Unrecorded stock of rice noticed during survey is Business Income

Pr. CIT Vs Bajargan Traders C/o. Kalani & Co. (Rajasthan High Court)

Whether the amount surrendered by way of investment in the unrecorded stock of rice has to be brought to tax under the head ‘business income’ or ‘income from other sources‘. In the present case, the assessee is dealing in sale of foodgrains, rice and oil seeds, and the excess stock which has been found during the course of survey is stock of rice. Therefore, the investment in procurement of such stock of rice is clearly identifiable and related to the regular business stock of the assessee. The decision of the Co-ordinate Bench in case of Shri Ramnarayan Birla (supra) supports the case of the assessee in this regard. Therefore, the investment in the excess stock has to be brought to tax under the head business income and not under the head income from other sources.

Full Text of the High Court Judgment / Order is as follows:-

By way of this appeal, the appellant has assailed the judgment and order of the Tribunal whereby the Tribunal has allowed the appeal of the assessee.

2. Counsel for the appellant has framed the following substantial questions of law:–

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