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2024 (1) TMI 28 - AT - Income TaxUnexplained investment u/s. 69B - excess stock found during the course of survey - HELD THAT:- According to assessee, if we apply this profit rate the stock will almost come close to book stock. It means that there is some discrepancies in the physical verification done because it is not possible to estimate stocks of textile and handloom within one day. Even otherwise, the Revenue could not point out how they have valued each items because they have not valued in term of quality i.e value of the textile and handloom. In view of the above, it cannot be said that excess stock found, which is also based on estimate only, is unexplained investment. In view of the above, the same is to be assessed as business income as declared by the assessee and it cannot be charged at special rate of tax u/s. 115BBE of the Act. Hence, we direct the Assessing Officer to assess the income of excess closing stock found during the survey operation in the business premises of the assessee as ‘’business income’’ and not as unexplained investment u/s. 69B of the Act. Disallowance of expenditure @30% - We note that AO without going into the details estimated disallowance of expenditure at 30% out of total expenditure - In the absence of details of expenses, CIT(A) confirmed the action of the AO. After going through the facts of the case, we are of the view that in the absence of evidence, it cannot be denied that there will be no indirect expenses. Hence, we restrict the disallowance at 20% and direct the Assessing Officer accordingly.
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