Jayshree Sarees Vs PCIT (ITAT Rajkot)
The case of Jayshree Sarees Vs. PCIT (ITAT Rajkot) revolves around the appeal filed by the assessee challenging the Principal Commissioner of Income Tax’s (PCIT) order dated March 10, 2023, concerning the Assessment Year 2018-19. The assessee contested the invocation of revisionary powers under Section 263 of the Income Tax Act, claiming that the assessment order passed by the Assessing Officer (AO) was neither erroneous nor prejudicial to the revenue’s interest. The PCIT had argued that the AO failed to adequately address the applicability of Section 115BBE, which prescribes a higher tax rate on undisclosed income, citing that the disclosed income of ₹71,50,000 from excess stock should not be treated as regular business income but rather as deemed income under Section 69. The assessee contended that this additional income had already been accounted for in their tax filings.
The appeal also addressed a procedural delay of 31 days in filing, which the ITAT condoned, considering the circumstances surrounding the late receipt of the demand notice. The ITAT examined the facts, including the partner’s admission of unaccounted income during a survey conducted on February 19, 2018. The assessing body ultimately ruled that the undisclosed excess stock discovered during the survey was effectively part of the business income, rejecting the PCIT’s assertion that it should be taxed at a higher rate. The ITAT referenced prior rulings, emphasizing that when excess stock is not distinctly identifiable as separate investments, it can be appropriately classified as business income, thereby upholding the AO’s initial assessment and dismissing the PCIT’s revision order.
