Excess stock found during survey cannot be treated as deemed income u/s. 69B

Bunty Kumar Vs ACIT (ITAT Amritsar)

ITAT Amritsar held that excess stock found during the survey only be treated as income under the head business income and not as deemed income under section 69B of the Income Tax Act.

Facts- The present appeal is filed by the assessee against the order of the CIT(A) for Assessment Year: 2018-2019 challenging therein confirmation of the treatment of income amount to Rs.18,85,319/- out of total surrendered income of Rs. 40 lacs on account of excess stock as unexplained stock u/s 69B and invoking the provisions of section 115BBE of the Income Tax Act, 1961.

Conclusion- Held that since, the excess stock found during the survey primarily pertains to the business carried out by the assessee, and secondly surrendered as business income during survey as accepted by the AO and hence, the excess stock would only be treated as income under the head business income and not as deemed income. In our view, the ld. CIT(A) was wrong in confirming the action of the AO regarding the applicability of the provisions of section 115BBE in case of the excess stock which was not separate or part of another lot of stock. Accordingly, the value of article/stock of the impugned investment was being fully disclosed in the books of account, being regularized by way of surrender of business income as accepted by the AO, would certainly not fall in the mischief of section 69B of the Act.

FULL TEXT OF THE ORDER OF ITAT AMRITSAR

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