ITO, New Delhi V. M/s Nikkamal Jewellers (P) Ltd., New Delhi

ITA 5892/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4125 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 25-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 23-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K MONGA
• Assessee Lawyers: Y P RAWLA
• Keywords: Business income; Income from undisclosed sources; Valuation report
• Section: 133A; 69B; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E DELHI BEFORE SHRI I.P.BANSAL AND SHRI K.G. BANSAL I.T.A. NO. 5892(DEL)/2010 ASSESSMENT YEAR: 2006-07 INCOME-TAX OFFICER, M/S NIKKAMAL JEWELLERS (P) WARD 13(2), NEW DELHI. VS. LTD., 66/22 53, OPP. GURDWARA ROAD, KAROL BAGH, NEW DELHI-5. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K. MONGA, SR. DR RESPONDENT BY : SHRI Y. P. RAWLA, C.A. ORDER PER K.G. BANSAL : AM THE FACTS OF THE CASE ARE THAT A SURVEY OPERAT ION U/S 133A OF THE INCOME-TAX ACT, 1961, WAS CONDUCTED AT THE BUSINE SS PREMISES OF THE ASSESSEE ON 8.12.2005. THE CASH AND STOCK OF THE ASSESSEE WAS VERIFIED. IT WAS FOUND THAT THE CASH AND STOCK FOUND AT TH E TIME OF SURVEY WAS MORE THAN THE CASH AND STOCK ENTERED IN THE BOOKS OF ACCOUNT ON THAT DATE. THE DISCREPANCIES FOUND HAVE BEEN MENTIONED BY THE AO ON PAGE 2 OF THE ASSESSMENT ORDER. THE DETAILS IN THIS REGARD ME NTIONED THEREIN ARE AS UNDER:- CASH A) CASH RECORDED IN THE BOOKS OF ACCOUNTS RS. 4,75,173/- B) CASH FOUND AT THE BUSINESS PREMISES RS. 8,96,555/- ITA NO. 5892(DEL)/2010 2 DIFFERENCE RS. 4,21,382/- STOCK OF DIAMONDS WEIGHT OF THE STOCK OF VALUE OF STOCK A S PER VALUE OF STOCK AS DIAMONDS BOOKS PER VALUATION DONE BY THE REGI STERED VALUER DURI NG THE SURVEY PROC EEDINGS. AS ENTERED IN THE BOOKS 6122.720 CARAT AS FOUND ON PHYSICAL INVENTORY TAKEN DURING THE SURVEY-6276.470 CT. RS. 3,98,21,662/ - RS. 4,58,21,662/- 1.1 THUS, THE EXCESS CASH OF RS. 4,21,382/- AND EXCESS DIAMONDS OF THE VALUE OF RS. 60.00 LAKH WERE FOUND. IN RESPECT OF THESE ITEMS, THE STATEMENT OF SHRI R.K. JAIN WAS RECORDED, IN WHIC H HE OFFERED ADDITIONAL INCOME OF RS. 60,01,332/- FOR TAXATION. THE RELE VANT PORTION OF HIS STATEMENT, BEING ANSWER TO QUESTION NO. 13, IS REP RODUCED BELOW:- QUESTION NO. 13: AS PER YOUR CLOSING STOCK DRAWN ON 09.12.2005, THE VALUE OF DIAMOND IS RS. 3,98,21,6 62/-, WHEREAS AS PER THE VALUERS REPORT, THE VALUATI ON OF THE DIAMONDS COME TO RS. 4,58,21,622/-, SHOWING A DIFF ERENCE IN DIAMOND STOCK OF RS. 60,00,000/-. WHAT DO YOU HA VE TO SAY ABOUT THIS? ANS. I AM UNABLE TO VERIFY THE CORRECT POSITION O F THIS STOCK AND I AM NOT ABLE TO EXPLAIN IT. BUT I HAD A TELEPHONIC ITA NO. 5892(DEL)/2010 3 CONVERSATION WITH SHRI CHAND KANT JAIN, DIRECTOR OF THE COMPANY WHO HAS INSTRUCTED/AGREED THAT AS THE GOVERNMENT APPROVED VALUER HAS VALUED IT, THE POSITION OF THE STOCK OF DIAMOND MUST BE CORRECT. HE HAS FURTHER TOLD M E THAT TO AVOID THE LITIGATION WITH THE INCOME-TAX DEPART MENT; HE OFFERED THE DISCREPANCY IN THE STOCK AS UNDISCL OSED INCOME OVER AND ABOVE THE REGULAR COURSE OF INCOME. HE H AS FURTHER SAID THAT THE G.P. RATE OF 7% SHOULD BE TAKEN I N CONSIDERATION TO DERIVE THE UNDISCLOSED STOCK. THUS, COUPLED WITH MY ANSWER TO QUESTION NO. 9 OF THE STATEMENT, I AM O FFERING RS. 60,01,332/- (RUPEES SIXTY LAC ONE THOUSAND THREE HUNDRED THIRTY TWO ONLY). 