DY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, AURANGABAD, AURANGABAD vs. SHRI. VIJAYKUMAR SATYANARAYAN AGROYA, LATUR
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Income Tax Appellate Tribunal, PUNE BENCHES “B” :: PUNE
Before: SHRI SATBEER SINGH GODARA & DR.DIPAK P. RIPOTE
।आयकर अपीलीय अिधकरण ”बी” �ायपीठ पुणेम�। IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “B” :: PUNE BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND DR.DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.623/PUN/2024 िनधा�रण वष� / Assessment Year:2019-20 The Dy.Commissioner of V Shri Vijaykumar Income Tax, Central Circle- s Satyanarayan Agroya, 1, Aurangabad. Prop.YashodaJewellers, Saraf Lane, Latur – 413512. PAN: AHQPA9339K Appellant/ Revenue Respondent /Assessee Assessee by None Revenue by Shri Sourabh Nayak – Addl.CIT(DR) Date of hearing 31/07/2024 Date of pronouncement 31/07/2024 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This is an appeal filed by Revenue against the order of ld.Commissioner of Income Tax(Appeal), Pune-12 passed under section 250 of the Income tax Act, dated 03.01.2024 for the A.Y.2019-20. The assessee has raised the following grounds of appeal : “1. Whether on the facts and in the circumstances of the case, the Ld.CIT(A) has erred in law and in facts by deleting the tax calculated on special rates as per provisions of section 60B r.w.s. 115BBL of theI.T.Acton declaration made of Rs. 1.21.11.850 - on account of excess
ITA No.623/PUN/2024 Shri Vijaykumar Satyanarayan Agroya, Latur [R] stock found and section 60Ar.w.s. 115BBE of the I.T.Act on declaration made of Rs. 3.88.324/- on account of excess cash found. 2. Whether on the facts and in the circumstances of the case and in law. the I d. CIT (A) has erred in law and in facts by not appreciating the facts that the main reason for excess stock found was because of unrecorded purchases. 3. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in law and in facts by not appreciating the facts that the assessee has failed to explain the nature and source of income utilize for unrecorded purchases which resulted into excess stock found and failed to produce supporting purchase bill or other relevant documentary evidences. 4. Whether on the facts and in the circumstances of the casae and in law. the I d. C ! I (A) has erred in law and in facts by not appreciating the facts that the assessee has failed to explain the nature and source of excess unexplained cash found and failed lo produce supporting relevant documentary evidences. 5. The appellant craves leave to add, alter, modify, delete, and amend any of the grounds, as per the circumstances of the cases.”
None appeared for the assessee nor any adjournment letter was filed by the assessee. Hence, we heard the Ld. Drpartmental representative, perused the records and heard the case as it is the department’s appeal.
Ld.DR vehemently relied on the order of the Assessing Officer.He vehemently submitted that during survey excess stock was found and hence the Assessing Officer(AO) was right in invoking provisions of section 69B and section 69A. The ld.DR relied on the order of ITAT Rajkot in the decision of Raghuvanshi
ITA No.623/PUN/2024 Shri Vijaykumar Satyanarayan Agroya, Latur [R] cotton Ginning & Pressing Pvt., Vs. Add.CIT in ITA No.222/RJT/2016 dated 03.01.2024.
Findings &Analysis : 4. We have heard ld.DR for the Revenue and perused the records. In this case, assessee is an individual, running a business of Trading in Gold and Silver Ornaments in the name of Yashoda Jewellers. Assessee filed Return of Income for A.Y.2019-20 on 06.10.2019 declaring total income of Rs.1,48,41,210/-. In the case, there was a survey u/sec.133A of the Income Tax Act on 21.01.2019, i.e. before closure of Financial Year 2018- 19(A.Y.2019-20). During the survey proceedings, excess stock of Rs.1,21,11,850/- was found unrecorded in the books of the assessee. During the survey, there was excess cash of Rs.3,88,324/- as per the tentative income and expenditure account prepared at the time of survey. The AO accepted the returned income in the assessment order, but taxed excess stock u/sec.69B r.w.s 115BBE and excess cash u/sec.69A r.w.s 115BBE of the Act. Aggrieved by the assessment order, assessee filed appeal before the ld.CIT(A). Before the ld.CIT(A) assessee relied on following case laws :
ITA No.623/PUN/2024 Shri Vijaykumar Satyanarayan Agroya, Latur [R] DCIT (Central)-2, Indore Vs. Ashish Porwal ITA No. 185/lnd/2020. Bajrang Traders vs. ACIT (Circle)-2 Alwar ITA no. 137/jp/17 dated 17.03.2017 DCIT (Central), Ajmer vs. Ramnarayan Birla (ITA No. 482/Jp/2018 dated 30.09.2016. Fashion World vs. ACIT (Central)-12, Ahemedbad (ITA No.1634/Ahd/2016 dated 12.02.2010. Chokshi Hiralal Maganlal Vs. DCIT, Ahemedabad (ITA No 3281/Ahd/2009 dated 05.08.2011. Shri Lovish Singhal Vs. ITO, Ward-2, Sriganganagar ( ITA No 143/Jodh/2018 dated 25.05.2018 ACIT Vs. Sanjay Bairathi Gems Ltd. 189 TTJ 487/492 (Jp) Md Serajuddin & Brothers Vs. CIT-24 Taxman.com 46 (Cal) 210 Taxman 84 (Cal) Surekh Jewellers Vs. DCIT ITA No. 18/PN/2016 dated 12.06.2016. M/s Solanki Jewellers Vs. DCIT IT No. 858PN72016 dated 18.11.2016.” 5. The ld.CIT(A) allowed the appeal of the assessee. The relevant paragraphs of ld.CIT(A)’s order are reproduced as under : “3.14 The facts of the present case suggest that at the time of the survey operation the appellant has offered additional income under the excess stock as well as excess cash found which are part of the business activities and no other activity is carried out by the appellant and in this respect entry was also made in the books of account during the financial year 2018-19 relevant to assessment year 2019-20 and said additional income in the form excess stock and excess cash were offered for taxation under the head ‘business income’. 3.15 In the present case, the appellant had confirmed in his statement that this unrecorded/excess stock and cash received
