9911796707
TMI Blog2025 (1) TMI 610X X X X Extracts X X X X X X X X Extracts X X X X ..... ot required to explain, because the assessing officer did not raise this question. We find merit in the submission of ld. Counsel that it was not required to explain, the source by the assessee, once the assessee has explained the causes of excess stock and the causes of discrepancy in the stock and this excess stock and the discrepancy in the stock were related to the assessee s business, which are sufficient to hold, that stock pertains to the assessee`s business. We note that no doubt the excess stock found and the discrepancy in the stock found during the survey proceedings is related to the business activity of the assessee, and the excess stock and the discrepancy in stock pertains to the business of the assessee, therefore, no addition u/s.115BBE of the Act, at the higher rate of taxation be imposed on the assessee. We note that assessee has submitted the relevant details and documents regarding closing stock and causes of discrepancy in the stock, considering, these facts, the assessing officer has taken a possible view and framed the assessment order. Therefore, no addition should be made u/s 115BBE of the Act The present order of assessing officer passed u/s 143(3) cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garding the facts available on record that the assessment dt. 16-09-2021 was made after specific inquiry and after obtaining the appellant's explanation as regards applicability of S. 115BBE of the Act, and therefore S.263 of the Act was not attracted. 3. The learned Pr. CIT has further erred in law and on facts in invoking the revisionary jurisdiction u/s.263 of the Act ignoring the fact that the record of the case available for perusal did not show assessment of income that warranted charging of tax u/s. 115BBE of the Act. 4. On the facts and in the circumstances of the case and in law the learned Pr. CIT ought to have dropped the proceedings u/s. 263 of the Act, and ought not to have set aside the assessment. 5. It is therefore prayed that the order u/s. 263 may be cancelled. 6. Your appellant craves leave to add, amend, alter or withdraw any ground of appeal at the time of hearing. 3. Brief facts, as discernible from the orders of lower authorities are that assessee has filed return of income on 19/09/2019, declaring total income of Rs. 1,07,90,090/-, (which includes the amount of Rs. 1,01,16,156/- disclosed during the survey proceedings as unaccounted excess stock under bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing officer has failed to examine the nature and source of the excess stock. 6. In response to the show -cause notice of the Ld. PCIT, the assessee has submitted online reply on 10/02/2024, which is reproduced below: With respect to the above referred notice we would like to submit that during the course of assessment proceedings we have made all the submissions with the assessing officer which the assessing officer has called for. The Ld. assessing officer has in his Show cause notice taken the point of taxing the income disclosed during the course of survey u/s 115BBE. In response to the same we have replied and the Ld. assessing officer has considered the reply and after satisfying with reply he has come to the conclusion and taxed the income at normal rates as regular business income. The Ld assessing officer has relied on the facts that the assessee is in the business of buying and selling of jewellary and whatever stock disclosed during the course of survey has direct connection with the business of assessee only. When income is specifically has connection with business so it should be taxed under the head business and profession only and can not be taken to residual h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ajasthan Financial Corporation (1996) 134 CTR 145 (Raj) held that: Once Assessing Officer has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the Assessing Offer allowed the claim being satisfied with the explanation of assessee, the decision of the Assessing Officer cannot be held to be erroneous simply because in his order not make an elaborate discussion in that regard. The Tribunal Mumbai Bench in Mrs. Khatiza S. Oomerbhoy vs. ITO (reported at (2006) 101 TTJ (Mumbai) 1095-Ed.) addressed this issue elaborately after referring to number of cases on revisionary powers vested in the CIT under s. 263 of the Act and summed up the fundamental principles emerging from several cases as under- (1) The CIT must record satisfaction that the order of the assessing officer is erroneous and prejudicial to the interest of the Revenue. Both the conditions must be fulfilled. (i) 263 of the Act cannot be invoked to correct each and every type of mistake or error committed by the assessing officer and it was only when an order is erroneous that the section will be attracted. (iii) An incorr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me