Case Law Details
Naresh Chandra Kalwani Vs PCIT (ITAT Indore)
The Naresh Chandra Kalwani Vs PCIT case revolves around the assessment of excess stock related to business activities and the applicability of section 69/69A/115BBE under the Income-tax Act. The dispute arises from a revision order passed by the Principal Commissioner of Income-Tax-1, Bhopal [“PCIT”] under section 263 of the Act, concerning the assessment order passed by the National e-assessment Centre, Delhi.
The case delves into whether the excess stock declared by the assessee as part of their business activities can be subjected to section 69/69A/115BBE. The Assessee, engaged in selling gold, silver ornaments, and money-lending, declared additional income due to excess stock during a survey conducted under section 133A. While the Assessing Officer (AO) accepted the declaration, the PCIT invoked revisionary jurisdiction under section 263, arguing that proper inquiry wasn’t conducted.
The argument unfolds with the AR for the assessee presenting evidence of thorough inquiry by the AO during assessment proceedings. It’s contended that the excess stock is indeed related to the money-lending business, supported by documents of previous years’ financial statements. The AR further relies on precedents where similar cases were assessed as regular business income and not subjected to section 69/69A/115BBE.
In response, the revenue emphasizes the surrender made by the assessee as ‘additional income,’ suggesting applicability of section 69/69A. However, the AR argues that the surrender doesn’t negate the explanation provided for the source of excess stock, being part of the money-lending business.
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