Case Law Details
Vijay Shriram Gundale Vs ACIT (ITAT Pune)
Introduction: The Income Tax Appellate Tribunal (ITAT) in Pune recently delivered a pivotal judgment in the case of Vijay Shriram Gundale Vs ACIT. The core issue revolved around whether additional income generated from excess stock should be treated under Section 69B of the Income Tax Act. The tribunal ruled in favor of treating the excess stock income as ‘business income,’ exempting it from the provisions of Section 69B. This article delves into the case details, the tribunal’s reasoning, and its implications for taxpayers.
Subheading 1: The Context and the Controversy: Vijay Shriram Gundale, an individual engaged in the business of selling garments and other clothing items, came under the scrutiny of the tax authorities. During a survey, excess stock amounting to Rs. 37,00,000 was discovered. The tax authorities wanted to treat this amount as ‘unexplained investment’ under Section 69B and charge it under Section 115BBE of the Income Tax Act.
Subheading 2: The Assessee’s Argument: Gundale asserted that the excess stock was not ‘unexplained investment’ but a part of his regular business income. He argued that the excess stock was bought during high-demand seasons like marriage seasons, for which bills would be received late.
Subheading 3: The Tribunal’s Ruling: The tribunal noted that Gundale had offered the excess stock as business income, not as unexplained investment. Moreover, the tribunal referenced similar cases where excess stock was treated as business income. Therefore, it ruled that the excess stock should be treated as business income, and provisions under Section 69B did not apply.
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