2023 (2) TMI 598 - AT - Income Tax

Addition u/s. 69B - difference of stock is the nature of business - undisclosed stock was generated from the business income - Tax levied u/s. 115BBE - AO had assessed by taking the stock as an income from other sources and addition was made u/s. 69B - HELD THAT - Assessee has confirmed the identity of investment in the difference of stock which was generated from business income. During the assessment and in appeal, both the revenue authorities had not been able to bring any such contrary findings against the assessee that the source of investment on undisclosed stock which was not from business income. In the recorded statement, the assessee had declared that the undisclosed stock was generated from the business income. After that the revenue had not made any queries to prove that the said investment is in nature other than business. Only on the basis of the legal view, the identity of the items cannot be changed. In referred case, DR is trying to prove that the investment in jewellery was out of income from other sources. But the assessee is the trader of jewellery and nature of investment was out of income generated from business. No contrary judgment was placed by the ld. DR against the submission of assessee. We fully rely on the orders of Ragavs Diagnostic Research Centre Pvt. Ltd. 2022 (9) TMI 584 - ITAT BANGALORE Accordingly, the application of 69B on the assessee is not warranted. So, the tax levied by the revenue on the assessee u/s. 115BBE is liable to be rejected. We order accordingly.

Summary

Issues Involved:
Appeals against order of CIT(A) - Addition made u/s 69B of the Income Tax Act - Taxability of undisclosed stock - Application of section 115BBE - Assessment of tax rate - Charging of interest under Section 234A and 234B - Nature of investment in stock - Business income or other sources.

Analysis:
1. The appeals were filed against the order of the CIT(A) concerning the addition made under section 69B of the Income Tax Act for the assessment year 2018-19. The appeals were heard together as the issues were identical for both assessees.
2. The assessee, a dealer of gold and silver articles, declared a difference in stock value amounting to Rs.50,39,395 during a survey conducted by the revenue department. The tax was paid on this difference under the normal rate.
3. The assessing officer confirmed the addition under section 69B and levied tax under section 115BBE. The assessee contended that the tax charged under section 115BBE was unwarranted as the undisclosed stock was part of the business income.
4. The counsel for the assessee argued that the undisclosed stock was generated from business income and should not be taxed under section 115BBE. The counsel relied on relevant case laws to support the argument.
5. The tribunal observed that the revenue authorities failed to prove that the investment in the undisclosed stock was from a source other than business income. The tribunal held that the application of section 69B was not justified, and the tax levied under section 115BBE was rejected.
6. Consequently, both appeals were allowed in favor of the assessee, and the tax assessment under section 115BBE was set aside. The order was pronounced on 24th January 2023.