DCIT, CENTRAL CIRCLE-1(3), BENGALURU, BENGALURU vs. MANGALDEEP CHAINS, BENGALURU

ORDER PER LAXMI PRASAD SAHU, ACCOUNTANT MEMBER These two appeals filed by the revenue against the separate orders passed by the Ld.CIT vide order & DIN No. ITBA/APL/M/250/2024- 25/1069234727(1) dated 27/09/2024 in respect of A.Y. 2017-18 and ITBA/APL/M/250/2024-25/1068721109(1) dated 17/09/2024 in respect of A.Y. 2020-21 on the following grounds of appeal.

& 2562/Bang/2024 Assessment Year 2017-18: “In the facts and circumstances of the case, the Learned CIT(A) has erred in holding the excess stock found and admitted during the survey action u/s 133A, as income under the Profit and Gains from Business & profession instead of treating it as 'Unexplained income u/s 69A of the Act" and to tax at special rates given in section 115BBE of the Income-tax Act, 1961.”

Assessment Year 2020-21: “In the facts and circumstances of the case, the Learned CIT(A) has erred in holding the excess stock found and admitted during the survey action u/s 133A, as income under the Profit and Gains from Business & profession instead of treating it as "Unexplained investments u/s 69B of the Act" and to tax at special rates given in section 115BBE of the Income-tax Act, 1961.”

3. The ld. Dr requested that the delay may be condoned. On the other hand, the Ld.AR had no objection.

4. Considering the submissions and relying on the judgment of Hon’ble Apex Court in the case of Collector, Land Acquisition vs. MST.Katiji and Others [ 1987] 167 ITR 471, we are condoning the delay. The Ld.DR has filed written submissions. Since in both the appeals, the revenue has filed appeal on the common grounds as mentioned above against the OIrder of the learned CIT(A), the learned CIT(A) has treated the income as business & 2562/Bang/2024 income. However, during the course of survey for the Assessment Year 2017-18 it was accepted as undisclosed income and for the Assessment Year 2020-21, during the course of recording of statements under section 133A of the Act, it was accepted as regular income respectively. for Assessment Year 2017-18: 3. Briefly stated the facts of the case are that the survey u/s. 133A was conducted in the case of the assessee on 30/08/2016. Accordingly, the case was selected for scrutiny under CASS after filing of return and notice u/s. 143(2) and other statutory notices were issued to the assessee. The assessee filed return of income on 07/11/2017 u/s. 139(1) declaring income of Rs. 18,36,11,380/-. In response to the notices issued by the AO, the assessee replied for the notice and the AO noted that the amount declared during the course of survey as undisclosed income of Rs. 18,27,71,190/- was mentioned by the assessee under the head “Profit gains / business profession” under any other item or items of addition u/s. 28 to 44DA. However this should have been shown under Schedule in the Income Tax return 1d.sl.4 of other sources as unexplained money etc. u/s. 69A of the Income Tax Act and assessing officer completed the assessment and income was stated as unexplained money u/s. 69A of the Act and section 115BBE was applied.

4. Aggrieved from the above order, the assessee filed appeal before the Ld.CIT(A). The assessee submitted the detailed written submissions and relying on the judgments of the Hon’ble Jurisdictional High Court and Hon’ble Bench of the ITAT, the Ld.CIT(A) after considering the written submissions and judgment of Hon’ble Jurisdictional High Court in the case of CIT & Anr. vs. S.K. Srigiri And Bros. reported in [2008] 298 ITR 13 (KAR) and in the case of DCIT vs. Sri Krishna Diamonds And Jewellery in dated 01/08/2023 and some other judgements, allowed appeal of the assessee observing that the income declared during the course & 2562/Bang/2024 of survey will be treated as business income. The assessee relied on the following cases too. 1) M/s. Travancore Textiles (P) Ltd. in & 176/Chny/2019 2) M/s. Samarath Realities in ITA No. 1144/Ahd/2017

