TMI Blog2011 (1) TMI 1578X X X X Extracts X X X X X X X X Extracts X X X X ..... for assessment year 2005-06. 2. The only issue in this appeal of Revenue is against the order of CIT(A) in deleting the addition made by Assessing Officer on account of disclosure made during the survey. For this, Revenue has raised the following ground No.1:- 1. On the facts and in the circumstances of the case and in Law, the learned C.I.T(Appeals) erred in deleting the addition made by the assessing Officer on account of survey disclosure of Rs.31,70,534/-. 3. The brief facts leading to the above issue are that during the assessment proceedings Assessing Officer treated the business income representing disclosure of undisclosed stock-in-trade, cash-in-hand and investment in renovation of shop found during the course of surv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowed u/s.69B and 69C of the I.T. Act, 1961 vide questionnaire dated 23.10.2007 and also order sheet entry dated 26.09.2007. The representative of the assessee vide reply dated 25.10.2007 explained as under:- In the case of the assessee, the provisions of the section 69B and 69C are not applicable as the assessee is trading in Silver ornaments and the amount of excess cash and excess stock declared during the curse of survey and credited to the profit and loss account is part of its business receipts. Here, the ITAT judgement (ITA No.307[RJT] of 1998 A.Y. 1994-95 in the case of Income-Tax Officer, Ward-1, Amreli v. Jamnadas Muljibhai, Amreli is quite relevant. It is worth to mention here that the assessee could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed at the time of survey was only from the business activities of that firm. He further reiterated to his submission dated 24.07.2007, vide his another submission dated 30.07.2007. In view of the above, it is clear that when the investment in accounted stock and cash etc. Which were found in the possession of the assessee was not recorded in the books of account and the assessee offered no explanation about the nature and source of such investment/acquisition and the value of such item was not recorded in the books of account, there can arise no question of allowing any expenses against the value of such items, which was deemed to be the income of the assessee, and such deemed income does not fall under the head of income prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation expenses which represented business income of the current year, was found to be not acceptable or untrue, the AO should have given reason to dispute the assessee s version as to the source being other than business income. No material has been brought out on record either by the survey party or by the AO to disprove the appellant s contention regarding the only source of the firm being business income. It has not been brought out on record that the appellant firm is doing some other activities from which such income was earned and the excess stock, excess cash found and the expenditure on renovation of shop represented the income from such other source. As per the provisions of sectino40(b), Expanation3, for the purpose of this clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tners on the amount of survey disclosure amount of Rs.31,70,534/- and Assessing Officer himself worked out trading and profit loss account including/excluding survey disclosure and arrived at normal business profit at Rs.11,52,258/-. The AO added the survey disclosure amount of Rs.67,51,994/- in normal profit and arrived at total income at Rs.78,67,252/- and added Rs.31,70,534/- as understated survey disclosed. The assessee contended that during the course of survey proceedings, a statement u/s.131 of the Act was recorded on oath of the partner of the assessee-firm, Shri Shaileshbhai Mahendrabhai Parekh. On being asked to explain the reasons of excess stock of gold ornaments, renovation and cash found of Rs.62,86,624/-, Rs.1.56 lakh and R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt in by the assessee-firm that stock-in-trade generates from business income. The assessee contended that even the business income was assessed by Assessing Officer as business income in para-7 of written statement as under:- INCOME FROM BUSINESS OR PROFESSION: Net total income as per statement Rs.46,96,720 Add: Disallowance/addition 1. Addition on account of Under stated of survey disclosure as discussed in para no.5 Rs.31,70,534 2. Disallowance out of vehicle expenses Telephone expenses as discussed in para no.6 Rs. 46,525 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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