ANNAPPPANDINADAR JAGANATHAN,GOBICHETTIPALAYAM vs. ACIT, ERODE, ERODE

Aforesaid appeals by different assessees for Assessment Year (AY) 2017-18 assails revisional jurisdiction as exercised by Ld. Pr.

The Ld. AR advanced arguments to submit that one of the possible views was taken by Ld. AO. The view of Ld. AO could not be substituted by revisional authority. The Ld. CIT-DR, on the other hand, advanced arguments to justify invocation of revision jurisdiction u/s 263. Having heard rival submissions and upon perusal of case records, our adjudication would be as under.

It could be seen that the assessee was assessed u/s 143(3) on 30- 12-2019. In the opening paragraphs, Ld. AO has noted that the assessee was subjected to survey u/s 133A on 20-09-2016 wherein the assessee disclosed excess stock of Rs.95.76 Lacs. During the course of assessment proceedings, notice u/s 142(1) was issued and various details were called from the assessee. After due consideration of assessee’s reply, Ld. AO made adhoc disallowance of certain expenditure and framed the assessment.

The Ld. Pr. CIT, upon perusal of case records, sought revision of the order vide order dated 25-03-2022. However, Tribunal, vide dated 07-02-2023, restored the issue of revision back to the file of revisional authority. In the set aside proceedings, the assessee furnished various submissions. It was noted by Ld. Pr. CIT that the assessee was engaged in manufacturing and trading of metals and plastic items. Though the assessment was completed, the same was erroneous and prejudicial to the interest of the revenue in view of the fact that the assessee was subjected to survey u/s 133A wherein excess stock was detected for Rs.95.76 Lacs. The assessee credited the excess stock to Profit & Loss Account and offered the same as business income. Since the assessee had made unexplained credit, being the excess stock in the books of accounts, the said unexplained credit was to be taxed u/s 68 of the Act. This issue was not considered by Ld. AO in the assessment order which would attract revision u/s 263.

The assessee, it its submissions, pleaded that stock was rightly offered and assessed to tax as ‘Business Income’. The Ld. AO had applied his mind to this issue during the course of assessment proceedings. Therefore, there was no error in the assessment order.

However, Ld. Pr. CIT observed that the assessee did not substantiate its case as to why the provisions of Sec.68 was not to be invoked in his case since unexplained stock represent unexplained credits which ought to have been taxed at higher rates u/s 115BBE. The Ld. AO also did not bring any material on record to suggest that the same should be taxed under normal tax rates as ‘Business income’. The issue was not examined in right perspective. The Ld. AO ought to have taxed the same u/s 115BBE. Therefore, rejecting assessee’s submissions, Ld. Pr. CIT directed Ld. AO to redo the assessment on the impugned issue after verification of facts pertaining to taxability of unaccounted stock. Aggrieved, the assessee is in further appeal before us challenging aforesaid revision of the order. Our findings and Adjudication 7. From the facts, it emerges that some excess stock was unearthed during survey proceedings. The assessee credited the same to Profit & Loss Account and offered the same as ‘business income’. The same has been accepted by Ld. AO. In the opening para of assessment order itself, Ld. AO has taken note of the outcome of survey proceedings. In such a case, it could be said that the issue was duly taken note of by Ld. AO and a view was taken in the matter. The Ld. AO accepted the working of the assessee in the assessment order. The said view could be said to be one of the possible views. The coordinate benches of this Tribunal, in various decisions, has concurred that such excess stock was to be treated as business income only. These decisions include the decision of Chennai Tribunal in M/s Mookambika Impex vs. DCIT (ITA No.299/Chny/2023); the decision in M/s Overseas Leathers vs. DCIT (ITA No.962/Chny/22); the decision in M/s Ethiraj Hotel Mart vs DCIT (ITA No.1096/Chny/20223); the decision in M/s Santhilal Jain Vijay Kumar vs. ITO (ITA No.1103/Chny/2022) as well as various other decisions, the copies of which have been placed on record. In such a scenario, though the assessment order may be prejudicial to the interest of revenue but it could not be said that it was erroneous. This being the case, impugned revision could not be sustained in law. We order so.

Admittedly, similar facts exist in wherein assessment has been framed by same assessing officer. Facts leading to revision are quite identical. Therefore, our adjudication as above shall mutatis-mutandis apply to this appeal also.

Both the appeals stand allowed. Order pronounced on 3rd June, 2024 Sd/- Sd/- (MANU KUMAR GIRI) (MANOJ KUMAR AGGARWAL) �ाियक सद4 / JUDICIAL MEMBER लेखा सद4 / ACCOUNTANT MEMBER चे5ई Chennai; िदनांक Dated : 03-06-2024 DS आदेशकीQितिलिपअ/ेिषत/Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. � थ�/Respondent 3. आयकरआयु>/CIT Salem 4. िवभागीय�ितिनिध/DR 5. गाडCफाईल/GF