5. The Ld.DR relied on the order of the assessing officer and referred to the statements recorded during the course of survey u/s. 133A and confirmed during the statements recorded u/s 131of the Act on 01/09/2013. The assessee itself(Partner) has declared as undisclosed income and referred to Q.Nos. 3 & 4 which are as under:

6. However, the Ld.CIT(A) has treated as business income instead of income under other source under section 69A of the Act. The assessee has accepted it as undisclosed income during the survey u/s 133A of the Act. It is very surprising that the assessee is not maintaining updated books of accounts to explain the source/application of funds . However, while filing the return of income, it was offered as business income which is complete violation of the statements given by the assessee during the survey. The statements given were on the basis of material evidences which cannot be & 2562/Bang/2024 denied / discarded later on. The case relied on by the Ld.CIT(A) are completely distinguishable on the facts of the case. In those cases, the assessee accepted in survey statements as a business income but here in the case on hand it is accepted as undisclosed income and assessee was unable to explain the source of stock found at the business premises at the time of survey.

7. On the other hand, the Ld. Counsel reiterated the submissions made before the lower authorities and he stated that the order of the Ld.CIT(A) is good and reasoned order and it should not be disturbed. The Ld.CIT(A) had rightly relied on the judgments of the Coordinate Bench and the Hon’ble Jurisdictional High Court. He further submitted that in assessee’s own case, for the A.Y. 2020-21, the survey was also conducted u/s. 133A and the ld. CIT (A) has accepted as business income. The Ld. Counsel further submitted that in the case of group cases, in the case of Mangal Deep Bangles, survey was happened and declared amount was accepted by the AO as business income and he has filed written submissions which is as under: “MAY IT PLEASE YOUR LORDSHIPS THE RESPONDENT HEREIN MOST RESPECTFULLY SUBMIT AS UNDER:

1.

2. The Appellant- Revenue has urged the following ground in support of its Appeal "In the facts and circumstances of the case, the Learned CIT(A) has erred in holding the excess stock found and admitted during the survey action u/s 133A, as income under the Profit and Gains from Business & profession instead of treating it as & 2562/Bang/2024 "Unexplained income u/s 69A of the Act" and to tax at special rates given in section 115BBE of the Income -tax Act, 1961'.

