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TMI Blog2014 (12) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... e allowable remuneration by ascertaining not only income from business but also income from other sources. – Decided in favour of assessee. Additional income declared representing excess stock – Whether or not additional income surrendered during the course of survey is assessable as income from business or not - Held that:- There cannot be an absolute proposition that any income surrendered during the survey is a business income or vice versa - in the absence of the nature of source of cash being proved it was held not to be assessable as income from business - an amount contained in the excess stock declaration of ₹ 15,01,620/- can be said to be assessable as income from business - For balance of the amount of excess stock, assessee has not demonstrated on the basis of evidence, the source from where such investment has been made and therefore it cannot be assessed as income from business – Decided in favour of assessee. - ITA No. 2268/PN/2012 - - - Dated:- 28-11-2014 - Shri G. S. Pannu And Ms. Sushma Chowla,JJ. For the Petitioner : Mr. Kishor Phadke For the Respondent : Mr. Rajesh Damor ORDER Per G. S. Pannu, AM The captioned appeal by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has disagreed with the assessee and upheld the action of the Assessing Officer. Against the aforesaid decision of the CIT(A), assessee is in further appeal before us. 4. Before us, the appellant has furnished a Paper Book which, inter-alia, contains copy of the statement recorded of one of the partners of the assessee firm during the course of survey u/s 133A of the Act on 22.02.2007. The said statement is significant as it contains the deposition of the assessee offering the additional income and also the manner in which it was offered. First, we shall refer to the additional income offered by the assessee on account of unrecorded debtors of ₹ 35,06,600/-. In this context, Question Nos. 20 to 23 are relevant. It transpires that during the course of survey certain computerized print-outs pertaining to the assessee were found, which was identified as a Sales Register. 3 The print-outs were explained to be containing the details of the Receivable amount i.e. sundry debtors. Some of the items were rounded, which were explained by the assessee as amounts received in cash and the balance of the unrounded items represented amounts which were still receivable against the sales ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , but as per him, it represented an unexplained investment in business. Assessee is in appeal before us contesting the aforesaid stand of the lower authorities. The Ld. Representative for the assessee has submitted that excess income declared during the course of survey is nothing but income from business of the assessee firm as there is no other source of income of the assessee firm. It has also been contended that there is no evidence found to the contrary so as to hold that such excess income was not a business income of the assessee. 7. On the other hand, the Ld. Departmental Representative appearing for the Revenue has relied upon the orders of the authorities below to oppose the plea of the assessee. The Ld. Departmental Representative has submitted that the onus was on the assessee to establish that the income represented by the excess stock in question was derived from business and in the present case it has not been demonstrated and therefore the lower authorities were justified in not treating the aforesaid income as a business income . In the course of the hearing, the Ld. Departmental Representative has also relied upon the judgement of the Hon ble Punjab Haryana Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh are again invested in stock of respective business . It was further deposed that such amount of cash received is included in the excess stock declared earlier. In this manner, the partner of the assessee explained that such amount of cash was included in the stock declaration. This explanation of the assessee made in the course of statement recorded during the course of survey has remained un-rebutted by the Revenue. The amount of cash so received qua the assessee firm is stated to be ₹ 3,50,000/- as per the details contained in the answer to Question No.22 of the statement. In our considered opinion, out of the excess stock of ₹ 15,01,620/- declared by the assessee, to the extent of ₹ 3,50,000/- it can be considered to have been funded by way of business profits, which was hitherto undeclared. Therefore, an amount of ₹ 3,50,000/- contained in the excess stock declaration of ₹ 15,01,620/- can be said to be assessable as income from business. For balance of the amount of excess stock, assessee has not demonstrated on the basis of evidence, the source from where such investment has been made and therefore it cannot be assessed as income from business. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res Ltd. v. Commissioner of Income Tax reported in (2002) 255 ITR 273 (SC) is an appropriate guidance of this point as to what should be done in order to ascertain the net profit in case of this nature. At page 280 in the first paragraph of the report the Supreme Court observed as follows:- Sub-section (1A) of section 115J does not empower the Assessing Officer to embark upon a fresh inquiry in regard to the entries made in the books of account of the company. The said sub-section, as a matter of fact, mandates the company to maintain its account in accordance with the requirements of the Companies Act which mandate, according to us, is bodily lifted from the Companies Act into the Income-tax Act for the limited purpose of making the said account so maintained as a basis for computing the company's income for levy of income-tax. Beyond that, we do not think that the said sub-section empowers the authority under the Income-tax Act to probe into the accounts accepted by the authorities under the Companies Act. If the statute mandates that income prepared in accordance with the Companies Act shall be deemed income for the purpose of section 115J of the Act then it should be th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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