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ACIT, CENTRAL CIRCLE-ALWAR, ALWAR vs SATYA DEV ARYA , BHARATPUR | BharatTax

ACIT, CENTRAL CIRCLE-ALWAR, ALWAR vs. SATYA DEV ARYA , BHARATPUR

ITA 421/JPR/2022Status: DisposedITAT Jaipur29 March 2023AY 2018-19Bench: DR. S. SEETHALAKSHMI (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;djvihy la-@ITA. No. 421/JP/2022 fu/kZkj.ko"kZ@AssessmentYears :2018-19 The ACIT Central Circle Alwar cuke Vs. Shri Satya Dev Arya Prop. M/s. Arya Showroom Ganga Mandir, Bharatpur LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AALHS 3826 D vihykFkhZ@Appellant izR;FkhZ@Respondent C.O. No. 01/JP/2023 (Arising out of vk;djvihy la-@ITA. No. 421/JP/2022) fu/kZkj.ko"kZ@AssessmentYears :2018-19 Shri Satya Dev Arya Prop. M/s. 33 pages

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Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR

Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;djvihy la-@ITA. No. 421/JP/2022 Shri Satya Dev Arya

Hearing: 10/01/2023

ORDER

PER DR. S. SEETHALAKSHMI, JM

1.

1. The Revenue has filed an appeal against the order of the ld. CIT(A)-4, Jaipur dated 30-09-2022 for the assessment year 2018-19 while the assessee has filed the 2 ACIT CENTRAL CIRCLE, ALWAR VS SATYA DEV ARYA, BHARATPUR Cross Objection. The grounds raised

by the Revenue in its appeal and the grounds raise by the assessee in the Cross Objection are as under:- - Revenue ‘’1. The Ld. CIT(A) has erred in law and on facts in granting relief to the taxpayer.

2. Whether in the facts and circumstances of the case, the ld. CIT(A) is justified in reducing the addition made of Rs.75,80,793/- us 69A an account of unexplained stack of jewellery ornaments to Rs.48,180 ignoring the facts/evidences gathered during survey and assessment proceedings. 3(i) The Ld. CIT(A) has erred in law and in appreciation of facts by accepting that three purchases totaling to Rs.26,01,746/- were not entered in the stock register as on date of survey which is 07.03.2018. The three purchases are admittedly of the first week of January 2018 whereas the survey took place on 07.03.2018, more than 2 months after these supposed purchases. Further the payment for these purchases was made after the date of survey, indicating to the whole scheme being an afterthought. 3 (ii) In accepting the version of the assessee, the Ld. CITA) has ignored the principal of preponderance of human probability as laid down by Hon'ble Supreme Court in case of Sumati Dayal Vs. CIT (1995) 214 ITR 801 (SC) & CIT Vs. Durga Prasad More (1971) 82 ITR 540 (SC).

4. Whether in the facts and circumstances of the case, the Ld. CIT(A) is justified in acceptingthe assessee's submission that he was maintaining stock register and not considering thefact that the major difference of stock was found on the date of survey.

