The Chennai ITAT held that additional income offered towards excess stock found during the course of the survey is assessable as business income.
The assessee is a proprietor of M/s. Vijay Jewellers, which is engaged in the business of trading in gold jewelry and silver articles. The assessee has filed his return of income for the assessment
During the course of survey proceedings, inventory of physical stock of gold and silver was taken, which resulted in detection of excess physical stock of gold weighing 10035.095 gms and silver articles of 154853.60 gms.
The value of excess stock was quantified at Rs. 3,39,98,188/-. The assessee was called upon to explain and reconcile excess stock found during the course of survey with books of accounts, for which Suresh Kumar Jain, in his statement u/s. 131admitted the excess stock and has also agreed to offer the same for taxation. During the course of assessment proceedings, the Assessing Officer noticed that on perusal of the profit and loss account for the year ended 31.03.2019, the assessee has offered excess stock found during the course of survey under the head business income.
The assessee was shown as to why the same should not be assessed u/s. 69B of the Act. In response, the assessee submitted that excess stock found during the course of survey is on account of numerous items of physical stock present, which cannot be immediately reconciled to books of accounts and further, said excess stock has been acquired out of business income earned for the impugned assessment year, which has been plugged back into business in the form of stock in trade.
The assessee argued that excess stock found during the course of survey is mixed with regular stock in trade of the assessee and said excess stock was acquired out of business income earned for the impugned assessment year.
The tribunal held that the additional income offered towards excess stock found during the course of survey is assessable under the head income from business as claimed by the assessee, but not income assessable u/s. 69B, as assessed by the Assessing Officer. Thus, we set aside the order of the CIT(A) and directed the Assessing Officer to assess income towards excess stock under the head income from business as declared by the assessee.
Case Name: Suresh Kumar V/S DCIT