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TMI Blog2024 (11) TMI 1119X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis of various case laws and since the revenue did not contradict them, we affirm the order passed by Ld CIT(A) on this issue. Adhoc disallowance of expenses incurred shop expenses, office expenses and packing expenses - HELD THAT:- AO has not given any basis for making disallowance @ 20%. Before CIT(A), the assessee contended that making of adhoc disallowance is bad in law. Assessee did not disprove the observations of the AO that many expenses are supported by self made vouchers. However, we notice that the AO has examined the expenses on test check basis only and accordingly concluded that all the expenses are supported by self made vouchers only. The presumption so arrived at by the AO is debatable one. Under these set of facts, disallowance of part of expenditure so claimed is required in order to take care of leakage of revenue, if any, in making the claim. We are of the view that the disallowance made @ 20% is on the higher side. Accordingly, we modify the order passed by Ld CIT(A) on this issue and direct the AO to restrict the disallowance to 10% of shop, office and packing expenses. Decided partly in favour of assessee. - Shri Br Baskaran (Accountant Member) And Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention that the income surrendered by it was generated from its business activities only and hence the same is assessable under the head Income from Business. The Ld CIT(A) has also placed reliance on various case laws and accordingly rendered his decision in favour of the assessee on this issue. For the sake of convenience, we extract below the decision rendered by Ld CIT(A) on this issue:- 6.12 I have carefully examined the written submission of the appellant and relevant facts of the case. It is admitted fact that during the course of survey excess stock was found as under: S.No. Particular Stock found during survey (in gms) Stock as per Books(in gms) Excess Stock (in gms) 1 Gold 26142.00 6165.910 19990.090 2 Silver 115612.00 91918.200 23693.800 3 Diamond 1042.003 1042.003 0 6.13 Thus, the value of the excess stock of gold and silver was at 19990.090gms and23693.800gms respectively. The appellant has calculated the value of excess stock of gold at Rs. 5,64,55,010/- and silver at Rs. 7,84,500/- by applying rate of Rs. 2824.15 per gm for gold and Rs. 33.11 per gm for silver respectively. Therefore, the total value of excess stock has been calculated at Rs. 5,72,39,510/- and the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks of account and its nature and source is not identifiable. Once such excess investment is taxed as undeclared business receipt then taxing it further as deemed income under section 69 would not be necessary. 6.17 Reliance is placed in the case of ParmodSinglav. ACIT, in [2023] 154 taxmann.com 347 (Chandigarh - Trib.)wherein the Hon'ble ITAT CHANDIGARH BENCH 'A'vide order dated JULY 24, 2023 has held as under:- Section 69, read with sections 69A, 115BBE, 133A and 28(i), of the Income-tax Act, 1961 - Unexplained investments (Applicability of provision) - Assessment year 2017-18 - A survey was conducted in business premises of assessee during which assessee surrendered certain amount towards unaccounted advances, stock and cash in hand - Said amount was offered in return of income at rate of 30 per cent but Assessing Officer held that as per provisions of section 115BBE read with sections 69 and 69A, amount so surrendered was taxable of rate of 60 per cent - Whether mere fact that survey/search proceedings have been initiated at business premises of assessee doesn't mandate Assessing officer to automatically invoke deeming provisions of sections 69 and 69A; before i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urse of survey, assessee had surrendered certain amount to cover up discrepancies Assessing Officer treated surrendered amount as excess stock under section 69B read with provisions of section 115BBE - It was found that stock physically found had been valued and then, compared with value of stock so recorded in books of account and difference in value of stock so found belonging to firm had been offered to tax - Revenue had not pointed out that excess stock had any nexus with any other receipts other than business being carried on by assessee - Further, in surrender letter, the assessee had stated that during course of survey operations, certain discrepancy out of excess stock of Rs. 50 lakhs had been found and to avoid litigation, he had offered additional business income of Rs. 50 lakhs out of excess stock found out of their normal business income over and above normal business income - Assessee had provided necessary explanation about nature and source of such unrecorded transactions and necessary nexus with assessee's business - There was no physical distinction between accounted stock and unaccounted stock - Whether, on facts, income surrendered by assessee during survey w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.50 lakhs - It was also observed that Assessing Officer could very well had obtained a report from departmental valuation cell to arrive at correct figure of investment in house property - Whether, on facts, impugned addition under section 69 made to income of assessee on account of unexplained investment in house property was to be set aside - Held, yes [Para 20] [In favour of assessee] 6.21 The Assessing Officer has nowhere in the assessment order been able to bring on record the fact that the income surrendered during the course of survey was not out of the business of the assessee. Further, even the survey team has not found any source of income except business income. Therefore, the amount surrendered under unrecorded stock has to be brought to tax under the head business income as the excess stock which has been found during the course of survey is the investment in procurement of such stock. Such stock is clearly identifiable and related to the regular business stock of the assessee. The undisclosed investment in the case of excess stock found during carrying on business and the same is generated out of business income, no provisions of section 69 of the Act would attract. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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