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TMI Blog2021 (9) TMI 424X X X X Extracts X X X X X X X X Extracts X X X X ..... w: "1. Whether on the facts and in the circumstances of the case, the Tribunal is correct in law in endorsing the erroneous order of the A.O as an order after taking one of the possible views? 2. Whether on the facts and in the circumstances of the case the Tribunal is correct in law in holding that unaccounted and excess stock found during the course of search shall be assessed as business income at the rate of 30%?" In ITTA No.8 of 2021, the assessee is doing business in Gold, Diamond jewellery and Silver Articles. Search and seizure operation under Section 132 of the Income Tax Act, 1961 ('the Act', for brevity) were conducted in the case of assessee and group concern and excess stock of Rs. 6,12,46,284/- was declared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und and therefore the investment in the excess stock has to be treated as business income." The Assessing Officer duly considered and accepted such explanation and taxed the additional income as 'business income' @ 30%, which was approved by the Joint Commissioner, Income Tax, Central Range under Section 153D of the Act. In ITTA No.9 of 2021, pursuant to search under Section 132 of the Act, notice was issued upon the assessee under Section 142(1) of the Act and the assessing officer filed return of income declaring total income of Rs. 34,47,92,320/- inclusive of additional income of Rs. 7,60,53,000/- declared during search. During the assessment proceedings, the Assessing Officer called for explanation as to why the additional income admi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock valued at Rs. 4,41,46,445/- was declared by the assessee. In return of income, the assessee claimed the additional income was declared under the heading 'other operating income', which was nothing but 'business income'. Upon show-cause notice being served upon it calling for explanation as to why the additional income was not treated as 'undisclosed investment' under Section 69 of the Act by applying provision under Section 115BBE of the Act, the assessee explained that the additional income was admitted in Schedule L under the heading, 'other operating income' in the relevant columns under the head "Profits and Gains of the Business" in Part A of the Return filed for the relevant Assessment Year. Excess stock found was business stoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. Challenging the said orders, Ms.M.Kiranmayee, learned Senior Standing Counsel for Income Tax, argues that the additional excess stock found in the course of search in these cases ought to have been treated as 'undisclosed investment' under Section 69 of the Act. The Assessing Officer did not consider such fact and assessed the additional income as business income @ 30% instead of 60% by applying Section 115BBE of the Act. Thus, the assessment orders being erroneous were rightly revised by the Principal Commissioner. Hence, the appeals ought to be admitted on the aforesaid substantial questions of law. When there are two possible views on the matter and one view has been accepted by the Assessing Officer after inviting explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Year. Hence, the excess stock could not have been treated as 'undisclosed investment' under Section 69 of the Act. Section 69 of the Act reads as follows: "69. Unexplained investments.-Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year." The above section provides investments would fall within the def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be erroneous and prejudicial to the interest of the revenue. Explanation (2) reads as follows: "Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,- (a) the order is passed without making inquiries or verification which should have been made; (b) the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) the order has not been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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