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TMI Blog2024 (1) TMI 418X X X X Extracts X X X X X X X X Extracts X X X X ..... r years business and surrendered the amount, the AO has not done anything to dispute the claim of assessee that the source was not from the business income. Hence, the AO cannot apply the provisions of section 115BBE - assessee also admitted the difference as income, which is not disputed but has to be taxed as normal business income and not as unexplained investment u/s. 69B of the Act. Accordingly, we allow the grounds of appeal of assessee. - Shri Mahavir Singh, Vice President And Shri Manjunatha.G, Accountant Member For the Appellant : Shri Hema Murali Krishnan, Advocate For the Respondent : Shri D. Hema Bhupal, JCIT ORDER PER MAHAVIR SINGH, VICE PRESIDENT: This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals)-18, Chennai in ITA No.420/2021-22/CIT(A)-18 dated 29.11.2022. The assessment order was framed by the Deputy Commissioner of Income Tax, Central Circle-3(4), Chennai for the assessment year 2019-20 u/s. 143(3) of the Income Tax Act, 1961 (hereinafter the Act ), vide order dated 30.09.2021. 2. The only issue in this appeal of assessee is as regards to the order of CIT(A) confirming the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness or other known sources. Thus, the twin conditions in section 69B are satisfied. Hence, the excess stock is assessable u/s 69B. Thus the claim of the assessee in the grounds that the AO had ulterior motive to assess it u/s 69B is fatally wrong 7.9 Similar issue had come up for consideration before the jurisdictional Madras High court in the case 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 unaccounted investment and not as business income. Assessee tried to distinguish the facts in futile by stating that the case law is on deductions allowable from excess stock, whereas the AO has reproduced the operating part of the case law in her order, from which it could be seen that no such differentiation is possible. 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 Honble Bombay High Court in the case of Subramaniam -vs.- Siemens India Ltd. (1985) 156 ITR 11 (Bom.) held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e stock inventory prepared by the Department i.e., the physical stock inventory vide Annexure- 1/EHM/3,which contains a loose sheet titled stock-in-hand and containing a figure of Rs. 88,95,175/- is said to be the value of closing stock of the assessee as on 07.02.2019 and this fact is noted by Revenue while recording statement of one of the partner of the assessee vide question No.8. The assessee computed its value of closing stock as on the date of survey i.e., 06.02.2019 and the relevant valuation reads as under:- Opening Stock 89,32,200.00 Purchases (01.04.2018 06.02.2019) 11,95,49,972.00 Direct Expenses (01.4.2018-06.02.2019) 6,91,885.00 GP 9% 1,07,33,678.28 Total 13,99,07,835.28 Sales (01.04.2018-06.02.2019) 11,92,63,092.00 Closing Stock as on 06.02.2019 2,06,44,743.28 Alleged stock at the time of survey 1,92,95,775.00 Excess Stock (13,48, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation offered by the assessee either during the course of survey or during the assessment proceedings is not negated with any other evidences to disprove the claim of the assessee that source for acquisition of stock in trade is other than business income of the assessee. Moreover, the assessee derives only one source of income from manufacturing and trading in leather and allied products, which is evident from income declared for the impugned assessment year and earlier assessment years. Further, when the assessee has explained source for excess stock found during the course of survey, is out of income earned from current year business, the AO did not go further to disprove the claim of the assessee that said source is not from income from business. Moreover, it is a general practice in trade that income generated is either ploughed back into the business in the form of stock in trade or receivables or spent for other purpose like acquisition of asset outside the business. In this case, during the course of survey except stock difference, no other investment with any other asset was found. Therefore, from the above it is very clear that explanation offered by the assessee tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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