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TMI Blog2023 (10) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant assessment year, because, it is a general practice in business that whatever excess income earned is kept in the form of stock and debtors. Since the excess stock found during the course of survey was not separately identified and was mixed with regular business income, the assessee has rightly offered additional income declared during the course of survey under the head income from business profession , and this position is supported by the decision of Bajargan Traders [ 2017 (11) TMI 388 - RAJASTHAN HIGH COURT] AO and the Ld. CIT(A) are erred in assessing additional income declared towards excess stock found during the course of survey u/s. 69B of the Act r.w.s. 115BBE of the Act, and thus, we direct the AO to assess the income under the head income from business profession as declared by the assessee. Decided in favour of assessee. - SHRI MANJUNATHA. G, ACCOUNTANT MEMBER AND AND SHRI MANMOHAN DAS, JUDICIAL MEMBER For the Appellant by : Mr. D. Anand, Adv. For the Respondent by : Mr. D. Hema Bhupal, JCIT ORDER PER MANJUNATHA. G, AM: This appeal filed by the assessee is directed against the order of the Commissioner of Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,74,84,250/-, which includes additional income offered during the course of survey towards excess stock found valuing Rs. 1,39,27,171/-. During the course of assessment, the AO called upon the assessee to explain source for excess stock found during the course of survey and in response, the assessee submits that such excess stock is on account of jewellery received form customers for repairs and in this connection, a list of customers has been furnished to the AO. The AO issued notices u/s. 133(6) of the Act, to all parties and requested to furnish necessary details. The notice issued u/s. 133(6) of the Act, returned unserved with a comment no such person . In few cases, parties have submitted certain details. The AO after considering relevant submissions of the assessee and also taken note of enquiry conducted during the course of assessment proceedings opined that the assessee could not substantiate its claim of excess stock found during the course of survey and thus, assessed excess stock valuing Rs. 1,39,27,171 u/s. 69B of the Act and computed tax u/s. 115BBE of the Act. 4. Being aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). Bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come (subject to 30% tax), whereas the AO has taxed it as undisclosed investment u/s. 69B (subject to tax rate of 60% u/s. 115BBE), However, he has not given any evidence to back his opinion. 7.2 The assessee has not proved with any cogent evidence as to how the excess stock amounting to Rs. 1,39,27,171/- was generated in his business to tax it as business income, in terms of proof for purchases made, source for such unaccounted purchases, the unaccounted sales made out of such unaccounted purchases, how the proceeds were ploughed back to generate the unaccounted stock amounting to Rs. 1,39,27,171/-. 7.3 The AC) duly recorded in the assessment order as: The assessee has not furnished any documentary evidence to substantiate the claim of the assessee that the excess stock had been earned from regular business activity done during the current financial year only. The assessee has failed to explain the source for purcha.se of excess stock. The assessee has not furnished any bills invoices also to substantiate the purchase of excess stock arid the source for purchase of such excess stock. 7.4 Without tendering any evidence for it, the assessee tries to force-' the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit arising from business. A separate net profit entry appears in the capital account. 7.5 Similar issue had come up for consideration before the jurisdictional; Madras High court in the ease of Ms. SVS Oils Mills Vs. The Assistant Commissioner of Income Tax in ITA No. 765 of 2018 wherein it was clearly held that the investment in excess stock found should be assessed as undisclosed income and not as business income. It is well settled principle of law that if there is conflicting views rendered by different High Courts, the view taken by the jurisdictional High Court: is binding in the jurisdictional area of the respective High Court, The Hon'ble Bombay High Court in the case of Subrarnaniam -vs.- Siemens India Ltd. (.1985) 156 1TR 11 (Bom.) held that so far as the legal position is concerned, the JTO would be bound by a decision of the Supreme Court as also by a decision of the High Court of the State within whose jurisdiction he is functioning, irrespective of the pendency of any appeal or special leave application against the judgment. He would equally be bound by a decision of another High Court on the point, because not to follow that decision would be to ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey, excess stock was found when compared to book stock. The assessee has offered additional income towards excess stock found during the course of survey and also paid necessary taxes by offering income under the head income from business profession . The AO assessed excess stock found during the course of survey u/s. 69B of the Act, as unexplained investment on the ground that the assessee could not explain source for excess stock found during the course of survey. We find that the excess stock found during the course of survey was mixed with regular stock in trade employed by the assessee in his business. The stock was not separately identified so as to assess it under the head unexplained investment . The assessee is having only one source of income i.e. income from trading in gold jewellery and silver articles. From the above, it is very clear that the entire stock found during the course of survey was available for trade at the business premise of the assessee and it was part and parcel of the regular business stock. Once, it is considered as regular business stock, then, obviously the source for acquisition of said stock is out of business income earned for the relevant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of CIT vs Bajargan Traders (supra) wherein it was held that with respect to such excess stock found during the survey, it could be said that the investment in procurement of such stock was clearly identifiable and related to regular business stock of the assessee. Therefore, the same should be considered as Business Income only. In the present case, the stock difference has arisen in the course of day-to-day business activity only and not otherwise. The entire stock was available as trading stock at the business premises and it was part and parcel of regular business stock. The decision of Hon ble Supreme court in the case of Lakshmichand Baijnath vs CIT (supra) also support the said conclusion. It was held by Hon ble Court that when an amount is credited in the business books, it is not an unreasonable inference to draw that it is a receipt from business. Therefore, the impugned income, in our considered opinion, would be assessable as Business Income only. Similar view has been taken in the decision of Chennai Tribunal in M/s Overseas Leathers vs. DCIT (ITA No. 962/Chny/22 dated 05.04.2023). We find that facts in that case are quite identical to the facts of the present ..... X X X X Extracts X X X X X X X X Extracts X X X X
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