ACIT Vs Anoop Neema (ITAT Indore)
The Income Tax Appellate Tribunal (ITAT), Indore Bench, has delivered a significant ruling concerning the tax treatment of excess stock found during search operations, specifically whether it should be classified as normal business income or unexplained investment. The case, ACIT vs. Anoop Neema, Indore, centered on a jeweller whose business premises were searched, revealing a substantial quantity of unrecorded gold stock.
The dispute arose from a search conducted on December 15, 2016, at the premises of Anoop Neema, an individual engaged in the manufacturing and trading of gold jewellery under the proprietorship M/s. A.P. Jewellers. During the search, physical verification revealed excess jewellery weighing 6433.812 grams, valued at Rs. 1,41,75,568, which was not recorded in the books of account. In a statement recorded under Section 132(4) of the Income Tax Act, 1961, the assessee admitted that this excess stock had accumulated from regular unaccounted business income.
Subsequently, the assessee filed a return declaring a total income of Rs. 3,34,05,000. While the additional income from excess stock was credited to the capital account, it was inadvertently omitted from the computation of total income. The Assessing Officer (AO), in the assessment order under Section 143(3), treated the excess stock as unexplained investment under Section 69, read with Section 115BBE of the Act, and assessed the total income at Rs. 4,75,80,568. The AO’s stance was that the assessee failed to explain the sources of the excess stock, thus attracting the provisions of Section 69 and the higher tax rate under the amended Section 115BBE, effective from April 1, 2017.
