2021 (9) TMI 408 - AT - Income Tax

Revision u/s 263 - excess stock found during the course of survey and taxability - difference in the physical stock and the stock recorded in the books of accounts - HELD THAT - On perusal of statement of Shri Ram Kumar Soni recorded u/s 133A it is noted that in response to question no. 6, he has offered an amount of ₹ 70 lacs to tax towards difference in stock and other deficiencies and during the course of assessment proceedings, there is a clear affirmation by the AO that the assessee has offered additional income for stock and other discrepancies pointed out during the course of survey as income in his return of income and the same was brought to tax at the rate of 30% under section 115BBE - The matter relating to excess stock found during the course of survey and taxability thereof has been specifically discussed in the body of the assessment order. Thus, it cannot be said that there is failure on part of the AO to examine the same. Excess stock of Gold Jewellery and silver jewellery - Figures relates to the stock which was recorded in the books of accounts as on the date of the survey as apparent from the trading account for the pre survey period which is also reproduced by the ld PCIT in the impugned order and not the figure of excess stock found during the course of survey. The excess stock which was found during the course of survey and the stock of gold and silver in the trading account has been corresponding increased in the trading account by the assessee and the same has been duly examined by the Assessing Officer along with other discrepancies found during the course of survey and the discrepancies on account of excess stock and other discrepancies adding up has been offered to tax by the assessee as we have noted above and duly brought to tax by the Assessing officer by invoking provisions of section 115BBE. There is no basis to hold that the order passed by the AO is erroneous so far as prejudicial to the interest of the Revenue. The order of the ld PCIT is hereby set-aside and that of the AO is sustained. - Decided in favour of assessee.

Summary

Issues Involved:
Challenging order passed under Section 263 of the IT Act for assessment year 2015-16 regarding excess stock of gold and silver jewelry found during a survey.

Analysis:
The appeal was filed against an order by the Ld. Pr.CIT, Jodhpur challenging the order passed under Section 263 of the IT Act for the assessment year 2015-16. The main issue revolved around the excess stock of gold and silver jewelry found during a survey conducted on the business premises of the assessee. The discrepancies in stock were highlighted, with the assessee offering an additional income amounting to ?70,00,000 for the discrepancies found during the survey. The Assessing Officer had duly considered and included this additional income in the computation of income, taxing it at 30% under Section 115BBE of the IT Act. The Ld. Pr.CIT contended that the Assessing Officer failed to examine and verify the reason for the enhancement in the trading amount regarding the excess stock found during the survey.

During the proceedings, it was noted that the Assessing Officer had specifically discussed the matter of excess stock found during the survey and its taxability in the assessment order. The figures of excess stock of gold and silver jewelry mentioned by the Ld. Pr.CIT were found to relate to the stock recorded in the books of accounts before the survey, not the actual excess stock discovered during the survey. The Assessing Officer had examined the discrepancies in stock, including the excess stock of ?67,58,112, and other deficiencies totaling ?70,00,000, which were offered to tax by the assessee and duly taxed by invoking Section 115BBE of the Act.

After considering all the contentions and examining the facts and circumstances of the case, the Tribunal found no basis to hold that the order passed by the Assessing Officer was erroneous or prejudicial to the interest of the Revenue. Consequently, the order of the Ld. Pr.CIT was set aside, and that of the Assessing Officer was sustained, leading to the allowance of the appeal filed by the assessee.

This detailed analysis of the judgment showcases the thorough examination of the issues involved, the arguments presented by both parties, and the Tribunal's reasoning behind its decision to uphold the Assessing Officer's order while setting aside the Ld. Pr.CIT's order under Section 263 of the IT Act.