register. Also, the ld. CIT(A) satisfied without any basis that the purchases and sales made by the assessee. During the course of survey proceedings, the opening stock of gold and silver ornaments as per books was Rs.45,49,865/- and Rs.4,98,375/- respectively. Thus the total stock was Rs.50,48,240/- available on the date of survey as per books of accounts. However, on physical verification the stock toe the value of Rs.1,43,86,936/- was found. The valuation was done by approved valuer. Thus, the difference of Rs.93,38,696/- was found in stock of gold/silver/diamond ornaments. The assessee was asked vide question No. 24 of this statements to give justification in this regard. The assessee in response to the question stated that the opening stock as on 01-03-2017 was 3298.695 gms and this figure was also mentioned in the Gold Stock register (Exercise book A-4). Further during the F.Y. land upto the date of survey i.e. 7-03-2018 purchase and sale is 449.030 gms and 413.53 gms respectively. This fact is also mentioned in the purchase and sale register (Exercise book A-4) and therefore, after considering all the purchase and sales made upto the date of survey was the closing balance as on 07-03-2018 came at 995.045 gms of gold and silver jewellery. Further, it is most importantly to mention here that during the course of assessment proceedings, the assessee was specifically asked to furnish all the purchase/ sale bills with regard to explain the difference of closing stock found during survey, but the assessee replied that all the bills and vouchers were in possession of the Department which may be verified at this end. It is pertinent to mention that copy of all the impounded materials have been provided to the assessee and the onus is upon the assessee to explain which bills are he claiming as his purchase/sale made during the year. The assessee has to give details each page of impounded material alongwith the amount of purchase/ sale so as to justify his claim. Further, it is pertinent to mention here that the assessee furnished purchase bills of total of Rs.s26,07,746/- only which are said to be not entered into the books at the time of survey. Further, it is worthwhile to mention here that during course of assessment proceedings assessee failed to adduce any cogent and supporting evidence to substantiate its claim.

‘’With regard to the difference of amount of Rs.93,38,696/- found in the stock of gold/silver/diamond jewellery, the assessee could produce purchase bills total of Rs.17,57,903/- (11,39018+6,18,885) only. Thus the difference to the amount of Rs.75,80l,793/- (93,38,696 – 17,57,903) remained unexplained. The assessee conspicuously failed to give satisfactory justification for the difference amount even after giving show cause vide notices u/s 142(1) supra. In view of the above findings and considering the reply of the assessee it is held that the jewellery/ornaments to the tune of Rs.75,80,793/- is unexplained money within the total income of the assessee. Tax on this income shall be charged as per provisions of Section 115BBE of the Act.’’ In first appeal, the ld. CIT(A), the ld.CIT(A) restricted the addition to the extent of Rs.48,180/- giving the relief of Rs.75,32,813/- out of the addition of Rs.75,80,793/- made by the AO i.e. to say that the ld. CIT(A) partly allowed of appeal of the assessee. From the available records, it is noted that the assessee produced bills of 14 ACIT CENTRAL CIRCLE, ALWAR VS SATYA DEV ARYA, BHARATPUR three parties for which the AO issued notice u/s 133(6) with a view to verifying the purchases made by the assessee from these three parties vide para 5.4 at page 8 of the assessment order. However, itreveals that the AO issued notice u/s 133(6) only to M/s ShrimJewellers and M/s GRS Jewellers who confirmed the purchase of Rs.11,39,018/- and Rs.6,18,885/- respectively made from them. The purchase of Rs.8,44,843/- was made from M/s Shrim Ornaments but the AO wrongly observed that this purchase is also made from M/s ShrimJewellers and they have not confirmed this purchase ignoring that this purchase is made from M/s Shrim Ornaments. The Ld. CIT(A) therefore, at Para 4.2(x) has correctly held that AO has not made any enquiry u/s 133(6) from M/s Shrim Ornaments but purchase from this concern is proved from copy of purchase bills, payment by account payee cheque and reflection of this purchase in GSTR-2A (PB 84-88). Therefore, Ground No.3(i) taken by the department challenging the total purchase of Rs.26,01,746/- made from these three parties by incorrectly observing that these purchases were made in first week of January, 2018 ignoring that these purchases were made on 05.03.2018 & 06.03.2018 and AO himself has accepted the genuineness of purchases of Rs.17,57,903/- (11,39,018 6,18,885) do not survive. As regards Ground No.4, department has challenged the finding of CIT(A) in accepting the stock register and not considering the fact that major difference of stock was found on the date of survey. It is noted from the available records that this ground is also 15 ACIT CENTRAL CIRCLE, ALWAR VS SATYA DEV ARYA, BHARATPUR misconceived as the stock register both for FY 2016-17 & 2017-18 was found in survey (PB 69-79). As per the stock register, the quantity of stock of gold ornaments as on 31.03.2017 was 3298.695 gms (PB 74) and the purchases & sales made in FY 2017-18 till 27.12.2017 was 449.030 gms and 413.530 gms (PB 79). After considering the purchases of 639.775 gms made from three parties, the Ld. CIT(A) has worked out the closing stock as per books at 4313.597 gms as against 4329.240 gms found in survey. Thus, the excess stock found is only 15 643 gms (refer Para 4.2(x) of order of CIT(A)). Hence, Ground No. 4 raised by the department is misconceived.As regards the stock of silver item, the weight of silver item found in survey was 19.878 kg whereas stock as per books was 20.205 kg. Thus, stock as per books was more by 0.327 kg. Hence, the addition made in respect of stock of silver is rightly deleted by Ld CIT(A).