only so such order can not be said to be erroneous. Also HIGH COURT OF ANDHRA PRADESH in case of Principal Commissioner of Income-tax v. Deccan jewellera (P.) Ltd. AUGUST 2, 2021 held: Section 69 read with section 263, of the Income-tax Act, 1961 Unexplained investments (Stock) - Assessee was engaged in business of gold and diamond jewellery and silver articles - Search and seizure operation under section 132 was conducted in case of assessee and group concern and excess stock was found to be declared and assessee submitted that excess stock was result of suppression of profit from business over years and had not been kept identifiable separately and, therefore, investment in excess stock had to be treated as business income - Assessing Officer duly considered and accepted such explanation and taxed additional income as 'business income' at rate of 30 per cent, which was approved by joint Commissioner However, 'Principal Commissioner invoked revisional powers under section 263 purportedly on ground that decision of Assessing Officer was erroneous and prejudicial to interest of revenue Whether in view of consistent view of various judicial authorities that where exces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee. 8. Aggrieved by the order of the Ld. PCIT, the assessee is in appeal before us. 9. Shri K. C. Thaker, Learned Counsel for the assessee, argued that during the course of assessment proceedings, assessee has made all the submissions with the assessing officer. The assessing officer has in his Show cause notice taken the point of taxing the income disclosed during the course of survey u/s 115BBE of the Act and in response to the same, the assessee has replied with documentary evidences. The assessing officer has considered the reply and after satisfying with reply the assessing officer has come to the conclusion and taxed the income at normal rates as regular business income. The assessing officer has relied on the facts that the assessee is in the business of buying and selling of jewellery and whatever stock disclosed during the course of survey has direct connection with the business of assessee only, therefore, assessee has explained the nature and source also. When income is specifically has connection with business so it should be taxed under the head business and profession only and cannot be taken to residual head or special provisions of Sec 68 to 69D of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls regarding valuation of closing stock and discrepancy of stock, vide paper book page no.19 of the assessee s paper book. In response to the said notice u/s.142(1) of the Act, the assessee submitted its reply on 20th February, 2021, which is mentioned in paper book page No.21, the reply submitted by the assessee is reproduced below: 8. Valuation of Closing Stock We have attached herewith working of valuation of Closing Stock based on the method of valuation consistently followed by us. The working of closing stock also includes stock difference found during the course of survey. 11. Detailed note on how accounting is done for discrepancy of stock and cash found during the course of survey u/s. 133A During the course of survey the physical stock of Gold jewellery was found for 9422.810 Gms as against the stock as per books was for 8937.245 Gms. The difference for 485.565 Gms calculated @ Rs. 3123.50 per gram (which is average purchase price during the year under survey) and valued for Rs. 15,16,662/- have been offered as income and the same is included in the closing stock as on 31.03.2019. In the same way in Silver physical stock was found for 26931.00 gms as against 20073.515 gms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the causes of excess stock and the causes of discrepancy in the stock and this excess stock and the discrepancy in the stock were related to the assessee s business, which are sufficient to hold, that stock pertains to the assessee`s business. We note that no doubt the excess stock found and the discrepancy in the stock found during the survey proceedings is related to the business activity of the assessee, and the excess stock and the discrepancy in stock pertains to the business of the assessee, therefore, no addition u/s.115BBE of the Act, at the higher rate of taxation be imposed on the assessee. We note that assessee has submitted the relevant details and documents regarding closing stock and causes of discrepancy in the stock, considering, these facts, the assessing officer has taken a possible view and framed the assessment order. Therefore, no addition should be made u/s 115BBE of the Act. For that learned Counsel for the assessee, relied on the following case laws: i. Lovish Singhal vs. ITO in ITA No.143/Jodh/2018 ii. Mohan Singh vs. CIT, 229 TTJ 0352 iii. Abdul Hamid Anr., 183 ITD 0711 16. According to us, the present order of assessing officer passed u/s 143(3) dated 16. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
