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Income Tax Appellate Tribunal, ‘C’ BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI ANIKESH BANERJEE
Page 2 & 1011/Bang/2022 ORDER PER BENCH Instant appeals of the assessees were filed against the order of the Ld. Commissioner of Income-tax (Appeals)-2, Panaji {in brevity the CIT(A)}, DIN No. ITBA/APL/M/250/2022-23/1044672436(1) vide order dated 16.08.2022. The appeals passed u/s. 250(6) of the Income Tax Act, 1961 (in brevity the Act) for A.Y. 2018-19. The impugned order was originated from the order of Ld. DCIT, Central Circle, Bellary (in brevity the AO), date of order 15.03.202, passed u/s. 143(3).
The issue is involved in both these appeals of two different assessees are identical and arises out of identical facts and circumstances. We therefore deem it convenient to pass common order and the decision in shall apply mutatis mutandis in 2018-19.
In the outset, we advert that both the appeals are of same nature of fact. By the consent of both the parties, we take the ITA No. 1010/Bang/2022 as lead case. 4. The assessee has taken the following grounds: “
1. The order of the NFAC in so far it is against the appellant is opposed to law, weight of evidence, facts and circumstances of the Appellant's case.
2. The NFAC has grossly erred in upholding the addition made u/s 69B of the Act amounting to Rs.50,39,395/- under the facts and circumstances of the case.
3. The NFAC has gross erred in upholding the addition without appreciating the fact that the excess gold and silver jewellery stock found at the business premises Page 3 ITA Nos. 1010 & 1011/Bang/2022 belongs to the personal effects of the appellant under the facts and circumstances of the case.
4. The NFAC has grossly erred in upholding the addition without giving credit to the personal belongings of the jewellery to the appellant under the facts and circumstances of the case.
5. Without prejudice to the above, the NFAC has grossly erred in upholding the addition without taking to consideration the actual purchase cost of the gold and silver jewellery under the facts and circumstances of the case. 5.1 The NFAC has grossly erred in upholding the addition which is based on the ad-hoc valuation of the gold and silver jewellery as on the date of survey under the facts and circumstances of the case.
6. Without prejudice to the above, the NFAC has grossly erred in upholding the addition without giving effect to the taxability of the addition at the rate of 8% of the taxable value after giving credit to the personal effects under the facts and circumstances of the case.
7. Without prejudice to the above, the NFAC has grossly erred in upholding the assessment order wherein the tax has been wrongly levied at the rate of 60% under the provisions of Sec. 115BBE of the Act under the facts and circumstances of the case.
8. Without prejudice to the right to seek waiver of interest, the appellant denies himself liable to be charged interest under Section 234A and. 234B of the Act under the facts and circumstances of the case. The rate and period are not discernible in the order of assessment. The rate of interest, quantum on which levied, and the period of levy is wrong and requires to be corrected in accordance of law.
9. The appellant craves to add, alter or delete the addition and grant relief for advancement of substantial cause of justice.
10. The appellant prays to admit the appeal and craves to urge such other grounds as may be deemed necessary during the time of appellate proceedings.”
Page 4 & 1011/Bang/2022 5. During the appeal hearing, before the ITAT, the Ld.AR had filed a synopsis which is kept in the record. The assessee is a dealer of gold and silver articles, running business under the name and style of M/s. V.K. Vernekar & Sons at Koppal, Karnataka. A survey was conducted by the revenue department. The assessee has declared the difference of stock in books and stock founded during the time of survey the difference of value amounting to Rs.50,39,395/-. The assessee had declared this difference of stock in the return of income and paid the tax accordingly under the normal rate.
During the assessment proceedings, the Ld.AO had confirmed the addition u/s. 69B of the Act and calculated the tax u/s. 115BBE of the Act. The basic grievance of the assessee was that the charging of tax by the ld. AO on the declared stock u/s. 115BBE is unwarranted for. The order of the assessing authority was challenged before the Ld.CIT(A). The Ld.CIT(A) had upheld the view of the Ld.AO and confirmed the order of assessment accordingly. Being aggrieved, assessee filed the appeal before us.
During the hearing, the Ld. Counsel argued that the addition was taxed u/s. 115BBE which is not at all accepted. The difference of stock is the nature of business. The undisclosed stock was generated from the business income. The Ld.AO had assessed by taking the stock as an income from other sources and addition was made u/s. 69B. The Ld. Counsel for the assessee invited our attention in AO’s order which is reproduced as below: “7.7 From the above, it is evident that the excess stock of gold & Silver jewellery found over and above the book stock could not be explained by the assessee also needs to Page 5 & 1011/Bang/2022 be assessed to tax u/s 69/69B of the Act. The assessee himself voluntarily admitted the unexplained investment in stock of Rs.50,39,395/- and offered the same for taxation in his Statement deposed during the course of survey / post survey proceedings. Hence, question of treating the said income of Rs.50,39,395/- admitted during the course of Survey u/s 133A other than Unexplained Investments u/s 69/69B of the Act, does not arise and is against the provision of Act.”
The Ld. Counsel further invited our attention in the assessee’s statement recorded by the Ld. AO on the date 20.07.2017. The relevant part of the recorded statement is reproduced as below:- “Q.13. Do you have anything to say? Ans. No. However, I submit that I accept to declare excess stock under business income as I do not have any other source of income except income deriving from the business. I accept to pay advance tax on the income declared for the Asst. Year 2018-19 will be paid at the earliest. Since I have co-operated with the Departmental proceedings, it may be granted immunity in finalization of all other proceedings of the Act.”
The Ld. Addl.CIT-DR vehemently argued and fully relied on the order of the revenue authorities. The ld. Addl.CIT-DR in argument invited our attention to the order of CIT(A) and argued that the difference of stock is nothing but the investment from undisclosed source of income. So the entire addition should come under the tax levied u/s. 115BBE. The Addl.CIT-DR relied on the order of the Hon’ble Madras High Court in case of M/s. SVS Oils Mills vs. ACIT reported in 418 ITR 442 (Mad) (2019).