Case Law Details
Montu Shallu Knitwears Vs DCIT (ITAT Chandigarh)
Recently the B Bench Of Chandigarh Income Tax Appellate Tribunal passed an judgement in the above case examining the applicability of Sec 69B r.w.s 115BBE. The central point of discussion was whether AO was right in applying the provisions of Sec 69B r.w.s 115BBE upon the excess value of stock found at the assessee’s premises during a survey conducted u/s 133A.
Issue:- Assessee is a partnership firm engaged in the business of manufacturing of wearing apparels. Apart from the said business, the assessee does not own or operate any other businesses, nor does the assessee have any other sources of income. On 29-08-2018 a survey action u/s 133A of the Act was carried out at the business premises of the assessee. During the course of survey the Ld. AO verified the stock and compared it to the value of stock in the assessee’s books of account. Discrepancies were discovered, so the assessee surrendered Rs. 50,00,000/- as an additional business income to buy peace of mind and to avoid litigation in FY 2018-19. For FY 2018-19 assessee declared a total income of Rs 1,40,22,393/- which includes that 50 lacs and paid tax at normal rate. Further that assessee’s case was selected for compulsory scrutiny assessment under CBDT guidelines, and a notice u/s 143(2) & u/s 142(1) along with a detailed questionnaire was issued to assessee on 29/9/20 & 20/01/21 respectively. On dt 28-09-2021 assessment order was passed where in the total income of the assessee was assessed at Rs 1,90,22,390/- after making additions of Rs 50,00,000/- on account of disallowance u/s 37. The Ld. AO also applied the provisions of section 115BBE on application of sec 69B of the Act.
Being aggrieved by the order of Ld. Assessing Officer the assessee filed an appeal before the Ld. CIT(A), where the additions of Rs 50,00,000/- on account of disallowance u/s 37 was deleted and the application of sec 115BBE was confirmed vide order dt 04-01-23. Further aggrieved by the order of Ld. CIT(A) the assessee filed an appeal before the Hon’ble ITAT.
In the whole case the assessee contention was that since he has no other source of income except income from business and the amt of Rs 50,00,000/- surrendered by him on account of discrepancies identified by the Ld. AO in respect of stock shall be treated as business income and should be offered to tax at normal rate.
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