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The only effective issue in this appeal is against the deletion of addition of Rs. 1.5 crores made u/s 69C of the Act. Summary: The case involved the deletion of an addition of Rs. 1.5 crores made under section 69C of the Income-tax Act. The assessee, a dealer in textiles, offered additional income of Rs. 1.15 crores due to discrepancies found during a survey. The Assessing Officer added a further Rs. 1.15 crores to the returned income, which the Commissioner of Income-tax (Appeals) later deleted. The Revenue appealed this deletion, arguing that the unexplained stock should be brought to tax for the assessment year 2003-04. The appellate authority was requested to reconsider all facts according to law. The assessee contended that the addition of Rs. 1.15 crores was incorrect as it represented unexplained purchases and was not connected to the income offered post-survey. Upon review, it was found that the assessee had unexplained investment in stock-in-trade amounting to Rs. 1.15 crores, which was offered as income for two assessment years. The assessee attempted to claim this amount as purchases for the assessment year 2003-04 to reduce income, which was not permitted under section 69C of the Act. The provisions of section 69C deem unexplained expenditure as income, disallowing deductions. The Tribunal held that the unexplained stock value could not be included as purchases in the final account, and the assessee was not entitled to claim it as a deduction. Therefore, the order of the Commissioner of Income-tax (Appeals) was reversed, and that of the Assessing Officer was restored. In conclusion, the appeal of the Revenue was allowed.
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