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2024 (1) TMI 1271 - ITAT CHANDIGARHAddition u/s 69A and 69B - discrepancies noticed in excess cash, excess stock and recoverable in Survey u/s 133A - surrendered amount treated as income from other sources(unexplained investment) as against declared business income by assessee - HELD THAT:- Assessee has been confronted with not just the discrepancy so found during the course of survey but the nature and source thereof during the course of survey proceedings and it is clearly emerging that the source of such income is from its business operations. There is a clear statement of the partner of the assessee that the advances are related to its business, however since the same have not been recorded in the books of account, he has offered the same to taxation. Similarly, the stock physically found has been valued and then, compared with stock as recorded in the books of account, thus, there is clear nexus of stock with the Assessee's business. The statement of the partner of the assessee is available on record and related documents so found during the course of survey are stated to be in possession of the Revenue authorities. Apparently, the AO has failed to take into consideration the statement of the partner of the assessee recorded during the course of survey holistically, and other documents and findings of the survey team which are very much part of the records The mere fact that survey/search proceedings have been initiated at the business premises of the Assessee doesn't mandate the Assessing officer to automatically invoke the deeming provisions and before invoking the deeming provisions, he has to call for the explanation of the Assessee and only where the explanation so offered is not found satisfactory, he can proceed and invoke the deeming provisions. We find that in the present case, the difference in stock found by the authorities has no independent identity and it is part and parcel of the entire stock. Therefore, it cannot be said that there is an undisclosed asset which existed independently and thus, what has been declared before the Department is received from business and it is not any investment, since it cannot be co-related with any specific assets. The difference, therefore, should be treated as the undeclared business income of the assessee. Following the said decision of Shri Ram Narayan Birla [2016 (9) TMI 1354 - ITAT JAIPUR] has taken a similar view holding that the excess stock so found during the course of survey was part of the stock and the Revenue has not pointed out the excess stock has any nexus with any other receipts other than the business being carried on by the Assessee. Thus we hold that the income surrendered by the assessee during the survey cannot be brought to tax under the deeming provisions of Section 69A and 69B of the Income Tax Act and the same has been rightly offered to tax by the assessee under the head of business income. In the absence of applicability of the deeming provisions, there is no question of the provisions of Section 115BBE. Assessee appeal allowed.
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