Ground No.5 of the Department ‘’Whether in the facts and circumstances of the case, the Ld. CIT(A) is justified in reducing the addition made of Rs.59,80,793/- u/s 69A on account of unexplained stock of cloth to Rs27,33,020 by allowing the bargain discount of 10% of the MRP tag price and 10% deduction for obsolescence on estimated basis without any material on record.’’ Ground No. 2 Assessee's CO The Ld. CIT(A) has erred on facts and in law in confirming the addition of Rs.27,33,020/- on account of alleged unexplained stock of garments.’’ 17 ACIT CENTRAL CIRCLE, ALWAR VS SATYA DEV ARYA, BHARATPUR Brief facts of the case are that during survey stock of cloth (readymade and 4.2 others) was physically verified and valued at Rs.1,24,23,487/- (Rs.44,38,930- of readymade garment and Rs.79,81,557/- of others) on the basis of the MRP tagged/noted on the cloth articles. As against this, as per the survey party, stock as per books as on 03.03.2018 is Rs.44,34,000/- (Rs.17,93,000/- readymade cloth and Rs.26.41,000/- of others). Thus, excess stock of Rs.79,89,4871- (124,23.487- 44,34,000) was determined in survey. Sh. Satya Dev Arya in his statement recorded in survey, in reply to Q. No. 14 (PB 49-50) stated that as per the books of account, stock of saree is approximately Rs.40,45,400/- and of readymade garments is approximately Rs.20,30,573/-. Thereafter in reply to Q. No.15 (PB 50) he explained that value of stock is arrived after reducing the gross profit margin. Further in reply to Q. No.20 & 21 (PB 52) he stated that the GP margin is determined on the basis of market condition like in case of Raymond shirt, branded shawl, etc. the GP rate is 5%, in case of ladies suit, lancha for kids the GP rate is 10% and in case of heavy sarees, lehenga the GP rate is between 15% to 18%. The tag on each item is done after taking margin of 5% to 18%. Thereafter in reply to Q. No.28 & 30 (PB 55-56) he explained that the value mentioned on the cloth article is MRP and he would explain the reason for difference after reconciling it with the purchase bill. In course of assessment proceedings the assessee vide letter dt. 23.02.2021 & 26.03.2021 reproduced at Pg 10-15 of the assessment order 18 ACIT CENTRAL CIRCLE, ALWAR VS SATYA DEV ARYA, BHARATPUR explained the reasons for difference along with supporting documentary evidences. The AO accepted that against physical stock of Rs.1,24,23.487/-, the stock as per statement is Rs.61,54,562/- (as against Rs.62,92,833/- claimed by the assessee) and thus, excess stock is Rs.62,68,925/-. From this he allowed deduction of purchases of Rs.3,16,731/-not entered in the books at the time of survey and thus made addition of Rs.59,52,194/- on account of unexplained investment in stock u/s 69 of the Act.For the sake of convenience, the relevant findings of the AO at para 6.3 and Page 15 is reproduced as under:-

