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2016 (8) TMI 601 - AT - Income TaxNature of income - Addition on account of excess stock found during the course of survey and admitted by the assessee as its undisclosed investment in stock - Held that:- It is undisputed fact that the books of account were not found during the course of survey and the admission was made by the partner of excess stock of ₹ 1.25 crores for gold and silver jewellery but he has not written this disclosure in the return itself. The ld Assessing Officer raised this issue during the assessment proceedings, which was replied by the assessee but he has not convinced with the assessee’s reply. Again this issue has been considered by the ld CIT(A) and who found that valuation of jewellery was made on the date of survey at the rate prevailing of survey but as per accounting policy it has to be valued on the basis of cost price or market price whichever is less, therefore, the assessee furnished revised valuation on the basis of average price of the gold and silver jewellery purchased. This calculation has been considered by the ld CIT(A) which was found justified to him, accordingly he deleted the addition. It is settled law that statement recorded during the course of survey has no evidentiary value as held by the Hon'ble Supreme Court in the case of COMMISSIONER OF INCOME-TAX Vs. S. KHADER KHAN SON [2013 (6) TMI 305 - SUPREME COURT ]. Non considering the excess stock surrendered in survey as part of book profit U/s 40(b) - Held that:-Assessing Officer can make certain adjustments in the book profit but change of income held is subject to be examined by the appellate authority but as the facts of the case are that the assessee’s books were not closed on the date of survey as such. The Coordinate Bench of Ahmadabad ITAT in the case of Chokshi Hiralal Maganlal vs. DCIT [2011 (1) TMI 125 - ITAT, AHMEDABAD ] has considered this issue where excess stock during the course of survey U/s 133A was found. The ld Assessing Officer considered this disclosure U/s 69 of the Act but the Coordinate Bench held that since the excess stock is a result of suppression of profit from business over the years and has not been kept identifiable separately but it is part of overall physical stock found, provisions of Section 69B cannot be invoked and assessee is entitled for higher remuneration on excess stock disclosed in the return to the partner U/s 40(b) of the Act. The other case laws relied by the assessee are also squarely applicable, therefore, we reverse the order of the ld CIT(A) and held that excess stock found during the course of survey is income from business and profession and cannot be assessed U/s 69 of the Act. It is also a fact that U/s 28(v) of the Act, the interest, salary, bonus, commission and remuneration in the name of partner is assessed to tax as income from business and profession. Therefore, we allow the assessee’s appeal on this ground. Addition on account of unexplained cash found during the course of survey - Held that:- We have heard the rival contentions of both the parties and perused the material available on the record. This issue required to be verified from the cash book prepared after date of survey by the assessee with reference to entries made in the cash book and accordingly, we set aside this issue to the Assessing Officer and direct to verify the cash available on the date of survey and take decision as per law.
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