Case Law Details
Overseas Leathers Vs DCIT (ITAT Chennai)
ITAT Chennai held that when assessee has explained the source for excess stock found during the course of survey, then, income offered towards excess stock cannot be treated as unexplained investment u/s. 69B of the Act.
Facts- During the course of survey proceedings, inventory of physical stock was taken which resulted in excess physical stock of Rs. 5.08 crores. The assessee was also called upon to explain the source for excess stock found during the course of survey, for which the assessee explained that excess stock found during the course of survey was on account of non-reconciliation of stock in books of accounts and further, said excess stock has been acquired out of current year business income of the firm.
The case was selected for scrutiny and during the course of assessment proceedings, AO noticed that the assessee firm has declared additional income of Rs. 5.08 crores towards excess stock found during the course of survey under the head ‘profits and gains from business and profession’. Therefore, the AO called upon the assessee to explain as to why the additional income admitted towards excess stock found during the course of survey should not be treated as unexplained investment u/s. 69B of the Act.
AO opined that the assessee has not furnished any documentary evidence to substantiate the claim that entire amount of additional income of Rs. 5.08 crores offered towards excess stock found during the course of survey is generated and earned from regular business activity from the current financial year. The AO, further observed that the assessee has failed to explain the source for purchase of excess stock and also not furnished any bills/invoices to substantiate the purchase of excess stock and the source for purchase of said excess stock. Therefore, the AO opined that additional income offered towards excess stock found during the course of survey is assessable under the head unexplained investment u/s. 69B of the Act and thus, additional income of Rs. 5.08 crores has been treated as unexplained investment and levied tax as per section 115BBE of the Act.
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