HARIPA INDUSTRIES,KOLKATA vs. ITO, CENTRAL CIRCLE 4(1), KOLKATA,, KOLKATA

ITA 2283/KOL/2026Status: DisposedITAT Kolkata29 September 2026AY 2019-20206 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the difference of ₹1,80,945/- should be added to the business income instead of being treated as unexplained investment under Section 69B of the Act. The Bench reasoned that following the order of the jurisdictional High Court in the case of Daulatram Rawatmull and considering that the assessee was in the business of putting up road signs, the valuation difference arose without any difference in quantity. Therefore, it was more appropriate to consider this as part of business income. Consequently, Grounds I to IV of the appeal were allowed. Grounds V to VII were considered general in nature and did not require separate adjudication. The appeal filed by the assessee was allowed.

What were the facts?

The assessee, Haripa Industries, filed an appeal before the Income Tax Appellate Tribunal (ITAT), Kolkata, challenging the order of the Commissioner of Income Tax (Appeals)-27, Kolkata, for Assessment Year 2019-20. The dispute arose from a survey under Section 133A of the Income Tax Act, 1961, conducted on April 10, 2018, which revealed excess stock. While the assessee could explain most of the difference, a sum of ₹1,80,945/- remained unreconciled. The Assessing Officer (AO) treated this amount as unexplained investment under Section 69B and added it to the total income. The CIT(A) upheld the AO's action, stating that undervaluation of closing stock represents concealed or escaped income, attracting Section 69B and taxing it under Section 115BBE. The assessee's appeal to the CIT(A) was dismissed.

What were the issues?

1. Whether the amount of ₹1,80,945/-, representing a small difference in the valuation of stock found during a survey, can be treated as unexplained investment under Section 69B of the Income Tax Act, 1961, or if it should be treated as normal business income. (Mixed question of law and fact) 2. Whether the initiation of penalty proceedings under Section 271AAC of the Income Tax Act, 1961, was erroneous. Assessee's Contentions: - The difference of ₹1,80,945/- was only in valuation, not quantity, and directly related to the business activity of putting up road signs. - The amount should be treated as normal business income, not unexplained investment under Section 69B. - Reliance was placed on the decisions in Principal Commissioner of Income-tax vs. Bajargan Traders and Daulatram Rawatmull v. Commissioner of Income-tax to argue that the addition should be made to business income. - The assessee argued that Section 68 was not applicable as books of account were not maintained, and the CIT(A)'s observation that no details were submitted was incorrect, as bills for approximately ₹39 lakhs were submitted. Revenue's Contentions: - The Ld. DR relied upon the order of the Ld. CIT(A) and requested it be upheld.

Which sections of the Income-tax Act were involved?

Section 133A,Section 69B,Section 143(3),Section 115BBE,Section 271AAC,Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH AT KOLKATA

Before: SHRI YOGESH KUMAR US & SHRI RAKESH MISHRA

For Appellant: Adv. प्रत्यर्थी के ओर से/

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)- 27, Kolkata [Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 for AY 2019-20 dated 13.04.2026. ITA No(s). 2283/KOL/2026 Assessment Year(s) 2019-20 Haripa Industries.

2.

The assessee is in

The order continues below.

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