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TMI Blog2020 (11) TMI 934X X X X Extracts X X X X X X X X Extracts X X X X ..... l the grounds of appeal are against to the order passed by the Pr.CIT, Visakhapatnam u/s 263 of the Income Tax Act, 1961 (in short 'Act'). In this case, search u/s 132 was conducted in the group cases of M/s Khan Mohammed Diamonds & Jewellers Pvt. Ltd., Guntur on 20.09.2016. The assessee filed return of income, originally, declaring total loss of Rs. 45,81,242/-. Subsequently, the Assessing Officer (AO) issued notice u/s 142(1) calling for return of income and the assessee filed the revised return of income on 06.11.2017 admitting the same loss of Rs. 45,81,242/-. The case was taken up for scrutiny and the assessment was completed on total income of Rs. 3,34,42,013/- and out of which the undisclosed income of Rs. 20,32,581/- was separatel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On going through the assessment order, we find that though the AO made the addition of Rs. 20,32,581/- as undisclosed income, no addition was made u/s 69 of the Act. The AO did not invoke section 68/69 separately in the assessment order. The income required to be taxed @60% in case the undisclosed income representing section 68 to section 69C of the Act. In this case, the AO has not invoked any such section. The assessee placed paper book and as per paper book page No.58, it is seen that the AO called for the information regarding excess stock of Rs. 7,74,270/- and excess cash of Rs. 9,37,170/- and also called for explanation of the assessee as to why both the items should not be taxed u/s 69 applying the tax rate @60%. The assessee furnis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per books and also the excess stock as computed by the Authorised Officers during the search operation at the premise. Since excess stock is a result of suppression of profit from business over the years and has not been kept identifiable separately but is the part of overall physical stock found, the provisions of section 69 cannot be made applicable as primary condition for invoking the provisions of the section is that the asset should be separately identifiable and it should have independent physical existence of its own. Since excess stock is a result of suppression of profit from business other the years and has not been kept identifiable separately but i.e. the part of overall physical stock found and therefore, the investment in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be made applicable as primary condition for invoking the provisions of the section is that the asset should be separately identifiable and it should have independent physical existence of its own. Since excess cash is a result of suppression of profit / sales from business over a period and has not been kept identifiable but i.e. the part of over all cash found and therefore the excess cash has to be treated as business income. It is an undisputed fact from the record that at the time of search excess cash was found. It is also not disputed that we are engaged in the business of jewellery. In view of our admissions, acceptance of excess cash as undeclared income is to be treated as only business income and provisions of section 69 and 115 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. This view is supported by the decision of Hon'ble A.P. High Court in the case of Spectra Shares and Scrips (P) Limited Vs. Commissioner of Income Tax - III, Hyderabad reported in (2013) 36 taxmann.com 348 (Andhra Pradesh). Hon'ble jurisdictional High Curt in the case laws cited supra held that merely because of difference of opinion, Pr.CIT cannot invoke his powers u/s 263 of the Act. For the sake of clarity and convenience, we extract relevant part of the order of the Hon'ble Andhra Pradesh High Court in para No.59 which reads as under : "59.......... The contention of the Revenue that the Assessing Officer had not applied his mind to the material on record cannot be accepted because the respondent in his order dated 31.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce the Assessing Officer had taken a conscious decision and acted in accordance with law and made the assessment, the same could not be branded as erroneous by the Commissioner, simply because according to him, the Assessing Officer should have made further enquiries. The Ld.DR did not bring any other decision to controvert the decisions relied upon by the assessee. Therefore, respectfully following the view taken by the Hon'ble High Court of Andhra Pradesh and the coordinate bench of this tribunal in the case law cited supra, we hold that there is no case for revision u/s 263, hence, we set aside the order of the Ld.Pr.CIT passed u/s 263 and allow the appeal of the assessee. 6. In the result, appeal of the assessee is allowed. Order pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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