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TMI Blog2024 (6) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... debtors arise out of money lending business being carried by the assessee family. Any discrepancy in debtors, in such a case, would be part and parcel of assessee s money lending business and it could very well be said that the discrepancy has arisen out of unaccounted income earned by the assessee from this business only and therefore, the same would be taxable as business income only. There is nothing on record that the assessee family has any other sources of income. The assessee is stated to be doing same business for last more than 20 years. All these facts support the case of the assessee. We also find that during the course of survey, a statement was recorded from the assessee s son. In reply as stated that the family was not maintaining proper books of accounts for finance business and record the transactions on rough sheets - balances would be updated on fortnightly basis. The complete list of outstanding balances was also furnished wherein outstanding amounts was shown as Rs. 12.31 Crores. As on 31-03-2016, the assessee s family reflected debtors to the tune of Rs. 7.41 Crores in their respective returns of income. In reply to question no.11, the assessee merely stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.1 In this case, the assessee admitted income of Rs. 343.40 Lacs in the return of income. The case was scrutinized to verify the cash deposited by the assessee during demonetization period. The assessee supplied financial statement as called for by Ld. AO. It transpired that the assessee family was subjected to survey u/s 133A on 26-09-2016 wherein assessee admitted certain income which was also offered in the return of income as 'Business Income'. Due taxes were also paid on the same. 2.2 The assessee had deposited sum of Rs. 104 Lacs in 4 bank accounts as tabulated on page no.2 of the assessment order. The assessee attributed the cash deposit to earlier income and cash balance available with him. During survey, the assessee offered additional income of Rs. 190 Lacs which would be sufficient enough to cover the stated cash deposits. 2.3 During survey, the statement was recorded from the assessee's son wherein it was submitted that the assessee and his family members carried out money lending business. The assessee family was directed to furnish the details of outstanding debtors' balances. The list of outstanding balances as on 15.09.2016 was furnished by the assessee family w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e's submissions, Ld. AO observed that the assessee could not substantiate the fact that advances were out of money lending business. In the absence of any identifiable and verifiable sources, the income would be assessable as undisclosed investments u/s 69 which would be subjected to rate of tax as specified u/s 115BBE. Finally, business income was reduced to the extent of Rs. 190 Lacs and the same was brought to tax as 'income from other sources'. Similar assessment was framed in the case of assessee's son Shri Rameshlal Kailash. Appellate proceedings 3.1 During appellate proceedings, the assessee drew attention to the reply given by him to Question No.11 during survey proceedings and submitted that the income was offered as unaccounted income only and not as income from undisclosed sources. The assessee furnished list of debtors to whom the advances were made. The assessee confessed that the income received in earlier year was utilized for lending further money to debtors. It was clearly stated that excess debtors found during survey were out of income generated from money lending business itself. The assessee also furnished confirmation letters from the borrowers who repaid th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the assessee and his family is engaged in money lending business for past more than 20 years. This is the substantial source of income for the assessee family. The assessee family advanced loans against promissory notes which were found during the course of survey on the basis of which it transpired that there was change in debtors' balances as on 31-03-2016 and debtor's balances as on 15-09-2016. The promissory notes constitute current asset for assessee's money lending business. During the course of survey on 26-09-2016, the assessee furnished list of debtors to whom the advances were given and it was found that during this year, there was increase in advances to the extent of Rs. 4.90 Crores. Since the assessee could not explain the same, it agreed to offer the same in his return of income to the extent of Rs. 1.90 Crores whereas the balance sum of Rs. 3 Crores was offered in the hands of the assessee's son. The assessee treated the same as interest income and offered the additional income as business income and paid due taxes thereon. 5. We are of the considered opinion that sundry debtors would keep on changing continuously in view of the fact that certain advances wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merges that the only source of assessee's income is 'Business income' arising out of sale of gold jewellery and silver articles. During survey proceedings, quantitative differences were found in the physical stock vis-àvis book stock. The assessee brought the same into books of account by way of credit to partners' capital account with corresponding increase in book-stock. The excess stock was included in the stock register. Accordingly, the differential was separately offered to tax in the return of income as 'Business Income'. Naturally, the excess stock was acquired out of excess income regenerated from business activity only since the assessee do not have any other source of income since its inception. The entire stock was accumulated out of income from jewellery business. The undisclosed business income was ploughed 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record. 8. Therefore, considering the facts of the case, we would hold that the assessee has correctly offered the additional income as 'Business Income' only. The provisions of Sec.69 r.w.s. 115BBE would have no application. The Ld. AO is directed to re-compute the income and demand payable by the assessee. The corresponding grounds stand allowed. 9. Admittedly, similar are the facts in ITA No.897/Chny/2023. Therefore, our adjudication as above would mutatis-mutandis apply to this appeal also. In this appeal, there is one more issue of addition u/s 56(2)(vii)(b) for Rs. 4.31 Lacs. The same represent difference in stamp duty value and document value with respect to one property which have been purchased by the assessee during the year. The same has been tabulated in para-11 of the assessment order. The assessee has purchased the same for Rs. 20 Lacs as against stamp duty value of Rs. 44.31 Lacs. Accordingly, the differential was brought to tax u/s 56(2)(vii)(b). The assessee raised an additional ground during first appellate proceedings. The Ld. CIT(A) did not admit the additional ground against which the assessee is in further appeal before us. The Ld. AR has pleaded for adjudi ..... 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