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TMI Blog2023 (10) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer had failed to bring any material to light to justify that the additional jewellery was that belonging to the Appellant apart from vague allegations. 5. The Learned CIT(A) has erred in making the addition u/s 69B of the act as the Appellant is not the owner of any bullion, jewellery or other valuable article was found at the time of the survey and the real owners have been identified and confirmed that the said jewellery belongs to them. 6. The Learned CIT(A) has failed to realize that the Appellant has only offered the said sum to income to buy peace with the department. 7. The Learned CIT(A) overlooked a plethora of cases in favour of the Appellant's claim and dismissed the appeal without going into the relied case laws 8. The Learned CIT(A) has failed to understand the facts of the case and passed the arbitrary order. For these and other grounds that may be rendered at the time of hearing it is most humbly prayed that the Hon'ble Tribunal may be pleased to allow the Appellants claim and thus render justice. 3. The brief facts of the case are that the assessee is an individual and engaged in the business of manufacturing and trading of gold jewellery u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble jurisdictional High Court of Madras in the case of M/s. SVS Oil Mills v. ACIT reported in [2020] 113 taxmann.com 388 (Mad.) observed that although, the assessee claims to have explained excess stock is out of business income, but could not substantiate its claim with necessary evidences, including bills for purchase of stock and details of income earned from business. Therefore, rejected the arguments of the assessee and sustained assessment of additional income under the head 'income from other sources' u/s. 69B of the Act r.w.s. 115BBE of the Act. The relevant findings of the Ld. CIT(A) are as under: 7. Decision along with Reasons: 7.1 I have considered the submissions of the appellant. The assessee has disclosed the excess stock amounting to Rs. 1,39,27,171/- as his income during the survey; such disclosure was backed by stock inventory- taken at the time of survey. Therefore, the disclosure is not just a bald statement, but has been backed by the physical stock inventory. The assessee has also duly shown it as income in its return of income. Even after showing it as income in the return, the assessee during the assessment proceedings tried to say that the excess je ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.80 - To Corporation & Property Tax (Shop No. 166 Mint Street) 56,795.00 - To Demat Charges 182.52 - To L.I.P. 54,662.00 - To Tuition fees 1,87,270.00 - To Medclaim 6,070.00 - To Income Tax 74,49,611,00 To Houses Rent 2,89,200.00 - To Drawings 4,85,102.00 - To Closing balance 5,05,19,962.91 - Total 5,90,88,551.23 5,90,88,551.23 It can be seen from the capital account above that the amount of Rs. 1.39,27,171/- has been added as "Declaration during the course of survey' and not as net. profit arising from business. A separate net profit entry appears in the capital account. 7.5 Similar issue had come up for consideration before the jurisdictional; Madras High court in the ease of Ms. SVS Oils Mills Vs. The Assistant Commissioner of Income Tax in ITA No. 765 of 2018 wherein it was clearly held that the investment in excess stock found should be assessed as undisclosed income and not as business income. It is well settled principle of law that if there is conflicting views rendered by different High Courts, the view taken by the jurisdictional High Court: is binding in the jurisdictional area of the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the Ld. CIT(A) submits that during the course of survey, excess quantity of physical stock was found over and above book stock and the assessee could not explain source for excess stock found during the course of survey. Therefore, the AO and the Ld. CIT(A) has rightly assessed additional income offered during the course of survey u/s. 69B of the Act, and their orders should be upheld. 7. We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. During the course of survey, excess stock was found when compared to book stock. The assessee has offered additional income towards excess stock found during the course of survey and also paid necessary taxes by offering income under the head 'income from business & profession'. The AO assessed excess stock found during the course of survey u/s. 69B of the Act, as unexplained investment on the ground that the assessee could not explain source for excess stock found during the course of survey. We find that the excess stock found during the course of survey was mixed with regular stock in trade employed by the assessee in his business. The stock was not separately identi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of excess income regenerated from business activity only since the assessee do not have any other source of income since its inception. The entire stock was accumulated out of income from jewellery business. The undisclosed business income 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 Hon'ble Rajasthan High Court in the case of CIT vs Bajargan Traders (supra) wherein it was held that with respect to such excess stock found during the survey, it could be said that the investment in procurement of such stock was clearly identifiable and related to regular business stock of the assessee. Therefore, the same should be considered as 'Business Income only. In the present case, the stock difference has arisen in the course of day-to-day business activity only and not otherwise. The entire stock was available as trading stock at the business premises and it was part and parcel of regular business stock. The decision of Hon'ble Supreme court in the case of Lakshmichand Baijnath vs CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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