TMI Blog2023 (2) TMI 639X X X X Extracts X X X X X X X X Extracts X X X X ..... r provision of the Act has accepted returned income of the assessee wherein the assessee has included surrendered amount on account of excess stock and excess cash as business income and has successfully explained the source from where the said surrendered excess stock and excess cash was earned, which was business activity of assessee of trading in jewellery gems and Adat/dalali in the same field. The coordinate bench of the Tribunal in the various orders including order in the case of Shri Lovish Singhal [ 2018 (5) TMI 1646 - ITAT JODHPUR] by following the judgment of Bajrang Traders ( 2017 (3) TMI 1828 - ITAT JAIPUR] observed that the excess stock found during the course of survey and surrendered made thereof was found to be taxable as business income under the head Income from business profession . Identical facts and circumstances as noted above have been found to be existing in the present case then the Ld. CIT(A) was correct and justified in dismissing the contention of the AO and holding that the AO was not right in observing that the assessee is liable to be taxed as per provision of section 115BBE. Therefore, we too have no hesitation in concluding that the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted the facts that the excess stock and excess cash found pertains to Adat/dalali business of bullion, gems property, which was recorded in the books of account. Therefore, the AO was right in calculating the chargeability of taxas per amended provisions of section 115BBE of the Act. He further submitted that the total amount surrendered on account of excess cash and excess stock was treated by the AO as unexplained money u/s 69A of the Act and unaccounted investment u/s 69B of the Act respectively and was rightly taxed u/s 115BBE of the Act. The Ld. Sr. DR placed vehemently reliance on the judgment of Hon ble Punjab Haryana High Court in the case of Kim Pharma (P.) Ltd. vs. Commissioner of Income Tax reported as [2013] 35 taxamann.com 456 (P H) submitted that where the amount surrendered during the survey was not reflected in books of account and no source from where it was derived was declared by assessee, it was assessable as deemed income of assessee under section 69A and not business income of the assessee u/s 69A of the Act and not as business income. The Ld. Sr. DR finally submitted that in the facts and circumstances of the case the Ld. First Appellate Authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. AR, vehemently supporting the first appellate order, submitted that the proposition rendered by the Hon ble Punjab Haryana High Court in the case of Kim Pharma (P.) Ltd. vs. CIT (supra) does not apply to the present case as the assessee has sucessfully explained the source of surrendered excess cash and excess stock as has been derived from business of the assessee trading into Bullion and commodity stock market, Adat/dalali therefore, peculiar facts and circumstances of the present case, the Ld. CIT(A) was right in dismissing the stand of AO on chargeability of tax u/s 115BBE of the Act. 4.2 Further placing reliance on the order of Co-ordinate Bench of ITAT, Chandigarh in the case of Famina Knit Fabs vs. ACIT, reported as [2019] 104 taxmann.com 306 (Chandigarh-Trib.) submitted that amendment made to section 115BBE w.e.f. 01/04/2017 made by Finance Act, 2016 is prospective in nature, and Revenue could not claim the same to be either clarificatory in nature or retrospective in operation. The Ld. AR pointed out that in this order, it was categorically held that if during the search operation, the assessee surrendered additional income on account of unaccounted receivables ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,43,587/- voluntary declared during the course of search and survey. However, as per AO, the details and evidences furnished by the assessee are nothing but an afterthought and therefore, subsequent addition was made in the income of the appellant by applying tax rate as per amended provisions of section 115BBE of the Act. 4.1.1 First of all let me discuss whether the provisions of section 115BBE are applicable to this case or not. The provision of disallowance of any loss with the income as computed under clause (a) of sub section (1) of section 115BBE came into force w.e.f 01.04.2017 (from FY 2017-18 onwads). However, the AO has applied amended provisions in FY 2016-17 applying retrospective effect of the said amendment. Hon ble Supreme court in the case of CIT vs Vatika Township Pvt Ltd (2014) 24 ITJ 532 (SC): (2014) 271 CTR 1: (2014) 227 Taxmann 121 has held that An amendment made to the taxing statute can be said to be intended to remove hardships only of the assessee, not of the department-on the contrary, imposing a retrospective levy on the assessee would have caused undue hardship. Hon ble ITAT Indore in the case of Priyadharshani Construction vs. ITO (2012) 19 ITJ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome furnished under section 139; or (b) determined by the Assessing Officer includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, if such income is not covered under clause (a),the income-tax payable shall be the aggregate of- (i) the amount of income-tax calculated on the income referred to in clause (a) and clause (b), at the rate of sixty per cent.; and (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (i). In nutshell, the provisions of section 115BBE of the Income Tax Act are applicable where addition is made under section 68, 69, 69A, 69B, 69C and 69D i.e. from residuary category w.e.f 01.04.2017. However, in the present case search u/s 132 and survey u/s 133 of the Act took place on 28.09.2016. The appellant during the course of search made voluntary disclosure of additional income of Rs. 4,53,43,587/- on account of excess stock. It is a settled law that additional income declared on account of excess stock is business income of the assessee. This proposition finds support from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing authority should be to find out link of