition made by learned assessing officer on estimation of net profit by comparing the current year's results with the previous year whereas in current year business is closed. 5. Hon'ble CIT(A) erred in law as well as on facts in confirming the addition made by learned assessing officer by not considering the melting loss and documents submitted by the assessee. 6. Hon'ble CIT(A) has erred in law in confirming the rejection the books of accounts by assessing officer u/s 145(3). 7. Hon'ble CIT(A) has erred in law in confirming the addition made by learned assessing officer by not following procedure u/s 144." 3. The facts of the case which can be stated quite shortly are as follows: The assessee, filed its return of income (ROI) on 28/09/2014, decl....
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....eclaration income in the Profit and Loss account. Thus, it is correct and also agreed by assessee that assessee had declared unaccounted stock/excess stock found during the survey of Rs. 1,50,00,109/- and the same is offered for tax in the return of income/books of accounts and due tax has been paid on such excess stock. The assessee submitted that its firm is dealing in the old ornaments which assessee purchases from his customers and at that time assessee books these ornaments on gross weight basis in the books of accounts. These ornaments, were sent for melting and hence, assessee got lesser quantity as from the old ornament, mani, moti, impurity, stone etc removed. This is regular practice of all the Goldsmith and this is the reasons of having shortage in assessee's business. The shortage due to this process is of 613.132 Grams. This is in normal course of business and claiming all the businessmen who are in the old ornament trading. The proof of the same are produced herewith for your kind verification. We also enclosed herewith the month wise details of showing shortage in the month in which old ornaments sent for melting. This is proving that assessee has shown shortage in a....
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....rams (2402.73 + 190.091). The proof of the goods sent for melting with all the details i.e. gross weight, net weight received with details of loss due to meena etc and due to impurity etc and final quantity received from the Ridhi Sidhi Jewellers to whom for melting ornaments was given are submitted before the assessing officer. All these supporting evidences proves that loss/shortage is due to either regular business loss which all the businessmen is incurring or major shortage is due to closer of business and sent for melting and get pure 24 carat gold from the ornaments. This has been seen form the stock statement submitted by the assessee, before the assessing officer. The assessee also submitted proof of the shortage for the FY 2012-13 and for earlier also which shows that this shortage is consistent and factual also. It is universally accepted that and showing all the businessmen that old ornaments sent for melting will be resulted in shortage of goods. Therefore, no addition should be made for the shortage of goods which is incurred in regular course of business and having all the supporting evidences in support of assessee's claim. It is fact and also can be seen from the s....
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....14, retaining only minimal activity for the purpose of liquidating remaining stock. During the course of the survey conducted at the business premises of the assessee, as on 20.11.2013 and 21.11.2013, a statement was recorded under section 131 of the Act of one of the partners, Shri Rasiklal Kalyanji Doshi. In the said statement, Shri Rasiklal Kalyanji Doshi admitted that certain gold stock, namely 1,000 grams of 24 carat gold and 4,031 grams of 916-type (22 carat) gold, constituted unaccounted stock, and agreed to offer the market value thereof, being Rs. 1,50,00,109/-for taxation. It is of fundamental importance to note that the stock so admitted was duly recorded in the stock register maintained by the assessee. The stock did not constitute a separate or independent asset but formed an integral part of the trading stock of the assessee. Subsequent to the survey, the assessee took a commercial decision to close its business operations in the month of January 2014. This was not a mere reduction in business activity but a complete cessation of manufacturing and trading operations. In furtherance of this decision, and for the purpose of liquidating the existing stock of gold ornamen....
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.... case laws relied upon and perused the facts of the case including the findings of the Ld. CIT(A) and other material brought on record. As mentioned above, the survey u/s 133A of the Act, was carried out at the assessee's premises and during the course of survey, excess stock of gold and silver ornaments to the extent of Rs. 1,50,00,109/- was found in the following manner: (a) 24 CT Gold: Unaccounted stock: 1000gms Rs. 3153/gmRs.31,53,000/-. (b) 22 CT Gold: Unaccounted stock: 4031 gms. Rs. 2939/gm= Rs. 1,18,47,109/- The working partner Shri Rasiklal Kalyanji Doshi who has present during the course of survey proceeding agreed in his statement to surrender the excess stock and to pay the taxes thereon. In this connection, it was stated that any unaccounted income that has already been earned earlier is utilized, invested or deployed in any manner including for the purpose of purchase or articles in which the business was carried on, such income will certainly not form part of the business of the assessee and will be treated as per the provisions of section 69B of the Act. The provision of section 69B of the Act has been specifically enacted to deal with situa....
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....00,109/- as deemed income for this assessment year as per the provisions of section 69B of the I.T. Act which has been invested for the purpose of acquisition of excess stock in trade. 17. In this regard, the assessee has replied before assessing officer, vide his reply dated 24.12.2016 and submitted that, "the unaccounted stock has been shown and recorded in the books of accounts and hence, it is wrong to say that we are not consistent as per section 69A/B/C of the IT Act." 18. However, assessing officer, noticed that assessee has created a huge fictitious loss due to conversion of gold ornaments as melting loss and set off the same with the value of unaccounted stock disclosed during the course of survey, which is not allowable. The discrepancy between the disclosed income and returned income relates to the following factor: (a). Creation of huge melting loss on account of conversion of gold from 22 CT to 24 CT and 18 CT to 24 CT. (b). Eligibility to allow or otherwise of interest and remuneration to be deductible under the provisions of section 40(b) of the Act claimed to be paid to the partners. It is the case of the assessee that excess stock found d....
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....in the books of account, that is, u/s 69B of the Act. Now, the question that whether on facts it can be said that the investment in stock is out of business income. No material has been brought on record by the assessee, to show that the unexplained investment found in stock is out of business income of the assessee not recorded in the books of account. Investment in unexplained stock could be from various modes and it was for the assessee to bring material on record to show that investment in such stock was sourced from business income earned by the assessee out of books of account, if assessee wants to claim that such unexplained investment in stock should be held to be business income of the assessee. In absence of any such material the same cannot be said to be business income of the assessee as its sources has not been established to be from "business". The assessing officer, therefore, noted that the issue which requires consideration is that the said amount does not represent business income, whether assessee is entitled to get deduction on account of remuneration paid to the partners under section 40(b) of the Act. The provision of law relating to addition made under sectio....