Nikhaar Fashions Vs ACIT (ITAT Jaipur)
The appeal before the Jaipur Bench of the Income Tax Appellate Tribunal Jaipur arose from an order passed by the Commissioner of Income Tax (Appeals), Jaipur, for Assessment Year 2017–18. The assessee, a partnership firm engaged in retail trading of designer sarees, suits and lehanga chunni, was subjected to a survey under Section 133A on 9 August 2016. During the survey, physical stock was valued at ₹3.14 crore against book stock of ₹2.14 crore, resulting in excess stock of ₹1,00,10,915. The assessee voluntarily disclosed this excess stock as business income in its return filed under Section 139(1) and paid tax accordingly.
During assessment, although the returned income was largely accepted, the Assessing Officer treated the surrendered excess stock as unexplained investment under Section 69B and taxed it at the special rate under Section 115BBE. This action was confirmed by the CIT(A). The assessee challenged this treatment before the Tribunal, contending that the excess stock formed part of business assets, was duly routed through audited accounts by debiting the cost of goods sold, and had a direct nexus with regular business activity.
The Tribunal noted that the only issue for consideration was the applicability of Sections 69B and 115BBE. It observed that there was no material on record to show that the assessee had made any investment outside its books or from any source other than business income. The assessee’s only source of income was trading activity, and the Revenue failed to bring any evidence to establish that the excess stock represented income from an undisclosed or non-business source. The Tribunal reiterated that the heads of income under the Act are mutually exclusive and income falling under one head cannot be taxed under another.
