Kolhapur Timber And Furniture Mart Vs ACIT (ITAT Pune)
Income Tax Appellate Tribunal (ITAT) Pune bench has allowed an appeal filed by Kolhapur Timber And Furniture Mart, a partnership firm, against the order of the Commissioner of Income Tax (Appeals)-11, Pune. The tribunal ruled that excess stock amounting to Rs. 50,05,145/-, detected during a survey operation and subsequently offered to tax by the assessee, should be assessed as business income under normal provisions of the Income Tax Act, 1961. This decision overturns the lower authorities’ action of taxing the amount as “income from other sources” under Section 68 read with Section 115BBE, which mandates a higher tax rate.
The case pertains to the assessment year 2019-20. Kolhapur Timber And Furniture Mart is engaged in the business of manufacturing wooden packing boxes, machinery packing units, small furniture items, and other related products. A survey operation under Section 133A of the Act was conducted at the firm’s premises on February 13, 2019. During this survey, an excess stock valued at Rs. 50,05,145/- was identified.
Following the detection, the assessee duly disclosed this unaccounted excess stock in its financial statements and filed its return of income for AY 2019-20 on October 31, 2019, declaring a total income of Rs. 48,23,690/-. The assessee treated the excess stock as part of its regular business income.
