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2023 (7) TMI 1159 - AT - Income TaxDetermination of head of income - excess stock found during survey - Unexplained investment u/s 69B r.w.s 115BBE or business income - quantitative differences were found in the physical stock vis-à-vis book stock - as per assessee surplus stock found at the time of survey is generated out of business income as brought into the books by way of credit to partners’ capital account - HELD THAT:- From the fact it emerges that the only source of assessee’s income is ‘Business income’ arising out of sale of gold jewellery and silver articles. Differential was separately offered to tax in the return of income as ‘Business Income’. Naturally, the excess stock was acquired out of excess income regenerated from business activity only since the assessee do not have any other source of income since its inception. The entire stock was accumulated out of income from jewellery business. The undisclosed business income was ploughed back into business to acquire further stock. In such a case, the excess stock could be said to have arisen out of normal business activity only and therefore, the same would be assessable as ‘business income’ only in terms of decision of Bajargan Traders [2017 (11) TMI 388 - RAJASTHAN HIGH COURT] wherein held excess stock found during the survey, it could be said that the investment in procurement of such stock was clearly identifiable and related to regular business stock of the assessee. Therefore, the same should be considered as ‘Business Income only. In the present case, the stock difference has arisen in the course of day-to-day business activity only and not otherwise. The entire stock was available as trading stock at the business premises and it was part and parcel of regular business stock. The decision of Hon’ble Supreme court in the case of Lakshmichand Baijnath vs CIT (1958 (11) TMI 3 - SUPREME COURT] also support the said conclusion as held when an amount is credited in the business books, it is not an unreasonable inference to draw that it is a receipt from business. Therefore, the impugned income, in our considered opinion, would be assessable as ‘Business Income’ only. Decided in favour of assessee.
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