4. Respondent's submissions in support of the order dated 27.09.2024 passed by the Learned Commissioner of Income Tax Appeals -11, Bengaluru.. 4.1. It is most respectfully submitted that the impugned order passed by the Learned Commissioner of Income Tax Appeals -11, Bengaluru is well reasoned and is duly supported by binding decisions of the Hon'ble Jurisdictional High Court/ ITAT apart from the decisions of Non jurisdictional High Courts/ ITATs. The Learned Commissioner had passed the impugned order after taking into consideration decisions of the Hon'ble Jurisdictional High Court & Hon'ble Tribunal in the following cases: i. CIT Vs S.K. Srigiri and Bros (HC-KAR); ii. DCIT Vs Sri. Krishna Diamonds and Jewellery - (ITAT - Bng) 4.2. It is further submitted that the issue is also covered in favour of the Respondent in the following decisions of this Tribunal which were rendered subsequent to the impugned order of the learned CIT(A); iii. ACIT Vs M/s. MRK Gold LLP - (ITAT -BNG) iv. DCIT Vs M/ s. Raj Diamonds - (ITAT- BNG) Relevant extracts of the above two decisions are as under:  ACIT Vs M/s. MRK Gold LLP, - ITAT -Bengaluru “9. Considering the rival submissions and perusing the material available on records and Orders of the authorities below, there are surveys was conducted on 20.01.2020 at the assessee's business premises and difference was noted in the stocks found in the books of accounts and it was quantified in value at Rs.3,23,08,950/- and the AO made addition under section 69B of the Act and applied section 115BBE of the Act. However, the learned CIT(A) has allowed the appeal of the assessee and treated it as a business income after relying on various judgments. We also noted from the Order of the lower authorities regarding the difference in stock found in the business premises of the assessee. It was not found separately elsewhere, the stocks found are the integral part of business activity of the & 2562/Bang/2024 assessee. The learned CIT(A) has relied on the judgment in the case DCIT Vs. Sri Krishna Diamond and Jewellery (supra) in which it has been observed as follows, and has allowed the appeal of the assessee. "9. After hearing rival contentions, we note that the assessee is dealing in gold jewellery, silver articles, diamond, platinum, other precious stones, semi-precious stones and dealing in bullion etc. A survey was conducted on 04/01/2018 and the excess stocks were found of Rs. 2,50,51,072/- . During the assessment AO treated the same as Income from other source and applied sec. 69 of the Act. The CIT(A) has allowed the appeal of the assessee by observing that the AO has not pointed out that the excess stock has any nexus with any other receipts. After discussing in detail and considering on the some judgments, he found that the assessee is engaged in jewellery business as noted supra and no other business is carried out by the assesee. We note that the assessee has stated that excess stock is kept in the premises and it was not recorded in the books of accounts. As per the submission of the ld. AR, after the survey, the assessee has made necessary entries in its books of account and offered it as regular business income. The answer to question No.26 in the statement recorded is very much clear that the assessee has offered it as excess stock of its business assets. The AO has not further established that the excess stock found was not in the nature of business assets/income and also not pointed out any adverse information that it is not regular business income. The CIT(A) has allowed the appeal of the assessee by observing as under:- "9.0 The appellant during the course of appellate proceedings has filed written submissions in support of his claim and also relied on various judicial judgements. The relevant part of the same is reproduced as under. 14.1 As stated above, in the case of appellant, a survey u's 133A was conducted on 04.01.2018 in the business premises of the appellant which is before the end of financial year 31.03.2018. In the course of survey, value of excess stock of Gold Jewellery and silver articles was declared. The stock declared under survey was credited to the capital account of the partners of appellant. Further, the stock was found in the business premises of the appellant for which the source is income from business only. The excess stock found during the course of survey & 2562/Bang/2024 and surrender made thereof was correctly returned under the head "Business and Profession' only in the Return of Income. As stated above, the appellant is dealing in Gold jewellery, Silver articles, Diamond, Platinum and other precious / semi precious, etc., and the excess stock which has been found during the course of survey is stock of Gold jewellery and Silver articles only. Therefore, the investment in procurement of such stock of Gold jewellery and Silver articles is clearly identifiable and related to the profit of regular business of the appellant only. Therefore, the investment in the excess stock has to be brought to tax under the head "Business Income" and not under the head "Income from Other Sources" and provisions of Section 69/115BBE would accordingly be not applicable. 14.2 Even in the statement recorded u/s 133A on 04.01.2018 from the appellant at the time of survey u's 133A, the appellant had stated that the extra income offered is over and above the normal profits of the appellant firm and such income declared is to be assessed as business income only. The relevant question no. 26 along with the answers are reproduced as follows; The complete valuation of the gold articles and other articles was done during the course of the survey and the entire valuation report was enclosed herewith as an annexure. As per the valuation report there is excess in various categories of the stock. Table The excess is appearing in the books on some of the categories as shown in the valuation report please comment- Ans: Sir, I agree that the valuation is done by government authorized valuers and also I agree that there is excess gold and silver in some of the categories. The total value of the excess gold present in the premises comes to Rs.1,00,11,072/-. Further as per the books the total silver articles present in the premises as per the books is 25,43,499.000 grams in addition, there is an excess of 376 kgs of other as kept in the premises as per the valuation report which is not accounted in. 14.3 Thus, it is clear from answer to question 26 from the statement recorded at the time of survey that the income declared is on account of excess stock found in the business premises of the appellant and accordingly appellant had declared extra income in the form of excess stock of gold jewellery and silver articles under the head Income from Business only. & 2562/Bang/2024

