Case Law Details
Vijay Shriram Gundale Vs ACIT (ITAT Pune)
Introduction: The Income Tax Appellate Tribunal (ITAT) Pune recently delivered a significant judgment in the case of Vijay Shriram Gundale vs. ACIT. The appeal contested the tax treatment of excess stock discovered during a survey, challenging the Commissioner of Income Tax Appeals’ decision for the assessment year 2019-20.
Detailed Analysis: The crux of the matter revolves around the treatment of Rs. 37,00,000/- as unexplained investment under section 69B of the Income Tax Act. The Assessing Officer (AO) argued that the excess stock, unearthed during a survey on 20-02-2019, should be taxed as per section 115BBE. The CIT(A) upheld this, stating that the nature of income regarding the excess stock remained unexplained.
Vijay Shriram Gundale, represented by Shri Hari Krishan, argued that the difference in stock valuation was clarified during the survey. The additional income of Rs. 37,00,000/- was offered as business income in the return of income. The AO’s contention, invoking section 69B, was vehemently opposed, asserting that the excess stock was integral to regular business income.
The ITAT’s analysis considered the assessee’s explanation, emphasizing that the additional income was credited to the profit and loss account. The tribunal referred to legal precedents, including the High Court of Rajasthan’s decision in Bajargan Traders, establishing that excess stock should be taxed under “business income” and not “income from other sources.”
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