‘’6.3 The reply of the assessee has been considered carefully. During the course of survey proceedings, the difference found in stock of readymade garments and other trotal of Rs.72,69,925/- [Rs.2408359 (readymade) +Rs.38,60,566 (other than readymade)]. Now, during the course of assessment proceedings the assessee furnished purchase bills of total of Rs.3,16,731/- which are said to be not entered in the books at the time of survey. To that extent the reply of the assessee alongwith supporting documents was considered and found satisfactory. But, still the difference of Rs.59,52,194/- (62,68,925- 3,16,741) is available in stock which entails the excess stock of Rs.59,52,194/- is found during the course of survey proceedings. With regard to the contention of the assessee that the valuation during survey proceedings was done on the MRP of the product which also consist of profit, it is evident that in his statement recorded during the course of survey proceedings the assessee has taken the margin portion on MRP and the difference in stock were remained after considering the same. Thus the assessee conspicuously failed to give any satisfactory justification for the difference amount even after giving show cause vide notices u/s 142(1) supra. In view of the above findings and considering the reply of the assessee, it is held that the stock of garments to the tune of Rs.59,52,194/- is held as unexplained investment made out of undisclosed sources in terms of 19 ACIT CENTRAL CIRCLE, ALWAR VS SATYA DEV ARYA, BHARATPUR provision of Section 69 of the Act and the amount is being added to the total income of the assessee. Tax shall be charged as per provisions of Section 115BBE of the Act.’’ In first appeal, the ld. CIT(A) at Para 5.2, Pg 10-12 of the order, after 4.3 considering the submission of assessee at Para 5.2(vi) & (vii) allowed reduction of 10% from MRP/ tag price to work out the value of stock found in survey. From the value so arrived he allowed deduction for obsolesce for 20% of stock @ 10%. From the value so arrived, deduction of 16% was given for GP margin to arrive at the cost price of stock found in survey at Rs.92,04,313/- against the book stock of Rs.61,71,293/- and thus, confirmed addition of Rs.27,33,020/-. For the sake of convenience, the relevant findings of the ld. CIT(A) at para 5.2 (vi) and (vii) are reproduced as under:-

‘’(vi) On perusal of the overall facts, I find that there is no dispute as to the fact that the appellant is not maintaining stock register for garments business and the stock found in survey has been valued at Tag Price. It is observed that the appellant has claimed bargain discount of 30%, GP of 16% and deduction for obsolescence at 15%. So far as deduction of Bargain discount is concerned,, I find that the appellant has filed comparison chart of tag price and actual sale price. However, in the absence of complete details in the sale bills/purchase bills, it cannot be said that the chart prepared is correct. But the fact remains that the appellant’s shop is not a fixed price shop and therefore some bargain discount is possible to have been given to the customers. Considering this fact, I 20 ACIT CENTRAL CIRCLE, ALWAR VS SATYA DEV ARYA, BHARATPUR find that it would be reasonable, if the bargain discount is restricted to 10% of the MRP/ Tag price. (vii) So far as deduction for G.P. Rate of 16% is concerned, the appellant’s contention appears to be correct. To arrive at the cost price, deduction of G.P. Rate needs to be given and therefore the same is allowed. In respect of deduction for obsolescence, the appellant has claimed reduction of 15% of the value of the overall stock which appears to be unreasonable. However, the fact remains that in garments, the business of loss due to obsolescence is present. Considering this fact, I find that it would be reasonable if a deduction of 10% is allowed in respect of 20% of the stock for obsolescence. If all these facts are considered, the position of the excess stock works out as under:- Particulars Amount Stock found in survey and 1,24,23,487/- valued at MRP/tagged price Less: Bargain discount @ 10% 12,42,349/- Discount value 1,11,81,138/- Deduction for obsolescence 2,23,622/- for 20% of stock @ 10% 1,09,57,516/- Less: G.P. Margin @ 16% 17,53,202/- Cost price of the stock found 92,04,313/- in survey Book value of the stock as on 64,71,293/- the date of survey Excess stock 27,33,020/-