15 In this regard the appellant would like to rely upon several Judicial precedents wherein it has been held that income declared under survey proceedings are to be assessed as Business income only and not as Income from other sources and consequently the provision of Section 115BBE will not apply.  CIT v/s. S.K. Srigiri 298 ITR 13(kar).  ACIT Cen Cir 13, Mumbai vs Rahil Agencies, Mumbai on 23 November, 2016  Shri Ram Swaroop Singha78z, others Vs. ACIT Circle (ITA No. 145/Jodh/2018)  Pr.CIT Vs. BaJrang Traders, C/o. Kalani and Co.,  Lakshminath Baijnath Vs. CIT(1959) 35 ITR 46 (SC)  DCIT vs. Ramnarayan Bir7a  Chandigarh ITAT- Famina Knit Fabs vs ACIT (2019) 176 ITD 246 (2021) 123 taxmann.com 8 (Jaipur- Trib.) In the ITAT Jaipur Bench -A'  Hari NarainGattani vs. Deputy Commissioner of Income Tax, Circle-04, Jaipur  Hon'ble ITAT, Indore Bench, Indore in the case of M/s Shahnai V/ s ITO 1(1), Ujjain, vide ITA No. 658/Ind/2014, dated 15-052015.  ACIT, Circle -1(1), Ujjain V/s M/s. A one Enclave, 3687/1, Hariphatak Road, Ujjain ITA No. 828/Ind/2018  Chokshi Hiralal Maganlal Vs. Dy. CIT (2011) 9 taxmann.com300/45 SOT 349 (Ahd.- Trib)  Principal Commissioner of Income Tax vs. Deccan jewellers (P.) Ltd.dated 02- 082021(2021) 132 taxmann.com 73 (Andhra Pradesh)/(2021) 438 ITR 13 ( HC of Andhra Pradesh) 9.1 I have heard the AR of the appellant and duly considered the submissions made. The assessing officer has considered excess stock found during the course of survey proceedings amounting to Rs. 2,50,51,072/- as unexplained stock and the same is added back to the income under section 69 of the Income tax Act, 1961. The assessing officer has relied on the decisions of Hon'ble High Court of Rajasthan in the case of PCITAiwar vs Bajargan Traders in ITA No. 258/2017 dated 12092017 and also on the decision of Hon'ble High Court of Madras in the case of M/s. SVS Oils Mills vs. The Assistant Commissioner of Income Tax in ITA No. 765 of 2018. The Hon'ble High Court of Rajasthan in the case of PCIT Alwar & 2562/Bang/2024 vs Bajargan Traders in ITA No. 258/2017 dated 12-09- 2017 held as follows. 2.7. It is further submitted that the real issue in this case is whether the excess stock surrendered should be made as a part of business income or not and if so, assessee can claim deduction on account of payment of remuneration to partners on account u/s 40b(v). In this regard, our reference was drawn to the decision of Co-ordinate Bench in case of Shri Ramnarayan Birla (in ITA No. 482/JPI15dted 30.09.2016). In that case, the question before the Coordinate Bench. was "whether the CIT(A)-2, Udaipur has erred in directing the AO to assess the unexplained investment surrendered by the assessee under the head "income from Business" ignoring the decision of the Hon'ble Gujarat High Court in the case of Fakir Mohd. Hazi Hasan 247 ITR 290 that unaccounted income ought to be categorized under the residuary head of 'Income from other sources. In respect to the said issue, the findings of the Coordinate Bench are as follows: "We have heard the rival contentions and perused the material available on record. Undisputed facts emerged from the record that at the time of survey excess stock was found. It is also not disputed that assessee is engaged in the business of jewellery. During the course of survey excess stock valuing Rs. 77,66,887/- was found in respect of gold and jewellery. The Coordinate Bench in the case of Choksi Hiralal Mangnlal vs. DCIT 131, TT) (Ahd.) 1 has held that in cases where source of investment/expenditure is clearly identifiable and alleged undisclosed asset has no independent existence of its own or there is no separate physical identity of such investment/expenditure then first what is to be taxed is the undisclosed business receipt invested in unidentifiable unaccounted asset and only on failure it should be considered to be taxed u/s 69 on the premises that such excess investment is not recorded in the books of account and its nature and source is not identifiable. Once such excess investment is taxed as undeclared business receipt then taxing it further as deemed income under section 69 would not be necessary. Therefore, the first attempt of the assessing authority should be to find out link of undeclared investment/expenditure with the known head, give opportunity to the assessee to establish nexus and if it is satisfactorily established then first such investment should be considered as undeclared receipt under that particular head. It is observed that there is no conflict with the decision of Hon'b]e Gujarat & 2562/Bang/2024 High Court in the case of Fakir Mohd. Jajihasan (supra) where investment in an asset or expenditure is not identifiable and no nexus was established then with any head of income and thus was not available for set off against any loss under Jany other head. Therefore, the Hon'ble Coordinate Bench held that where asset in which undeclared investment is sought to be taxed is not clearly identifiable or does not have independent identity but is integral and inseparable (mixed) part of declared asset falling under a particular head, then the difference should be treated as undeclared business income explaining the Investment. In the present case the excess stock was part of the stock. The revenue has not pointed out that the excess stock has any nexus with any other receipts. Therefore, we do not find any fault with the decision of the Id. CIT(A) directing the AO to treat the surrendered amount as excess stock qua the excess stock found." 2.10. We have heard the rival contentions and perused the material available on record. During the course of survey, the assessee has surrendered an amount of Rs. 70,04,814/- towards investment in stock of rice which had not been recorded in the books of accounts. Subsequently, in the books of accounts, the assessee has incorporated this transaction by debiting the purchase account and crediting the income from undisclosed sources. In the annual accounts, the purchases of Rs. 70,04,814/- were finally reflected as part of total purchases amounting to Rs. 33,47,19,658/- in the profit and loss account and the same also found included as part of the closing stock amount to Rs. 1,94,42,569/- in the profit/loss account since the said stock of rice was not sold out. In addition to the purchase and the closing stock, the amount of RS. 70,04,814/- also found credited in the profit and loss account as income from undisclosed sources. The net effect of this double entry accounting treatment is that firstly the unrecorded stock of rice has been brought on the books and now forms part of the recorded stock which can be subsequently sold out and the profit/loss therefrom would be subject to tax as any other normal business transaction. Secondly, the unreco4rded investment which has gone in purchase of such unrecorded stock of rice has been recorded in the books of accounts and offered to tax by crediting the said amount in the profit and loss account. Had this investment been made out of known source, there was no necessity for assessee to credit the profit/loss account and offer the same to tax.

