Prakash Chand Harish Kumar Vs ACIT (ITAT Chennai)
The Income Tax Appellate Tribunal (ITAT), Chennai, allowed the appeals filed by two assessees for Assessment Year 2020-21, holding that the value of excess stock found during a survey could not be assessed as unexplained investment under Section 69B of the Income Tax Act where the assessees had explained the source of such stock as arising from their jewellery business and had accounted for it in their books.
Both assessees were engaged in the business of trading in gold and silver. A survey under Section 133A of the Act was conducted at their business premises. In the lead case, physical verification revealed excess stock comprising new gold, old gold, and silver valued at ₹2,06,97,491. During the survey, the assessee expressed difficulty in immediately explaining the discrepancy and agreed to pay tax on the difference in stock. However, the assessee subsequently clarified that the amount represented additional business income generated from the jewellery trade and not unexplained investment. The assessee stated that old gold jewellery received from customers in exchange for new jewellery and purchases from unregistered dealers, made out of unaccounted business income, had not been recorded in the regular books of account. According to the assessee, the excess stock formed part of the regular stock-in-trade accumulated through the same business activities.