3. The items in which the assessee deals are such items, which if could not be sold within a limited period get obsolete because of change in trend, fashion and design. For sale of such item, every year clearance sale is made which is duly advertised in the newspaper. Such clearance sale is by giving discount of 10% to 90% from MRP. Therefore, the assessee has claimed deduction of 15% on account of obsolesce but ld.CIT(A) has only considered 10% obsolesce on 20% of the stock. However, the AO has not considered this aspect at all. Hence, AO be directed to allow the discount of 15% for arriving at the value of stock found in survey 4. After considering the above, there is no difference in the value of stock found in survey and that as per books of accounts. It may be noted that even in survey no evidence of unrecorded purchase sale was found. In fact the assessee with reference to alleged discrepancies in stock in Q. No.33 has specifically stated that he is a regular income tax assessee and after verification of books, if any tax is payable he would pay it as per law Thus, when no evidence of unrecorded business activity was found in survey and the assessee has explained the reason for the difference in the valuation of stock, no addition for excess stock can be made. In view of above, ground of the department be dismissed and CO of assessee he allowed.’’ We have heard both the parties and perused the materials available on 4.6 record. It is noted from the assessment order that the AO made an addition of Rs.59,52,194/- holding that that the stock of garments to the tune of Rs.59,52,194/- 24 ACIT CENTRAL CIRCLE, ALWAR VS SATYA DEV ARYA, BHARATPUR is held as unexplained investment made out of undisclosed sources in terms of provision of Section 69 of the Act and the amount is being added to the total income of the assessee. In first appeal, the ld. CIT(A) has confirmed the addition of Rs.27,33,020/- by giving the relief of Rs.32,19,174/- i.e. to say partly allowed the appeal of the assessee. With a view to deeply examining the case of the assessee, it will be worthwhile to consider the table advanced by the assessee in his written submission (supra).

(i) The ld. AO made addition of Rs.75,80,793/- in respect of excess stock of gold/silver ornaments and addition of Rs.59,52,194/- in respect of excess stock of cloth/ readymade garments u/s 69A of the Act. On this addition, he applied the provision of Section 115BBE of the Act. (ii) Before me, the ld AR of the appellant argued that the AO taxed the alleged excess stock u/s 115BBE whereas the same is on account of regular business income of the appellant. The excess stock of jewellery/garments found in survey is part and parcel of the regular business stock. The same is not separately identifiable. Such excess stock has arisen out of the business activity of the appellant. It is not a case that the source of excess stock is not the business activity of the appellant. The AO has not brought any evidence to establish that the appellant has any other source of income. Therefore, the same can be assessed only under the head profit & gain of business and the provisions of Section 115BBE does not apply on the same. For this proposition, he placed reliance on the following decisions:- PCIT vs Bajrang Traders in DBIT No. 258/2017 (Raj. H.C.) DCIT vs Ramnarayan Birla 482/JP/2015 dated 30-09- 2016 (ITAT-JP) Chokshi Hiralal Maganlal vs DCIT 141 TTJ (Ahd.)1 dated 21-01-2011 Shri Ram Swaroop Singhal vs ACIT dated 25-05-2015. (iii) Therefore ld. AR pleaded that if there remains any addition for alleged excess stock, the same be assessed as part of the regular business income of the appellant and the provision of Section 115BBE of the Act does not apply on the same. (iv) On perusal of the overall facts, I find that the stock of jewellery and garments found in excess are part and parcel of the regular business carried out by the appellant and the same is 28 ACIT CENTRAL CIRCLE, ALWAR VS SATYA DEV ARYA, BHARATPUR not separately identifiable. Therefore, the same should be treated as business income. The various cases including the decision of Rajasthan High Court relied by the AR also support this view. Therefore, following the same, the AO is directed to assessee the excess stock confirmed in Grounds of Appeal No. 1 & 2 under the head income from business and the provisions of Section 115BBE does not apply on the same. Accordingly, the Ground of Appeal No. 3 is treated as allowed.’’ 5.2 During the course of hearing, the ld.DR supported the order of the AO.

