ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, BELGAUM, BELGUAM vs. M/S RAJGURU FOODS, BIJAPUR

ITA 77/PAN/2025Status: DisposedITAT Panaji09 October 2026AY 2018-1951 pages
AI SummaryDismissed

What were the facts?

The assessee, M/s. Rajguru Foods, engaged in foodgrain trading, processing, and storage, is in appeal against the order of the CIT(A)-2, Panaji, for Assessment Year 2018-19. The dispute arises from an assessment order dated 30.06.2021 passed under Section 143(3) of the Income Tax Act, 1961. During a survey under Section 133A on 08.03.2018, excess stock was found, leading the assessee to offer an additional income of Rs. 5.25 crore. This amount was incorporated into the return of income filed on 26.10.2018. Despite the assessee offering this income, the Assessing Officer (AO) treated the excess stock as unexplained investment under Section 69 read with Section 115BBE, initiating scrutiny proceedings.

What did the Tribunal hold?

The Tribunal held that the excess stock found during the survey was business income and the Assessing Officer erred in treating it as unexplained investment under Section 69 or 69B read with Section 115BBE. The Tribunal noted that the assessee maintained stock records, which were reflected in the audited balance sheet, and complete quantitative details were available. The gross turnover was not disputed, indicating no unaccounted sales. The survey team did not find a quantitative difference in stock but only used a valuation method for alleging excess stock. The Tribunal found that the source of the additional income offered was purely from business, and there being no other source of income, the CIT(A) was correct in holding the additional income as business income liable to normal tax rates. The Tribunal dismissed the Revenue's appeal. The grounds raised in the assessee's Cross Objection were dismissed as infructuous as they supported the finding of the CIT(A) which was upheld by the Tribunal. The Tribunal also noted that the decisions relied upon by the Revenue were not applicable to the facts of the case.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the CIT(A) was right in law in holding that the excess stock found during the survey is not unexplained investment merely because it was not separately identifiable? (Revenue's Ground 1) 2. Whether, on the facts and in the circumstances of the case, the CIT(A) erred in not considering Rs. 5.25 crore on account of excess stock as unaccounted investment, which was admitted by the partner and included in the return? (Revenue's Ground 2) 3. Whether, on the facts and in the circumstances of the case, the CIT(A) was justified in not considering the income surrendered during the survey as unexplained investments under Section 69, ignoring that the stock was included in books only after the survey? (Revenue's Ground 3) 4. Whether, on the facts and in the circumstances of the case, the CIT(A) was justified in not considering the admission of disclosure during the survey as proof of suppression of business affairs and incorrect stock valuation? (Revenue's Ground 4) Assessee's Contentions (Cross Objection): - The AO erred in holding Rs. 5.25 crore as unaccounted investment without considering that stock records were consistently accepted and the books were perused and accepted during assessment. (Assessee's CO Ground 2A) - The AO erred in not holding that addition for excess stock cannot be made unless stock valuation in books is rejected based on verifiable evidence. (Assessee's CO Ground 2B) - The Rs. 5.25 crore was not real income but offered to buy peace due to the health condition of the appellant. (Assessee's CO Ground 3) - The Rs. 5.25 crore was based on a sworn statement made under duress. (Assessee's CO Ground 4B) - The Rs. 5.25 crore was based on unwarranted conjectures and faulty methodology adopted by the survey party. (Assessee's CO Ground 5A & 5B) Revenue's Contentions: - The CIT(A) erred in not treating the excess stock as unexplained investment. (Revenue's Grounds 1-4) - Relied on decisions in PCIT Vs. Kushi Ram and Sons and PCIT Vs. Kanak Impex (India) Ltd.

Which sections of the Income-tax Act were involved?

Section 133A,Section 143(3),Section 69,Section 115BBE,Section 69B,Section 143(1)(a),Section 142(1),Section 263

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PANAJI DB BENCH, PANAJI

Before: DR.MANISH BORAD & SHRI VINAY BHAMORE

For Appellant: Shri Bharath Laxminarayana
For Respondent: Shri Narasimharaju M
Hearing: 20.08.2026Pronounced: 09.10.2026

PER DR. MANISH BORAD, ACCOUNTANT MEMBER :

The captioned appeal at the instance of Revenue and Cross Objection by the assessee pertaining to A.Y. 2018-19 are directed against the order dated 17.02.2025 of ld. CIT(A)-2, Panaji CO No.4/PAN/2025 M/s. Rajguru Foods emanating out of Assessment Order dated 30.06.2021 passed u/s.143(3) of the Income Tax Act, 1961 (i

The order continues below.

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