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TMI Blog2024 (1) TMI 380X X X X Extracts X X X X X X X X Extracts X X X X ..... 5) TMI 1392 - MADRAS HIGH COURT] has also been considered while disposing of the cases in favour of the assessee. It is our considered opinion that as the business of the assessee is Jewellery and Pawn Broking, the excess stock of gold and silver found during the survey operation is part and parcel of that business of the assessee. No other business is carrying on by the assessee. Accordingly, claim of the assessee has to be allowed. No application of provision of Section 115BBE of the Act on the excess stock of the assessee. Decided in favour of assessee. - SHRI MANJUNATHA. G, ACCOUNTANT MEMBER AND SHRI MANOMOHAN DAS, JUDICIAL MEMBER For the Appellant : Shri N. Arjun Raj, C.A For the Respondent : Shri V. Nandakumar, CIT ORDER PER MANOMOHAN DAS, J.M: This appeal by the assessee is directed against the order of the Learned Commissioner of Income-Tax (Appeals)-18, Chennai [CIT(A)] dated 25-08-2022 and pertains to the Assessment Year [AY] 2019-20. The grounds of the assessee are as under: 1. The order of the Commissioner of Income Tax (Appeals) - 18, Chennai dated 25.08.2 022 vide DIN: No. ITBA/APL/M/250/2022-23/1044918661(1) for the above ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of section 69A of the Act without assigning proper reasons and justification. 9. The CIT(Appeals) failed to appreciate that there was no proper opportunity given before passing of the impugned order as well as before passing the assessment order and any order passed in violation of the principles of natural justice would be nullity in law. 10. The Appellant craves leave to file additional grounds/arguments at the time of hearing. 2. The brief facts of the case are that the assessee is an individual and engaged in the business of Jewellery and Pawn Broking in the name and style of M/s. Rahul Gold House . On 22-01-2019, a survey operation u/s. 133A of the Income-Tax Act, 1961 [the Act] was conducted at the business premises of the assessee situated at No. 3/33, OMR Road, Kelambakkam, Chennai- 603103. Subsequently, the case was selected for scrutiny and notice u/s. 143(2) of the Act dated 29-09-2020 was issued to the assessee. Notice u/s.142(1) of the Act was issued on 27-01-2021 asking for details and documents. The assessee responded to the notice and made submissions. The Ld. Assessing Officer [AO] considered the submissions and issued show- cause notice date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only. The ld. AR relies on the following decisions of the Tribunal. (i) M/s Overseas Leathers vs. DCIT Chennai Tribunal ITA No. 962/Chny / 2022, (ii) M/s MookambigaiImpex vs. DCIT Chennai Tribunal ITA No. 299 / Chny / 2023, (iii) Santhilal Jain Vijay Kumar vs. ITO Chennai Tribunal ITA No. 1103 / Chny / 2022, and (iv) Kamlesh vs. DCIT Chennai Tribunal ITA No. 1104 / Chny / 2022. 7. On the other hand, the Ld. DR supports the order of the lower authorities. The Ld. DR relies on the following decision: (i) Shri Rajesh Kumar Bajaj vs. ACIT Indore Tribunal ITA No.16/ Ind/2019. 8. We carefully considered the submissions of the parties. Also, we have perused the orders of the lower authorities. The ld. CIT(A) noticed that the assessee accepted the value of the excess stock of Rs. 1,78,22,940/- for assessment but is aggrieved due to treat the said amount as undisclosed income u/s. 69B of the Act. The ld. CIT(A) finally dismissed the case of the assessee by observing as under: 7.2. I have considered the submissions of the appellant. Similar issue had come up for consideration before the jurisdictional Madras High Court in the case of M/s SVS Oils ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Kamlesh vs. The Dy. Commissioner of Income Tax under Appeal No. ITA No.1104/Chny/2022. The decision of the Tribunal is as under: 7. We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. During the course of survey, 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 and 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oughed back into business to acquire further stock. In such a case, the excess stock could be said to have arisen out of normal business activity only and therefore, the same would be assessable as business income only in terms of decision of Hon ble Rajasthan High Court in the case 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 consi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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