of survey proceedings, excess stock and excess cash was found. The assessee submitted that the alleged excess stock and excess cash are part of the business income and have been shown in the PAI A/c. It was also submitted that the excess stock in hand has also been shown in the trading account on the debit side so as to bring the stock offered to tax in the regular hooks for subsequent sales. The AO, however, held that it is not a business income and should be directly added to the total income of assessee as 'Income from other sources. The Id. CIT(A) concluded that the AO has not rejected the books of accounts and the assessee has rightly disclosed the excess stock and excess cash in hand in the books as is generally done by other assessee's subsequent to survey operations. Accordingly, he accepted the book results of the assessee and deleted the addition made by AO. On further appeal, Hon'ble ITAT confirmed the order of CIT(A) by giving the following findings at Para 11 & 14 of the order: 11. On perusal of the above finding of Lal CIT(A) and the decisions referred therein we observe that the revenue authorities have not disputed the fact that the assessee's only source of income is from Dal &Basen Mill. No other incriminating material or document was found during the course of survey which could indicate that the assessee has any other source of income. It can thus be concluded that the alleged excess stock is part of the business income of the assessee. It is also discernable from the records that when the statement was taken during the course of survey, son of the assessee namely Mayur Kumar Surana gave reply to various questions asked by the survey team. …… The crux of the statement given during the course of survey on the facts that the alleged stock was not accepted to be undisclosed income from other sources but was a part of the business income which required some reconciliation as books of account were not completed at the time of survey proceedings. We are of the view that since the income alleged excess stock and excess cash found during the course of survey is part of the business income, the provisions of section 115BBE of the Act would not be applicable as rightly held by the Id. CIT(A) and also in view of the facts that there was an amendment in the provisions of section 115BBE w.ef. 1st April 2017 and the assessee's case is pertaining to A.Y 2015-16, thus, it is not be applicable on the case of assessee.

ld. AO and also holding that the provisions of section 115BBE of the Act are not applicable on the assessee since the income declared during the course of survey is a business income.’’ 3. PCIT VS. Bajargan Traders DBITA No.258/2017 order dt. 12.09.2017 (Raj.) (HC) In this case the assessee is a partnership firm dealing in sale of food grain, rice and oil seeds. A survey u/s 133A was conducted on the business premises. During the survey. assessee surrendered excess stock of rice. The assessee submitted that the investment in procurement of such stock of rice is clearly identifiable and related to the regular business stock of the assessee, AO taxed the amount surrendered by way of investment in unrecorded stock of rice under the head Income from other sources In appeal, the Hon'ble ITAT allowed the claim of assessee by holding as under "2.10 We have heard the rival contentions and perused the material available at record During the course of survey, the assessee has surrendered an amount of Rs 70,04814 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 70.04814 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 amounting to Rx 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 unrecorded 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. 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 toregularise its books of accounts. In 31 ACIT CENTRAL CIRCLE, ALWAR VS SATYA DEV ARYA, BHARATPUR fact, the same provides a credible base for Revere 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 food grains, 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" On further appeal by department, the Ilon'ble Rajasthan High Court upheld the above findings of ITAT dismissed the appeal filed by department.’’ 4. DCIT Vs. Sh. Ram Narayan Birla order dt. 30.09.2016 (Jaipur) (Trib.) In this case it was held that the excess stock is to be assessed as part of the normal stock and to be taxed under the head income from business. The relevant finding of IIAT at Para 43 reads as under- ‘’4.3 We have heard 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 the 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 silver jewellery The Coordinate Bench in the case of Chokshi Hiralal Maganlal DCTE 131 TT (Ahd) has held that in a 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 under section 69 on the premises that such excess investment is not recorded m the books of account and its nature and source is not identifiable. Once such excess investment is taxed as undeclared business 32 ACIT CENTRAL CIRCLE, ALWAR VS SATYA DEV ARYA, BHARATPUR 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'ble Gujarat High Court in the case of Fakir Mohd. Ilajillasan (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 any other head. Therefore, the Hon'ble Coordinate Bench held that where asset in which undeclared investment is sought to he 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 CTT (A) directing the 10 to treat the surrendered amount as excess stock qua the excess stock found.