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2024 (5) TMI 697 - ITAT CHENNAIDetermine the head of income - survey u/s 133A - difference in stock as offered to tax by the assessee in statement recorded during survey - 'Business Income' Or 'Unexplained investment' - as per DR excess sock was an investment which was not fully explained, therefore, the aforesaid income was to be assessed u/s 69B which would be subjected to special higher rate of tax u/s 115BBE - HELD THAT:- AO has disturbed the closing stock of earlier year or opening stock of this year by adopting GP rate of 7% on sales. The computation of differential in stock is based on mathematical formula only. However, no discrepancy in the physical stock vis-à-vis book quantities has been noted by Ld. AO. The assessee has merely accepted the computations made by AO and voluntarily agreed to increase the closing stock of earlier years by way of credit to Profit & Loss Account. All the sales and purchase, as per admission, have taken place through bank transfers only. Unless, discrepancy is pointed out in the physical quantities, no case of unexplained investment, in our considered opinion, could be made out against the assessee. As undisputed fact that the assessee is assessed to tax for past several years and its only source of income is ‘Business income’ only. In such a case, whatever discrepancies are noted, the same would be part and parcel of business operations and could be considered to be Business income only and not from any other sources. It could very well be said that entire stock was accumulated out of income from business and the undisclosed business income, if any, 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 Chennai Tribunal in M/s Mookambika Impex [2023 (7) TMI 1159 - ITAT CHENNAI] We would hold that the impugned additions have to be assessed as ‘Business Income only’. The provisions of Sec.69B r.w.s. 115BBE would have no application. AO is directed to recompute the tax payable by the assessee. Assessee appeal allowed.
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