TMI Blog2024 (4) TMI 1108X X X X Extracts X X X X X X X X Extracts X X X X ..... ered amount as unexplained investment under Sections 69A and 69B, since it emerged that source of income of assessee was from its business operations, income surrendered by assessee during survey could not be brought to tax under deeming provisions of Sections 69A and 69B of the Act. In the case of Baljinder Kumar. [ 2023 (8) TMI 289 - ITAT CHANDIGARH] ITAT held that where there are unrecorded sales made by assessee during current financial year and receivables arising out of such unrecorded sales had been offered to tax as additional business income by assessee, such amount could not be brought to tax under Section 69 of the Act. In the case of Parmod Singla 2023 (8) TMI 525 - ITAT CHANDIGARH] ITAT held that mere fact that survey/search proceedings have been initiated at business premises of assessee does not mandate Assessing officer to automatically invoke deeming provisions of Sections 69 and 69A; said provisions can be invoked only where explanation offered by assessee is not found satisfactory; where from explanation offered by assessee it clearly emerged that source of income offered during survey was from his business operations, such income could not be taxed under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, which was not received within a period of 60 days from date of revision order under Section 263 of the Act. It was submitted before us that the order under Section 263 of the Act was uploaded on ITBA portal on 14.03.2023, whereas the demand notice was uploaded by the Department on 12.06.2023. Accordingly, the delay of 31 days in filing of the present appeal occurred due to late receipt of demand notice from the Department. The assessee requested that looking into the instant facts, the delay of 31 days in filing of present appeal may kindly be condoned. 4. Looking into the instant facts, we are of the considered view that it is a fit case where in the interest of justice, the delay in filing of the present appeal may be condoned. In the result, the delay in filing of the present appeal is hereby being condoned. 5. The brief facts of the case are that the assessee is a partnership firm and had filed return of income on 27.10.2018 declaring total income at Rs. 77,57,510/-. The assessment was finalized under Section 143(3) of the Act on 25.02.2021 accepting the return of income. On verification of case records, the Ld. PCIT, Rajkot observed that survey action under Section 133A(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome of the assessee firm for the year under consideration. The Counsel for the assessee drew our attention to Question Nos. 12 13 of the statement of the partner at Pages 56 57 of the Paper Book, in which the main partner of the firm accepted such excess stock as unaccounted business income of the assessee firm. Thereafter, inventory of the physical stock was prepared by the survey team and the survey team observed that the excess stock found is not separately and clearly identifiable stock and is part of the mixed lot of stock found during the survey at the premises of the assessee. Further, the Counsel for the assessee submitted that the additional income on account of excess stock found during the course of survey was reflected in the Profit Loss Account in Schedule P-6 of the Audit Report by the assessee. Further, the Counsel for the assessee submitted that in the computation of income total business of income of Rs. 77.66 lakhs includes additional income of Rs. 71.50 lakhs under the head business income in the return of income. Accordingly, it was submitted that in light of the above facts, the undisclosed excess stock is clearly the business income of the assessee. 7. Secondl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tentions and perused the material on record. 12. On going through the facts of the instant case, we are of the considered view that this is not a fit case for revising the order passed by Ld. Assessing Officer by taking recourse to 263 proceedings. In this case, we observe that during the course of survey conducted at the premises of the assessee, certain excess stock was found, which was admitted to be the undisclosed business income of the assessee, by the main partner in the assessee firm. It is not the case of the Department that certain cash / jewellery / other income etc. was found which could be attributed as the business income of the assessee. As per the report by the survey team, the excess stock was a mixed stock and was not separately and clearly identifiable. Therefore, in our considered view, the said undisclosed excess stock should normally presumed to be the business income of the assessee only. We further observe that in the case of PCIT vs. Deccan Jewellers Pvt. Ltd. 132 taxmann.com 73 (Andhra Pradesh) , the High Court held that where nature and source of excess stock found during search was not specifically identifiable from profits which had accumulated from ear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g, 'other operating income' in the relevant columns under the head Profits and Gains of the Business in Part A of the Return filed for the relevant Assessment Year. Excess stock found was business stock which accumulated and brought forward for many years. Hence, the additional income was 'business income'. 8. In support of their explanations, the assessees have relied on the following judgments of various High Courts as well as different Benches of the Income-tax Appellate Tribunal, (a) Chokshi Hiralal Moganlal v. Dy. CIT [2011] 9 taxmann.com 300/45 SOT 349 (Ahd. - Trib.); (b) Asstt. CIT v. Sanjay Bairathi Gems Ltd. [2017] 84 taxmann.com 138/166 ITD 445 (Jp. - Trib.); (c) Dy. CIT v. Ram Narayan Birla [IT Appeal No. 482 (Jp.) of 2015, dated 30-9-2016]; (d) Kim Pharma (P.) Ltd. v. CIT [2013] 35 taxmann.com 456/216 Taxman 153 (Mag.) (Punj. Har.) and (e) CIT v. S.K. Srigiri Bros. [2008] 171 Taxman 264/298 ITR 13 (Kar.). 9. The Assessing Officer duly considered and accepted such explanation and taxed the additional income as 'business income' @ 30%, which was approved by the Joint Commissioner, Income Tax, Central Range under section 153D of the Act. 10. In all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' under section 69 of the Act. 18. As explanations pursuant to the Show-cause notices issued by the Assessing Officer had been submitted claiming that the nature and source of the excess stock fell under the heading 'Profits and Gains of the Business' and such stock was not specifically identifiable from the profits which had accumulated from earlier years and such explanations being considered and accepted by the Assessing Officer, which came to be approved by the Joint Commissioner, Income Tax, it cannot be said that the condition precedents for holding that the excess stock as 'undisclosed investment' under section 69 of the Act are satisfied .. 13. In the case of Veer Enterprises vs. DCIT 158 taxmann.com 655 (Chandigarh Tribunal) , the ITAT held that where during course of survey, assessee surrendered excess stock, cash and receivables and offered same to tax as business income, however, AO treated said surrendered amount as unexplained investment under Sections 69A and 69B, since it emerged that source of income of assessee was from its business operations, income surrendered by assessee during survey could not be brought to tax under deeming provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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