DEPUTY COMMISSIONER OF INCOME TAX -23(1), MUMBAI vs. KUNDANMAL KESHRIMAL SHAH, MUMBAI

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ITA 4371/MUM/2023Status: DisposedITAT Mumbai18 July 2024AY 2018-19Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI GAGAN GOYAL (Accountant Member)1 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that once the stock was offered as part of the business and credited to the profit and loss account, it cannot be added under Section 69A. Such undisclosed stock, if accepted by the AO and treated as business income, should be taxed as such.

What were the facts?

The Revenue appealed against the CIT(A)'s order which treated Rs. 1,56,19,021/- worth of unaccounted gold stock, discovered during a survey u/s 133A, as business income instead of income under Section 69A taxable at a special rate. The assessee had declared this stock in their profit and loss account as business income.

What were the issues?

Whether the CIT(A) erred in holding that Section 115BBE would not apply to the stock offered as business income during a survey, and should be taxed at the normal rate.

Which sections of the Income-tax Act were involved?

Section 133A,Section 143(3),Section 69A,Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘E‘ BENCH

For Appellant: Ms. Sruti Kalyanikar
For Respondent: Shri P.D. Chougule
Hearing: 04/07/2024Pronounced: 18/07/2024

आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the Revenue against order dated 05/10/2023 passed by CIT(A)-51, Mumbai for the quantum of assessment passed u/s.143(3) for A.Y.2018-19. 2. The only ground raised by the Revenue is that ld. CIT(A) has erred in treating the income of Rs.1,56,19,021/- towards unaccounted cash which was added u/s.69A to be taxed at Shri Kundanmal Keshrimal Shah normal rate as against Section 115BBE applied by the ld. AO which provides a special rate of 16%.

1.

3. The assessee has filed its return of income on 22/09/2018 declaring return of income of Rs.1,89,77,960/-. The assessee is in the business of manufacturing of jewellery in the name of M/s. K.K. Jewellers. The survey action u/s.133A was conducted on the business premises of the assessee on 07/11/2017 and during the survey, assessee had declared 5681.71 gms of gold ornaments stock valuing at Rs.1,56,19,021/-. The assessee had included this amount in his profit and loss account as his regular business income. The income offered by the assessee on account of stock was treated as income u/s.69A by the ld. AO and invoked Section 115BBE to tax Rs.1,56,19,021. The ld. CIT(A) held that since assessee had declared it as business income, the provision of Section 115BBE would not apply.

3.

After going through the impugned orders, we find that during the survey action u/s.133A assessee had offered stock of Rs.1,56,90,021/- on the credit side of the profit and loss account and declared the stock as his business income. The gold ornaments stock offered as business stock and credited to trading account cannot be added u/s.69A. Once assessee is in regular business of jewellery and the gold ornament has been offered as stock for the purpose of business and had credited in the profit and loss account and the same has been accepted by the ld.AO, then such undisclosed stock credited to the profit and loss account has to be taxed as business income and therefore, Shri Kundanmal Keshrimal Shah the ld. CIT (A) has correctly held that Section 115BBE would not apply.

5.

In the result, appeal of the Revenue is dismissed. Order pronounced on 18th July, 2024.

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