& 2562/Bang/2024 Accordingly, we do not see any infirmity in assessee's bringing such transaction in its books of accounts and the accounting treatment thereof so as to regularise its books of accounts. In fact, the same provides a cred- idle base for Revenue to bring to tax subsequent profit/loss on sale of such stock of rice in future. 2.11. Having said that, the next issue that arises for consideration is whether the amount surrendered by way of investment in the unrecorded stock of rice has to be brought to tax under the head "business income" or "income from other sources". In the present case, the assessee is dealing in sale of foodgrains, rice and oil seeds, and the excess stock which has been found during the course of survey is stock of rice Therefore, the investment in procurement of such stock of rice is clearly identifiable and related to the regular business stock of the assessee. The decision of the Co-ordinate Bench in case of Shri Ramnarayan Birla (supra) supports the case of the assessee in this regard. Therefore, the investment in the excess stock has to be brought to tax under the head "business income" and not under the head income from other sources" In the result, ground No. 1 of the assessee is allowed. 9.2 The Hon'ble High Court of Rajasthan in the case or PCIT Alwar vs. Bajargan Traders in (supra) has affirmed the decisions of ITAT which had held that in a cases where source of investment/expenditure is clearly identifiable and related to the regular business stock of the appellant then the investment in excess stock found during the course of survey has to be brought under the head "Business Income" and not under the head "Income from other sources". 9.3 The appellant has relied on the decision of Hon'ble High Court of Rajasthan in the case of PCIT Alwar vs. Bajargan Traders in ITA No. 258/2017 dated 12- 092017 and also on other various judicial decisions. It is seen that the facts of the case under consideration are similar to that of PCIT Alwar vs. Bajargan Traders in ITA No. 258/2017 dated 12- 09-2017 (Supra). In the instant case, the appellant is engaged in the business of jewellery. During the course of survey excess stock amounting to Rs.2,50,51,072/- was found in respect of gold and jewellery. Further, the AO has not identified any source of income apart from the business income of the appellant, to which excess stock found during the course of survey can be attributed. In the given case, the excess stock found during the course of survey & 2562/Bang/2024 proceedings is clearly identifiable and the same is related to regular business stock of the appellant therefore, the same is to brought under the head "Business income" and not under the head "Income from other source". The AO was not justified in considering the excess stock found during the course of search as unexplained stock and assessed to tax as per the provisions of section 69 of the Income Tax Act since in the present case the excess stock was part of the stock and the AO has not pointed that the excess stock had any nexus with any other receipts. As such, ground nos. 2 to 4 as raised by the appellant is allowed"