undeclared investment/expenditure with the known head, give opportunity to the assessee to establish nexus and if it is satisfactorily established then first such investment should be considered as undeclared receipt under that particular head. It is observed that there is no conflict with the decision of Hon'ble Gujarat High Court in the case of Fakir Mohd. HajiHasan (supra) where investment in an asset or expenditure is not identifiable and no nexus was established then with any head of income and thus was not available for set off against any loss under any other head. Therefore, the Hon'ble Coordinate Bench held that where asset in which undeclared investment is sought to be taxed is not clearly identifiable or does not have independent identity but is integral and inseparable (mixed) part of declared asset, falling under a particular head, then the difference should be treated as undeclared business income explaining the investment. In the present case the excess stock was part of the stock. The revenue has not pointed out that the excess stock has any nexus with any other receipts. Therefore, we do not find any fault with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 15. In view of the above, AO is directed to consider the sum of Rs.8,10,011/- as undisclosed business income assessable under the head 'business' and other two sums under section 69. The business income including application of section 40(b) has to be considered accordingly. For calculation of income in view of our above observations, we restore the matter to the file of AO. (d) ChokshiHiralalMaganlal Vs. DCIT, Ahemadabad (ITA No. 3281/Ahd/2009 dated 05.08.2011) In this case, it is held as under:- 9. Since in the present case excess stack found during the survey is not separately and clearly identifiable but is part of mixed lots of stack found at the premises which included declared stock as per books and also the excess stock as computed by the survey officers, the provisions of section 69B cannot be made applicable as primary condition for invoking the provisions of section 69A, 69B is that the asset should be separately identifiable and it should have independent physical existence of its own. Since excess stock is a result of suppression of profit from business other the years and has not been kept identifiable separately but i.e. the part of overall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch operation at the premise. Since excess stock is a result of suppression of profit from business over the years and has not been kept identifiable separately but is the part of overall physical stock found, the investment in the excess stock has to be treated as business income. Further, the excess stock so found is part of the regular business, therefore, following decision of Hon'ble Tribunal Bench Jaipur in case of Ramnarayan Birla (cited supra), the same has to be taxed under the business income. Otherwise even if the same is taxed under s. 115BBE of the Act, the provisions of not allowing the set off has come into effect from1st April, 2017. (g) Md Serajuddin Brothers vs CIT- 24 Taxmann.com 46 (Cal): 210 Taxmann 84 (Cal). (h) SurekhJewellers vs DCIT ITA No 18/PN/2016 dated12.06.2016. (i) M/s Solanki Jewellers vs DCIT ITA No 858PN72016 dated 18.11.2016. Considering the submission made and decisions referred, it is undisputed that the appellant has been trading in jewellery and the excess stock found during the course of search and survey was accumulated from transaction carried out of forward commodity trading in bullion and mediation. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has successfully explained that the excess stock excess cash was nothing but business income of assessee. 7. After considering the above factual matrix of the case now we proceed to consider the proposition relied by learned representative of both the sides. The Ld. Senior DR has relied on the judgment of Punjab Haryana High Court in the case of Kim Pharma (P.) Ltd. vs. CIT(supra) to submit that where the amount surrendered during survey was not reflected in the books of accounts and no source from where it was derived was declared by the assessee, then it is assessable as deemed income of assessee u/s. 69A of the Act and not as business income. In this case the Assessing Officer made addition of surrendered amount u/s. 69 of the Act as the assessee could not explain the source from where it was derived by the assessee. In the present case undisputedly the Assessing Officer has not made any addition u/s. 69 or any provision of the Act and has accepted return income of the assessee. In the present case we are in agreement with the contention of the learned AR that the orders of the authorities below clearly reveal that the amount of excess stock excess cash found durin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer without making any addition u/s. 69A or any other provision of the Act has accepted returned income of the assessee wherein the assessee has included surrendered amount on account of excess stock and excess cash as business income and has successfully explained the source from where the said surrendered excess stock and excess cash was earned, which was business activity of assessee of trading in jewellery gems and Adat/dalali in the same field. The coordinate bench of the Tribunal in the various orders including order in the case of Shri Lovish Singhal v/s. ITO (supra) by following the judgment of Hon ble Rajasthan High Court in the case of Bajrang Traders (supra) observed that the excess stock found during the course of survey and surrendered made thereof was found to be taxable as business income under the head Income from business profession . Identical facts and circumstances as noted above have been found to be existing in the present case then the Ld. CIT(A) was correct and justified in dismissing the contention of the AO and holding that the AO was not right in observing that the assessee is liable to be taxed as per provision of section 115BBE. Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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