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TMI Blog2024 (1) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... le and handloom. In view of the above, it cannot be said that excess stock found, which is also based on estimate only, is unexplained investment. In view of the above, the same is to be assessed as business income as declared by the assessee and it cannot be charged at special rate of tax u/s. 115BBE of the Act. Hence, we direct the Assessing Officer to assess the income of excess closing stock found during the survey operation in the business premises of the assessee as business income and not as unexplained investment u/s. 69B of the Act. Disallowance of expenditure @30% - We note that AO without going into the details estimated disallowance of expenditure at 30% out of total expenditure - In the absence of details of expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n textile and manufacturing of textiles handloom etc. A survey u/s. 133A of the Act was conducted in the business premises of the assessee on 06.02.2019. Assessee filed his return of income for the assessment year 2019-2020 on 26.12.2019 admitting a total income of ₹75,40,970/- including the excess stock of ₹54,89,056/- which was found during survey. The ld. Assessing Officer accepted the returned income but reduced from assessed income declared by assessee as business income and again added as unexplained investment u/s. 69B of the Act amounting to ₹54,89,056/-. Aggrieved, the assessee preferred an appeal before the ld. CIT(A). 5. Ld. CIT(A) vide detailed order running into thirty one pages dismissed the appeal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 985) 156 ITR 11 (Bom.) held that so far as the legal position is concerned, the ITO 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 cause grave prejudice to the assessee; however, in the case where there is conflict of views between different High Courts, ITO must follow the decision of the High Court within whose jurisdiction he is functioning. In view of the above settled law, I am bound to follow the jurisdictional Madras Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Add: Purchases accounted in the tally accounting maintained at Thambu Chetty Street, Chennai till 06-02-2019 Rs. 3,39,20,828/- Total Rs. 8,28,40,680/- Add: Gross Profit @22% Rs. 1,24,90,226/- Less: Sales accounted in the tally accounting maintained at Thambu Chetty Street, Chennai till 06-02-2019 (-) Rs. 5,67,73,753/- Total (Closing stock as per books) Rs. 3,85,57,153/- Stock as inventorised on physical verification at Thambu chetty premises on 06-02-2019 Rs. 4,40,46,209/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it cannot be said that excess stock found, which is also based on estimate only, is unexplained investment. In view of the above, the same is to be assessed as business income as declared by the assessee and it cannot be charged at special rate of tax u/s. 115BBE of the Act. Hence, we direct the Assessing Officer to assess the income of excess closing stock found during the survey operation in the business premises of the assessee as business income and not as unexplained investment u/s. 69B of the Act. 7. The last issue in this appeal of the assessee is with regard to the order of the ld. CIT(A) confirming the action of the ld. Assessing Officer in making disallowance of expenditure @30%. 8. We have heard rival contentions and go ..... X X X X Extracts X X X X X X X X Extracts X X X X
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