Rajesh Bansal vs DCIT

“13.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find in the instant case a survey action u/s 133A of the Act was conducted in the business premises of the assessee during which various discrepancies were found on account of stock, cash in hand and expenditure towards furniture and fixtures. The assessee when confronted, offered the same as additional income, the details of which are as under:

Sr. No. Disclosure Amount (Rs.) 1 Declaration on account of excess stock 3,20,25,540/-2 Declaration on account of excess cash 9,55,920/-3 Investment in furniture 19,98,263/---------------Total 3,49,79,723/-

14.

We find the Assessing Officer in the assessment order rejected the explanation of the assessee that the same be assessed to tax as normal business income and brought the same to tax u/s 69 / 69C r.w.s. 115BBE of the Act. When the assessee challenged the action of the Assessing Officer in bringing to tax the additional income declared during the course of survey u/s 69 / 69C r.w.s. 115BBE of the Act as against the normal business income, the Ld. CIT(A) / NFAC allowed the appeal of the assessee by holding that the Assessing Officer has wrongly assessed the additional income offered by the assessee u/s 69 / 69C of the Act instead of assessing it as business income, the reasons of which have already been reproduced in the preceding paragraphs.

15.

We do not find any infirmity in the order of the Ld. CIT(A) / NFAC on this issue. It is an admitted fact that the assessee is engaged in footwear business on retail basis under the name and style of M/s. Patel Shoes Company. The Revenue has no other information or material that the assessee is engaged in any other activity other than the shoe business on retail basis. Under these circumstances, we have to see as to whether the income so offered during the course of survey u/s 133A has to be taxed as normal business income or unexplained investment / unexplained expenditure u/s 69 / 69C r.w.s. 115BBE of the Act.

16.

We find an identical issue had come up before the Co-ordinate Bench of the Tribunal in the case of Vijay Shriram Gundale vs. ACIT vide ITA No.79/PUN/2023, Vidyatai Vijay Gundale vs. ACIT vide ITA No.80/PUN/2023 and Rajiv Shriram Gundale vs. ACIT vide ITA No.81/PUN/2023, common order dated 03.08.2023 for assessment year 2019-20. We find the Tribunal following the decision of Hon'ble Rajasthan High Court in the case of Bajargan Traders reported in (2017) 86 taxmann.com 295 (Rajasthan) reversed the order of the Ld. CIT(A) and directed the Assessing Officer to consider the excess stock found during the course of survey as normal business income instead of attracting the provisions of section 69B r.w.s. 115BBE of the Act. The relevant observations of the Tribunal read as under:

"7.

Heard both the parties and perused the material available on record. There is no dispute regarding offering of additional income on account of excess stock for an amount of Rs.37,00,000/- during the course of survey. We note that as rightly pointed by the ld. AR which is not disputed by the ld. DR crediting the said additional income to profit and loss account and by including in the computation of income in the total income of the assessee which clearly demonstrate the assessee offered the same as business income. The ld. AR vehemently submitted the assessee explained the difference in valuation stock as per the books explained by the assessee through answers to Q. Nos. 10 and 11 of the statement u/s. 131 of the Act and also in response to notice invoking the provisions u/s. 115BBE of the Act during the course of assessment proceedings. We note that the Q. No. 10 is reproduced by the CIT(A) at page No. 10 of the impugned order and on perusal of the same, we note that the assessee explained the difference of Rs.37,00,000/- as stock purchased on high demand during the marriage seasons and bills will be received late. Therefore, it can be fairly concluded that the excess stock as found during the course of survey is nothing but business income flowing from assessee's regular business.

8.

The Hon'ble High Court of Rajasthan in the case of Bajargan Traders reported in (2017) 86 taxmann.com 295 (Rajasthan) was pleased to observe that the amount surrendered under unrecorded stock has to be brought to tax under the head "business income" as the excess stock which has been found during the course of survey is the investment in procurement of such stock is clearly identifiable and related to the regular business stock of the assessee. The Hon'ble High Court clearly held the investment in excess stock has to be brought to tax under the head "business income" but not under the head "income from other sources". The Mumbai Benches of the Tribunal in the case of Govind Godomal Lulla (supra) held undisclosed investment in the case of excess stock found during carrying on business and the same is generated out of business income, no provisions of section 69B of the Act would attract. Further, the Jodhpur Benches of the Tribunal in the case of Shri Lovish Singhal (supra) held the excess stock/cash found during the course of survey is taxable under the business and no provision u/s. 115BBE of the Act is attracted. In the present case as discussed above without any dispute the assessee offered additional income under excess stock during the course of survey and same was entered in the books of account as on the last day of financial year ending on 31-03-2019 and offered the said amounts to tax under the business income. Therefore, in our opinion, the ratio laid down by the Hon'ble High Court of Rajasthan in the case of Bajargan Traders (supra) which was followed by the Jodhpur Benches of Tribunal is similar and identical to the issue in the present case. Therefore, the CIT(A) is not justified in confirming the order of AO in excluding the alleged additional income offered during the course of survey and attracting the provisions u/s. 69B of the Act, consequently, the charging u/s. 115BBE of the Act. Thus, the order of CIT(A) is set aside and the grounds raised by the assessee are allowed.

9.

The ld. AR submits that the assessee is not interested to prosecute additional grounds. Hence, the same are dismissed as not pressed.

10.

In the result, the appeal of assessee is allowed."

17.

We find similar view has been taken by the Tribunal in the case of Yash Construction Co. vs. ACIT (supra) and in the case of Late Harilal Mavjibhai Patel vs. ACIT (supra). Respectfully following the above decisions and considering the fact that the only source of income of the assessee is from retail shoe trading and no other business activity has been found by the Revenue either during survey action or subsequently, therefore, the additional income so declared during the course of survey action has to be considered as business income to be taxed at normal rate instead of applying the provisions of section 69 / 69A / 69B / 69C r.w.s. 115 BBE of the Act. We, therefore, uphold the order of the Ld. CIT(A) / NFAC and dismiss the grounds raised by the Revenue.”