DY. COMMISSIONER OF INCOME-TAX, AGRA V. SACHIN AGRAWAL, MATHURA

ITA 78/AGR/2023

AI Insights

The case involves an appeal by the Deputy Commissioner of Income Tax (DCIT) against Shri Sachin Agrawal concerning the assessment year 2021-22. The appeal arose from an order by the Commissioner of Income Tax (Appeals), Kanpur, which followed a survey and subsequent surrender of additional income by the assessee. The survey, conducted under section 132A of the Income Tax Act, revealed discrepancies in stock and cash, leading to a surrender of Rs. 387.41 Lacs by the assessee, which was accepted as business income by the CIT(A). The DCIT contested this, arguing that the income should be treated as undisclosed under sections 69B and 69A, attracting a higher tax rate. The Tribunal, referencing decisions from various High Courts, upheld the CIT(A)'s decision, categorizing the surrendered income as business income.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 25475 (ITAT-AGRA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2021-2022
• Other Referred Cases: J.K. Chokshi vs ACIT, PCIT vs. Bajargan Traders, PCIT vs. Deccan Jewellers Pvt. Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUKESH KUMAR JAIN LD
• Assessee Lawyers: ANURAG SINHA LD
• Keywords: Business income; Search and seizure; Deemed to accrue or arise in india
• Section: 143(3); 69B; 69A; 133A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “DB” BENCH, AGRA BEFORE HON’BLE SHRI SATBEER SINGH GODARA, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं. / ITA No.78/Agr/2023 (िनधाŊरणवषŊ / Assessment Year: 2021-22) DCIT R. No.104, Sanjay Palace Agra 282002 बनाम/ Vs. Shri Sachin Agrawal Shop No.9, Brijwasi Complex UP 281001 ̾थायीलेखासं./जीआइआरसं./PAN/GIR No. AKMPA-3554-D (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) अपीलाथŎकीओरसे/ Appellant by : Shri Sukesh Kumar Jain – Ld. CIT DR ŮȑथŎकीओरसे/Respondent by : Shri Anurag Sinha (Advocate) – Ld. AR सुनवाईकीतारीख/Date of Hearing : 12-02-2025 घोषणाकीतारीख /Date of Pronouncement : 28-03-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by revenue for Assessment Year (AY) 2021-22 arises out of an order of learned Commissioner of Income Tax (Appeals), Kanpur [CIT(A)] dated 28-02-2023 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 29-09- 2022. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under. 2. In the impugned order, it has been noted that a search and seizure action was carried out u/s 132A on the assessee on 01-11-2020 along with two others viz. Shri Sunil Garg and Shri Bhagwan Singh. The assessee admitted income of Rs.387.41 Lacs on 16-03-2022. The Ld. 2 AO accepted the returned income except for the issue that jewellery valuing Rs.367.14 Lacs would be deemed income u/s 69B and cash amounting to Rs.19.94 Lacs would be unexplained money u/s 69A though these were surrendered by the assessee during survey against excess stock of jewellery & cash and both these items stood included in the return of income as filed by the assessee. 3. It emerges that the cash of Rs.10 Lacs and Jewellery valuing Rs.648.40 Lacs was intercepted and found to be in the possession of Shri Sunil Garg and Shri Bhagwan Singh. They stated that they were employees of M/s Girraj Ornaments prop. Sh. Sachin Agarwal and were carrying gold jewellery for sampling and sale. The cash was stated to be sale proceeds of jewellery. The same triggered survey u/s 133A on M/s Girraj Ornaments and statement of Shri Sachin Agarwal was recorded confirming the fact that the jewellery was sent for sampling and sale. However, he expressed no knowledge about cash of Rs.10 Lacs. During the course of survey, the physical sock was reconciled and to make up for the stock discrepancies, the amount of Rs.377.08 Lacs was surrendered which was disclosed in the return of income along with additional surrender of Rs.10.32 Lacs. The total additional income thus offered by the assessee was Rs.387.41 Lacs which was offered as business income whereas Ld. AO held that the same would be undisclosed income / money u/s 69B / 69A respectively which would be subjected to higher rate of tax. 4. The ld. CIT(A) noted that the assessee was running a shop in the name of M/s Girraj ornaments at Mathura. In the assessment order, there was no discussion as to why Ld. AO applied Sec.69B / 69A r.w.s. 115BBE particularly when the application of these sections was 3 discretionary and not mandatory depending upon facts and circumstances of each case. The assessee was engaged in jewellery trading. The jewellery was owned up by the assessee and it was admitted that the jewellery was being sent for sale through Shri Sunil Garg and Shri Bhagwan Singh. The survey party, in statement recorded u/s 131(1A), confronted the assessee with stock position and the assessee offered aggregate amount of Rs.377.08 Lacs represented by jewellery for Rs.367.14 Lacs and cash of Rs.9.94 Lacs. The assessee always maintained that he had no other source of income except jewellery business and the excess stock was built up from business income only. No evidence was found to negate this consistent explanation of the assessee and therefore, most likely presumption would be that excess stock and cash was sourced from business income only. Reference was made to the decision of Hon’ble Gujarat High Court in the case of J.K. Chokshi vs ACIT (TCA No.149 of 2003 dated 22-12- 2014); the decision of Hon’ble Rajasthan High Court in the case of PCIT vs. Bajargan Traders (86 Taxmann.com 295) as well as the decision of Hon’ble Andhra Pradesh High Court in PCIT vs. Deccan Jewellers Pvt. Ltd. (132 Taxmann.com 73) holding view favoring the assessee. It was thus held that the impugned income would be taxed as business income only which would be subject to normal rate of tax only. Aggrieved as aforesaid, the revenue is in further appeal before us. 5. In our considered opinion, the factual matrix would clearly indicate that the additional income as surrendered by the assessee was sourced out of business income only since the assessee is not shown to have any other source of income. The additional income has been offered to make up for the stock discrepancies during survey and returned income has 4 duly been accepted by Ld. AO. The impugned order has quoted three decisions of Hon’ble High Courts taking a view favoring the assessee. Therefore, we see no reason to interfere in the same. 6. The appeal stand dismissed. Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963. Sd/- Sd/- (SATBEER SINGH GODARA) (MANOJ KUMAR AGGARWAL) Ɋाियक सद˟ /JUDICIAL MEMBER लेखा सद˟ / ACCOUNTANT MEMBER Dated: 28-03-2025 आदेश की Ůितिलिप अŤेिषत / Copy of the Order forwarded to : 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF ASSISTANT REGISTRAR ITAT AGRA "