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TMI Blog2024 (9) TMI 860X X X X Extracts X X X X X X X X Extracts X X X X ..... se appeals were heard together with the agreement of both the parties and are being disposed off by this consolidated order. 3. At the outset, the ld. AR has submitted that the matter in ITA No. 664/JP/2024 may be taken as a lead case for discussions as the issues involved in the lead case are common and inextricably interlinked or in fact interwoven and the facts and circumstances of other cases are identical except the difference in the amount in other cases. The ld. DR did not raise any specific objection against taking that case as a lead case. Therefore, for the purpose of the present discussions, the case of ITA No. 664/JP/2024 is taken as a lead case. Based on the above arguments we have also seen that for these appeals grounds are similar, facts are similar, and arguments were similar and therefore, were heard together and are disposed by taking lead case facts, grounds, and arguments from the folder in ITA No. 664/JP/2024. 4. Before moving towards the facts of the case we would like to mention that the assessee has assailed the appeal in ITA No.664/JP/2024 on the following grounds; "1. Under the facts and circumstances of the case, order passed by the Ld. PCIT u/s 263 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, on perusal of the return and reply of the assessee, ld. AO noticed that the assessee has declared the amount of Rs. 18,32,947/- in the return of income filed for the year under consideration and paid due taxes thereon. 5.3 During survey proceedings, the cash of Rs. 5,91,900/- was found in physical verification, whereas as per books of accounts the available cash was Rs. 84,695/-. Thus, the cash of Rs. 5,07,205/- was found excess. In this regard, the assessee was asked vide question no. 13 of his statements recorded during survey proceedings to give justification of excess cash of Rs. 5,07,205/- found at business premises. In response to the question, he surrendered the excess cash amounting to Rs. 5,07,205/- as his income of the year under consideration. The ld. AO did not find that disclosure in the return of filed so he raised the issue to the assessee and the assessee submitted that income on account of excess remained to be offered and the software does not permits to revise the return the assessee offered that income by way of letter dated 26.03.2021. Accordingly, the ld. AO made the addition of Rs. 5,07,205/- in the return of income filed for the year under consideration. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a routine and casual manner without applying the applicable sections of the Act. Ld. AO has not verified the details which were required to be verified under the scope of scrutiny. The order of the AO is, therefore, considered by her liable to revision under the explanation (2) clause (b) and clause (a) of section 263 of the Act. 7. Feeling aggrieved from the above order of the PCIT passed u/s. 263 of the Act, the present appeal is filed by the assessee challenging the finding recorded thereon. Apropos to the ground so raised the ld. AR appearing on behalf of the assessee has placed their written submission which is reproduced herein below; 1. The assessee is proprietor of M/s Singhal Timber & Hardware Store engaged in the business of manufacturing of timber and trading/supply of timber, cement sheet, iron sheet, etc. A survey was carried out at the business premises of assessee on 31.01.2019. In course of survey assessee in his statement dt. 31.01.2019 which continued on 01.02.2019, in reply to Q. No.13 & 14 (PB 31-32) offered for tax current year income of Rs. 23,40,152/- represented in form of excess cash of Rs. 5,07,205/- and excess stock of Rs. 18,32,947/-. 2. The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jargan Traders where the appeal filed by the department against the order of ITAT, Jaipur Bench was dismissed where the Hon'ble ITAT has held that excess stock which is clearly identifiable and related to regular business stock of assessee has to be brought to tax under the head business income. Further reliance was placed on the decision of ITAT, Jodhpur Bench in ITA No.143/Jodh/2018 where it was held that lower authorities were not justified in taxing the surrender made on account of excess stock and excess cash found u/s 69 of the Act and thus there is no justification for taxing such income u/s 115BBE of the Act. Thus on both the issues for which order u/s 263 is passed has been enquired and examined by the AO and therefore invocation of clause (a) & (b) of Explanation 2 to section 263 is unjustified. Reliance in this connection is placed on the following cases:- Smt. Rekha Shekhawat Vs. PCIT (2022) 218 DTR 161 (Jaipur) (Trib.) In view of the fact that the unrecorded trade advances and cash in hand admitted during the course of survey u/s 133A emanated from and related to the real estate business carried on by the assessee and the same were later incorporated in the regular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also justification for various exemptions and deductions claimed in the return of income including the profit on sale of investments and the assessee having filed the break-up details of exempt income including exemption of long-term capital gain claimed u/s 10(38) in reply thereto, the Principal CIT was not justified in initiating revision proceedings on the basis that the AO has allowed the exemption without examining the claim. 2. It is a settled law that when the stock & cash found in survey is clearly identifiable and related to the regular business of assessee, the alleged excess stock and cash can be brought to tax only under the head business income and section 115BBE is otherwise not applicable. In this connection reliance is placed on the decision of Hon'ble Rajasthan High Court where the appeal filed by the department against the order of ITAT, Jaipur Bench in case of PCIT Vs. Bajargan Traders DBITA No.258/2017 order dt. 12.09.2017 was dismissed. The Hon'ble ITAT in this case at Para 2.10 & 2.11 of the order held as under:- "2.10. We have heard the rival contentions and perused the material available on record. During the course of survey, the assessee has surrendere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Shri Ramnarayan Birla (supra) supports the case of the assessee in this regard. Therefore, the investment in the excess stock has to be brought to tax under the head "business income" and not under the head income from other sources". In the result, ground No. 1 of the assessee is allowed." Similar view has been taken by Hon'ble ITAT, Jaipur Bench in case of DCIT Vs. Sh. Ram Narayan Birla ITA No.482/JP/2015 order dt. 30.09.2016 and Sanjay Gupta Vs. ACIT ITA No.292/JP/2023 order dt. 17.07.2023 (copy enclosed). In the present case also, excess stock and excess cash has been duly incorporated in the books of accounts by making general entries (PB 25-26) and the same has arisen in normal course of business of assessee. Therefore, such income is taxable at normal rate and not u/s 115BBE of the Act. Thus when there are favorable decisions on this issue, proceedings u/s 263 is bad in law for which the cases referred at Point No.1 is relied upon. In view of above, order passed u/s 263 be quashed." 8. To support the contention so raised in the written submission reliance was placed on the following evidence / records / decisions: Sr. No. Particulars Pg. No. 1 Copy of repl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Alwar. In the survey proceeding so conducted by the revenue the stock of Rs. 58,72,780/- was found in physical verification, whereas as per books of accounts the available stock was Rs. 40,39,833/-. Thus, the stock of Rs. 18,32,947/- was found in excess. In this regard, the assessee was asked vide question no. 14 of his statements recorded during survey proceedings to give justification of excess stock of Rs. 18,32,947/- found at business premises. In response to the question, he surrendered the amount of Rs. 18,32,947/- as his income of the year under consideration. Further, on perusal of the return and reply of the assessee, ld. AO noticed that the assessee has declared the amount of Rs. 18,32,947/- in the return of income filed for the year under consideration and paid due taxes thereon. In that survey proceeding cash of Rs. 5,91,900/- was found in physical verification, whereas as per books of accounts the available cash was Rs. 84,695/-. Thus, the cash of Rs. 5,07,205/- was found excess. In this regard, the assessee was asked vide question no. 13 of his statements recorded during survey proceedings to give justification of excess cash of Rs. 5,07,205/- found at business premi ..... 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