1.2 THE ASSESSEE DECLARED THIS INCOME AS BUSINE SS INCOME. HOWEVER, THE AO TREATED IT AS INCOME FROM UNDISCLOSED SOURCES THEREBY BRING IT TO TAX UNDER THE RESIDUARY HEAD. THE RESULT WA S THAT BROUGHT FORWARD LOSSES FROM EARLIER YEARS WERE NOT ALLOWED TO BE SET OFF AGAINST THIS INCOME. THUS, THE TOTAL INCOME OF THE ASSESSEE W AS COMPUTED AT RS. 16,75,650/- AGAINST THE RETURNED INCOME OF RS. 4,6 0,437/-. 2. THE MATTER WAS AGITATED BEFORE THE CIT(APPEAL S)-XVI, NEW DELHI, WHO PASSED AN ORDER ON 7.9.2010 IN APPEAL NO. 23 7/2008-09. IT WAS HELD THAT THE AO WAS NOT JUSTIFIED IN BRINGING TO TAX THIS INCOME UNDER THE RESIDUARY HEAD. FOR THE SAKE OF READY REFEREN CE, HIS FINDINGS ARE REPRODUCED OVERLEAF:- ITA NO. 5892(DEL)/2010 4 THUS, THE ONLY DISPUTE IS WHETHER THIS INCOME IS TO BE TAXED UNDER THE HEAD BUSINESS INCOME OR INCOME FRO M OTHER SOURCES. WHILE THE ASSESSING OFFICER HAS GIV EN THE FINDING IN THE ASSESSMENT ORDER THAT THESE UNDISCLOSED INVESTMENTS IN CASH AND STOCK U/S 69A AND 69B OF THE ACT ARE TO BE TREATED AS INCOME FROM OTHER SOURCES, THE APPELLANTS C ONTENTION IS THAT THESE MAY BE TAXED UNDER THE HEAD BUSINE SS INCOME AND LOSSES OF EARLIER YEARS ALLOWED TO BE SET O FF AGAINST THIS INCOME. DURING THE COURSE OF APPELLATE PROCEED INGS, IT WAS SUBMITTED THAT THE APPELLANT WAS NOT HAVING ANY OTHER SOURCE OF INCOME AND THE EXCESS INVESTMENT IN STOCK AND CASH COULD HAVE BEEN MADE ONLY OUT OF ITS BUSINESS INCO ME. FURTHER, THE APPELLANT HAS RELIED UPON THE CASE LAW OF CIT VS. MEHTA GWAR GUM & COMPANY, (2008) 219 CTR 58 (R AJ.) WHEREIN THE HONBLE COURT NOTED THAT THE STOCK F OUND IN EXCESS DURING SURVEY HAD BEEN SUBSEQUENTLY RECO RDED IN THE BOOKS OF ACCOUNTS AND AFTER ACCOUNTING FOR THE SAME, THE FIGURE OF SALES AS PER THE BOOKS OF ACCOUNTS OF THE ASSESSEE HAD BEEN ACCEPTED BY THE ASSESSING OFFICER. ACC ORDINGLY, THE COURT HELD THAT PROVISIONS OF SECTION 69 COULD N OT BE SAID TO BE ATTRACTED TO THE PRICE OF STOCK IN QUESTION. IN THE CASE OF THE APPELLANT COMPANY ALSO, THE EXCESS CASH AND STOCK HAVE SUBSEQUENTLY BEEN RECORDED IN THE BOOKS OF THE C OMPANY, WHICH THE ASSESSING OFFICER HAS NOT REJECTED. T HE ONLY ADJUSTMENT MADE BY THE ASSESSING OFFICER IS TH AT HE HAS SEGREGATED THE VALUE OF EXCESS CASH AND STOCK FOUND DURING SURVEY AND TAXED IT AS INCOME FROM OTHER SOUR CES, AFTER DEDUCTING THIS AMOUNT FROM THE TOTAL BUSINESS INCO ME OF THE APPELLANT. THIS ACTION OF THE ASSESSING OFFIC ER WAS NOT JUSTIFIED IN VIEW OF THE APPELLANTS SUBMISSION TH AT IT WAS NOT HAVING ANY OTHER SOURCE OF INCOME AND ALSO IN VI EW OF THE JUDGMENT OF THE HONBLE RAJASTHAN HIGH COURT AS DISCUSSED ABOVE. THE ASSESSING OFFICER IS ACCORDINGLY DIR ECTED TO TREAT THE VALUE OF EXCESS STOCK AND CASH AS BUSINESS INCOME AND ALLOW THE SET OFF OF LOSSES FROM BUSINESS, IF ANY . ITA NO. 5892(DEL)/2010 5 2.1 AGGRIEVED BY THIS ORDER, THE REVENUE IS IN APPEAL BEFORE US. THE ONLY GROUND TAKEN IS THAT THE LD. CIT(APPEALS) ERRED