Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2023 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (11) TMI 1093 - AT - Income TaxAddition u/s. 69A - income surrendered during survey - undisclosed business income or income from other sources - CIT(A) treated it as being in the nature of business income and thus allowing deduction of interest and salary paid to partners against the same - HELD THAT:- CIT(A) has rightly applied the decision of Fashion World . [2010 (2) TMI 1171 - ITAT AHMEDABAD] wherein in identical set of facts, as analysed the provisions of section 69A, 69B, 69C etc. and held that for invoking the said provision, there are two conditions to be satisfied; (i) that investment or expenditure is not recorded in the books of the assessee, and (ii) nature &source of acquisition of assets or expenditure are not explained or are not explained satisfactorily. Thereafter the meaning of “nature” was elaborated upon stating that it would require the assessee to explain the description of the investment or the expenditure and to explain the corpus or funds from where investment or expenditure has been met. Where the assessee is able to explain the nature and source of investment or expenditure, and if they are recorded in the books of accounts, then such investment or expenditure will not be treated as deemed income, but if these conditions are not fulfilled, the same would be treated as deemed income of the assessee. ITAT, thereafter went on to hold that the important aspect that emerges was that for invoking deeming provisions under sections 69,69A, 69B & 69C there should be clearly identifiable asset or expenditure, and thereafter they held that in a scenario where excess stock of the business is found, there is no physical distinction between the accounted and unaccounted stock, and such assets found cannot be said to be distinct or separate assets. Difference in stock has no independent identity of its own and is part and parcel of the entire lot of stock. The difference is only a mathematical expression in terms of value and not a separate independent identifiable asset, and therefore, it could not be stated that there is an undisclosed asset existing independently; that once it was so held, then what was not declared to the department was receipt from business and not any investment. ITAT thereafter went to distinguish the decision of Fakir Mohmed Haji Hasan (2000 (8) TMI 44 - GUJARAT HIGH COURT) pointing out that in the said case what was found was separate and distinguishable asset or investment, source of which remained unexplained, and was therefore treated as deemed income of the assessee. Thus CIT(A), has rightly applied the said decisions to the facts of the present case which are identical as in what has been found during survey is excess stock of the business of the assessee. The assesses case, in fact, we find on a better footing since the assessee has disclosed investment made by way of purchases for the excess stock not only in its business books of accounts but also in the VAT return filed to the VAT authorities. Therefore undoubtedly the assessee has demonstrated the excess stock as relating to its business. And therefore, the l.d CIT(A), we hold, has rightly treated the same as being derived from the undisclosed business income of the assessee. Decided against revenue.
|