10. On going through the above order of the CIT(A), we do not find any infirmity in the order of the CIT(A) and he has passed a reasoned order. We further note that the case laws relied by the CIT(A) as well as the ld.AR of the assessee noted supra, supports the case of the assessee and the excess stock found during the course of survey cannot be taxed u/s 69 of the Act because excess stock was part of the regular business of the assessee and the AO has not brought on record anything to show that the excess stock has nexus with any other business receipts or that it was not the part of the regular business of the assessee. Considering the entire facts, we uphold the order of the ld. CIT(A) and dismiss the appeal of the revenue."

by the Revenue are accordingly dismissed." Unquote.

6. Conclusion: In the above facts and circumstances, settled law on the issue involved as well as the principles of consistency, it is most respectfully submitted that the subject Appeal filed by the Revenue may kindly be dismissed and the impugned order be upheld in the interest of justice.”

8. For A.Y. 2017-18, during the course of hearing, the Ld. Counsel further submitted that the assessing officer has accepted the income offered by the assessee as business income in the case of group cases on the similar circumstances.

& 2562/Bang/2024 9. In the rejoinder the ld. DR submitted that the date of assessment orders are different. He further submitted that the statements given in the case of Mangaldeep bangles and assessee’s are not matching. In the case of assessee it is 09/09/2019 while the assessment order referred by the Ld. Counsel is 17/12/2019 and the facts are also different. Therefore this argument of Ld. Counsel is not applicable.

9.1. He further submitted that while deciding the heads of income for computing of due tax, in respect of survey conducted u/s. 133A, the statements recorded, are very much relevant in the case of the assessee for the A.Y. 2017-18, the assessee itself(Partner) accepted as undisclosed income(unexplainable). Once it is undisclosed income accepted, it cannot be treated as business income and therefore he requested that the order of the assessing officer should be upheld.

