Case Law Details
Saitawadekar Jewellers Vs CIT (ITAT Pune)
ITAT Pune held that revisionary proceedings under section 263 sustained as AO failed to apply proper and correct section of Income Tax Act to the investment in the undisclosed stock.
Facts- The assessee’s case was selected for scrutiny assessment. The assessment order u/s 143(3) for AY 2015-16 was passed on27/11/2017 accepting the returned income.
The Pr.CIT Pune after verification of records issued notice u/s.263 dated 16/2/2021 and then passed order u/s 263 dated 18/03/2021. This order was challenged by the Assessee before the ITAT. The ITAT in ITA 115/Pune/2021 vide order dated 31/05/2022 set aside the order u/s 263 to the Pr.CIT for denovo adjudication after giving opportunity to the assessee. The Pr.CIT passed an order u/s 263 after giving opportunity to the assessee on 22/11/2022.
Conclusion- Held that the AO has failed to apply proper and correct section of Income Tax Act to the “Investment in the Undisclosed Stock”. The undisclosed investment in the unaccounted stock needs to be taxed separately as Income of the assessee as per the deeming provision of the Act. The tax liability is calculated as per section 115BBE of the Act .Hon’ble Madras High Court in the case of SVS Oil Mills vs ACIT 418 ITR 442 has upheld the addition of excess stock found during survey u/s69B. The AO has failed to verify this aspect. Hence, we are of the opinion that the Assessment Order is erroneous and prejudicial to the interest of the revenue. This is not the case where two plausible views are possible and the AO has adopted one plausible view. Hence, the order u/s 263 is upheld qua ‘the investment in the undisclosed stock’.
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