ITA No.623/PUN/2024 Shri Vijaykumar Satyanarayan Agroya, Latur [R] were his regular business income. The relevant portion of the statement is as under. "16. It is seen that the closing stock as per the tentative trading account submitted by you for the period of 01/04/2018 to 21/01/2019 is at Rs.2,37.70,Q65/-whereas the actual stock evaluated by the approved valuer is at Rs. 3,40,16,992/-(Gold and Platinum ornaments stock evaluated at Rs.3,12,68,607/- plus Silver ornaments stock evaluated at Rs.27,48,385/-, the total of which comes to Rs.3,40,16,992/-). You are requested to explain the difference of Rs. 1,02,46,927/-. Ans: Sir, I agree with your observation that there is a difference of Rs. 1,02,46,927/- in the stock as above. As mentioned earlier I have been purchasing URD goods and selling it after polish. The difference in the stock is on account of the URD goods purchase which inadvertently escaped accounting. I am submitting herewith the list of the said URD purchase of goods worth Rs.1,21,11,850/- which has not been accounted for. Hence, I, hereby voluntarily offer the amount of Rs.1,21,11,850/- on account of the URD goods purchase as additional income over and above my regular income for the A.Y.2019-20. I promise you to pay the due advance tax on the same on or before 31.03.2018 17. As per the tentative trading account, the cash balance as on 21/01/2019 is Rs.6,34,256/- whereas on physical verification the same is found at Rs. 10,22,580/- Please explain the difference of Rs.3,88,324/- in cash? Ans: Sir, I agree with your observation that the cash found is at Rs.10,22,580/-. I am unable, to explain the excess cash found at Rs.3,88,324/- therefore I hereby declare an amount of Rs. 3,88,324/- as my additional Income over and above my regular income for the AY 2019-20. I assure to pay the due taxes on this additional income declared on or before 31-Mar-2019." The above reply clearly indicates that the appellant has established that the investment in the excess stock and excess cash found were out of his regular business income. Thus, the appellant filed his return of income on 06.10.2019 wherein the said additional income of Rs. 1,25,00,174/- was declared as income from business and
ITA No.623/PUN/2024 Shri Vijaykumar Satyanarayan Agroya, Latur [R] paid the taxes at normal rates. 3.18 In view of the above discussion and the above judicial pronouncements, it is held that the impugned amount of Rs. 1,25,00,174/- cannot be taxed as deemed income u/s 69B and 69A of the Act as done by the assessing officer. Accordingly, the provisions of section 155BBE cannot be made applicable to the income of Rs.1,25,00,174/-, Thus, the grounds no. 1 & 2 raised by the appellant are hereby allowed.” 6. During the hearing, Revenue has not brought out any contrary evidence to rebut the findings recorded by ld.CIT(A). It is a fact that during the survey, a tentative trading account was prepared and based on the tentative trading account, closing stock was worked out at Rs.2,37,70,065/-, whereas the physical stock taken with the help of approved valuer was at Rs.3,40,16,992/-. Therefore, during the survey it was observed by the Assessing Officer that there was excess stock of Rs.1,02,46,927/-. During the survey, assessee explained that the excess stock is on account of URD Purchases which were inadvertently escaped accounting. During the survey, assessee submitted list of said URD Purchases. This fact has not been disputed by the Revenue. Thus, at the time of survey itself, assessee has provided list of URD Purchases which remained outside the books. As per the Survey Manual, the unrecorded bills, vouchers should be entered and then only the closing stock should worked out. The relevant part of the Survey
ITA No.623/PUN/2024 Shri Vijaykumar Satyanarayan Agroya, Latur [R] Manual published by Income Tax Department which is in public domain reproduced here as under : “43. The books of account, if incomplete, must be updated on the basis ofpurchase and sale vouchers. Care should be taken to include consignment sales and consignment purchases till the date of survey. 6.1 Thus, as per the procedure laid down by Income Tax Department, the bills which are not recorded were to be recorded at the time of survey, if details were available. In this case, the assessee submitted list of URD Purchases at the time of survey itself, which is evident from Answer to Question No.16 of the statement recorded during the survey. However, the officers had not followed the procedure laid down in the Survey Manual. Since list of URD Purchases was available at the time of survey, it cannot be held that it is an unaccounted investment. The Hon’ble Rajasthan High Court in the case of Pr.CIT Vs. Bajrang Traders has upheld the order of ITAT on identical facts of excess stock found during the survey. Therefore, in these facts and circumstances of the case, we agree with the ld.CIT(A) that the stock found cannot be taxed as deemed income u/sec.69B of the Act. Similarly, the excess cash found cannot be taxed u/sec.69A of the Act. Therefore, provisions of section 115BBE are not
ITA No.623/PUN/2024 Shri Vijaykumar Satyanarayan Agroya, Latur [R] appliable. Accordingly, grounds of raised by the Revenue are dismissed.
In the result, appeal of the Revenue is dismissed. Order pronounced in the open Court on 31st July, 2024.
Sd/- Sd/- (S.S.GODARA) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; �दनांक / Dated : 31st July, 2024/ SGR* आदेशक��ितिलिपअ�ेिषत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. िवभागीय�ितिनिध, आयकर अपीलीय अिधकरण, “बी” ब�च, 5. पुणे / DR, ITAT, “B” Bench, Pune. गाड�फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune.
