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2023 (12) TMI 99 - ITAT RAIPURCategorization of income - Undisclosed income surrendered consequent to survey action u/s. 133A - excess stock found during the course of survey proceedings - Charging of tax rate u/s. 115BBE of Act on undisclosed investment - investment in stock remains unexplained and the assessee failed to substantiate such investment during the survey proceeding - assessee submitted a revised computation moving the undisclosed income surrendered under the head of income “Income from other sources” to “Income from Business and Profession” - HELD THAT:- As we held that the source of undisclosed income surrendered by the assessee could not be substantiated, the same should be covered as taxable income under the head ‘Income From Other Sources’. Therefore, the original computation and return of income filed by the assessee was with correct application of law, wherein the income was shown as income from other sources and the tax was offered at special rates under the provisions of sec.115BBE of the Act. The assessee’s explanation before the Ld.CIT(A) which were accepted by the Ld.CIT(A) were found under the erroneous appreciation of facts by the Ld.CIT(A), wherein, there was no whisper or observation on the source of investment in excess stock found during the survey. CIT(A) has recorded that the assessee has offered income on account of excess stock found during the survey by crediting the capital amount of the assessee and subsequently, adding the excess stock to the closing stock in the balance sheet, the stock becomes part of regular books of accounts of the assessee and was made available for subsequent sale - Also further observed that the AO has not rejected the books of accounts of the assessee and rather accepted the entries passed in the books of accounts. We cannot subscribe to the view expressed by the CIT(A), since the AO has accepted the income offered by the assessee comes under the head ‘Income from Other Sources’ and offered higher rate of tax on the said income, therefore, there was no occasion for the AO to go into the integrities of the books of accounts to make them liable to be rejected. Thus the order of the Ld.CIT(A) was not according to the facts and law and therefore, the same is liable to be quashed and the findings of the AO in his order deserves to be sustained. Consequently, appeal filed by the Revenue is allowed with the observation that surrender amount on account of excess stock accepted as undisclosed income by the assessee, source of which is unexplained nonetheless belongs to activities other than regular business of the assessee, as admitted by assessee himself, should be categorized as ‘Income From Other Sources’, and taxes to be charged at special rates in accordance with provisions of sec.115BBE of the Act. Appeal of the Revenue is allowed.
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