10. Considering the rival submissions and perusing the materials available on record and the order of the authorities below, we noted that the case was selected for a scrutiny under CASS and during the survey proceedings, the assessee had declared undisclosed income of Rs. 18,27,71,190/- which has been assessed by the AO as unexplained money u/s. 69A of the IT Act however, the assessee had offered it as business income and paid normal rate of tax. The Ld.CIT(A) has accepted the income shown by the assessee as business income relying on the judgment of the Hon’ble Jurisdictional High Court and Coordinate Bench. We have gone through the assessment order passed by the assessing officer dated 09/09/2019 which is as under: & 2562/Bang/2024 & 2562/Bang/2024 & 2562/Bang/2024 11. We noted that from the above assessment order, the assessing officer has made addition u/s. 69A of the IT Act. We also noted that from the financial statements that the closing stocks from assessee is Rs. 17,33,93,820/- and sales of Rs. 26.48 crores. The opening stock is Rs. 3.41 crores and purchases is only Rs. 38.26 crores. However, the undisclosed income was declared by the assessee during the course of survey of Rs. 18,27,71,190/- as unaccounted stock. The ld. CIT(A) should have considered the purpose/ findings/statements recorded during the course of survey-.The ld. CIT(A) has treated as business income only relying on the judgements as per his order without going into the facts/ findings at the time of survey for the impugned Assessment Year of the assessee and has ignored the statements recorded during the survey proceedings and post survey proceedings. The ld. CIT (A) is not justified for allowing the appeal of the assessee. Once the assessee itself (partner) admitted as undisclosed income because he was unable to explain the source of investments in excess stock found as the nature of business and source of investment is only known well by the assessee himself. If the assessee had invested from known source of income, he would not accept it as undisclosed source of income. During the course of hearing the bench asked a question about the offering of surrendered amount as business income and explain the source of investment in the excess stock found to the ld. Counsel for the assessee but he was also unable to explain. Inspite of giving one more opportunity to the ld. Counsel he was unable to explain the source of investment in the excess stock found at the time of survey. ,Therefore, Considering the totality of facts of the case we found substance on the arguments of the ld. DR. And rejected the arguments of the ld. AR. The case law relied on by the learned Counsel does not support the case of the assessee since the facts are different. The ld. CIT(A) has wrongly applied the judgements and allowed the appeal of the assessee. In the result the appeal of the revenue is allowed.

& 2562/Bang/2024 Assessment Year 2020-21: 12. Briefly stated the facts of the case are that the assessee filed return of income on 21/01/2021 declaring income of Rs. 4,50,91,170/- and the case was selected for complete scrutiny as survey u/s. 133A was conducted in the case of the assessee. Accordingly, notice u/s. 143(2) dated 28/06/2021 was issued to the assessee and other statutory notices were issued to the assessee. The assessee submitted reply. From the submissions of the assessee, it was noted that a survey u/s. 133A was conducted on 26/06/2019. During the course of survey, it was noted that the assessee had maintained cash book and other books of upto 25/06/2019 and there was cash, details called and physical stock found during the course of survey was Rs. 25,98,860/-. Further, the ornament stock weighing 79.199 Kgs and gold bullion weighing 3.005 kgs were physically found whereas the books ornament stock was of 66.903 kgs and bullion stock was Nil. Due to discrepancy in stock, an amount of Rs. 3,27,76,490/- was offered to tax as stock difference. Consequent to survey, the assessee has admitted an amount of Rs. 3,27,76,490/- on account of excess stock and Rs. 21,40,777/- on account of unaccounted cash sales. The assessee had declared income of Rs. 4,50,91,170/- as return of income. The assessing officer after considering the entire materials available before him, treated the assessee’s stock of Rs. 3,27,76,490/- u/s. 69B of Income Tax Act. However, the assessee offered it as business income. The Ld.CIT(A) also treated the income declare during the survey u/s. 133A as business income. The Ld.CIT(A) relied on the judgment of Hon’ble Jurisdictional High Court and the Coordinate Bench and allowed the appeal of the assessee. Aggrieved from the order of the Ld.CIT(A), the revenue filed an appeal.

& 2562/Bang/2024 14. On the other hand, the Ld. Counsel relied on the order of the Ld.CIT(A) and submitted that the Ld.CIT(A) has given reasoned order and it should not be disturbed and submitted that in the case of group cases in Mangal Deep Bangles, the assessing officer had accepted as business income then why the assessing officer had treated the income u/s. 69B in the case of the assessee. The Ld. Counsel further submitted that there was a discrepancy noted in the stock were found. Purchases and sales were updated upto 25/06/2019. The stock register was not properly updated. Therefore whatever declared by the assessee are part of the business stock which is appearing on the statements recorded of the assessee u/s 133A of the Act. Therefore there is no infirmity in the order of the Ld.CIT(A) and the order passed by the Ld.CIT(A) is also covered by the judgement of the Hon’ble Jurisdictional High Court as well as the decision of the Coordinate Bench relied by him.

& 2562/Bang/2024 14. To sum up, the appeal for the A.Y. 2017-18 in is dismissed.

Order pronounced in the open court on 31st October, 2025.