IN TREATING THE UNDISCLOSED INCOME OF RS. 60,01,383/- AS BUSINES S INCOME, THEREBY ALLOWING THE SET OFF OF BROUGHT FORWARD BUSINES S LOSSES AGAINST THIS INCOME ALSO. IN THIS CONNECTION, IT IS SEEN TH AT ALTHOUGH THE ASSESSEE HAD TAKEN UP A SPECIFIC GROUND BEFORE THE LD. CIT(AP PEALS), BEING GROUND NO. 7, TO THE EFFECT THAT THE INCOME DISCLOSED DURI NG SURVEY SHOULD BE TREATED AS BUSINESS INCOME AND BROUGHT FORWARD LOSSES F ROM EARLIER YEARS SHOULD BE ALLOWED TO BE SET OFF, THIS GROUND WAS NOT DECIDED SPECIFICALLY BY THE LD. CIT(APPEALS). HOWEVER, THE CASE OF THE LD. C OUNSEL FOR THE ASSESSEE BEFORE US IS THAT LACK OF DECISION IN THE MATTER DOES NOT PREJUDICE THE CASE OF THE ASSESSEE BECAUSE IF THE SURRENDERED INCO ME IS TAKEN AS BUSINESS INCOME, THE ASSESSEE AUTOMATICALLY BECOMES ENTI TLED TO THE SETTING OFF OF THE BROUGHT FORWARD LOSSES. 3. BEFORE US, THE LD. DR HAS SUBMITTED THAT THE RE WAS A DIFFERENCE IN THE WEIGHT OF THE DIAMONDS FOUND IN THE COURSE OF SURVEY AND THE WEIGHT RECORDED IN THE BOOKS OF ACCOUNT. AS CA N BE SEEN FROM THE TABLE GIVEN ABOVE, THE DIFFERENCE IN WEIGHT IS 153.75 C ARAT. THE EXCESS CASH AND THE DIFFERENCE IN THE VALUES OF THE DIAMON DS FOUND AND RECORDED IN ITA NO. 5892(DEL)/2010 6 THE BOOKS OF ACCOUNT HAVE BEEN BROUGHT TO TAX UNDER SECTIONS 69A AND 69B RESPECTIVELY OF THE ACT. THESE SECTIONS D O NOT FORM PART OF CHAPTER IVD DEALING WITH PROFITS AND GAINS OF BUSINESS OR PROFESSION. THEREFORE, THE INCOME CANNOT BE CLASSIFIED AS T HE BUSINESS INCOME. 3.1 IN REPLY, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ESTIMATED DIFFERENCE IN WEIGHT WAS ABOUT 100.28 CARAT AS SUBMITTED BEFORE THE LD. CIT(APPEALS), THE DETAILS OF WHIC H ARE AS UNDER:- TOTAL QUANTITY AS PER VALUATION REPORT 6276.470 CT. TOTAL QUANTITY AS PER BOOKS 6122.720 CT. PURCHASE ENTERED ON 10.12.2005 53.470 CT. DIFFERENCE (ON THE BASIS OF ESTIMATED DETERMINATIO N 100.280 CT. OF WEIGHT) 3.2 THE OTHER DIFFERENCE IS MERELY ON ACCOUNT OF VALUATION. THE DIAMONDS AND THE CASH BELONGED TO THE BUSINESS OF THE ASSESSEE-COMPANY AND, THEREFORE, THE LD. CIT(APPEALS) RIGHTLY HE LD THAT THE SURRENDERED INCOME HAS TO FORM PART OF THE BUSINESS INCOME. 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AN D SUBMISSIONS MADE BEFORE US. THE UNDISPUTED FACTS ARE THAT ON THE D ATE OF SURVEY DISCREPANCY WAS FOUND IN CASH AND STOCK AMOUNTING TO RS. 4,21, 382/- AND RS. 60.00 LAKH. ON THE BASIS OF DISCREPANCIES, THE ASSES SEE OFFERED AN OVERALL SUM ITA NO. 5892(DEL)/2010 7 OF RS. 60,01,332/- FOR TAXATION. THIS AMOUNT HAS BEEN INCLUDED WHILE COMPUTING THE TOTAL INCOME IN THE RETURN FILED ON 27.11.2006. THE DISCREPANCY IN RESPECT OF STOCK WAS ON ACCOUNT O F DIFFERENCE IN WEIGHT OF ABOUT 100 CARAT AND THE BALANCE AMOUNT REPRESE NTS THE DIFFERENCE IN VALUATION. THE QUESTION THEREFORE IS-WHETHER, THE LD. CIT(A) WAS RIGHT IN HOLDING THAT THE WHOLE OF THE AMOUNT, INVOLVED I N THE DISCREPANCIES, REPRESENTS BUSINESS INCOME? 4.1 IN THE CASE OF GIGGLES (P) LTD. VS. ITO, (1 992) 43 ITD 388, RELIED UPON BY THE LD. DR, THE FACTS ARE THAT SURVEY U/S 133A WAS CONDUCTED ON 11.3.1987. EXCESS STOCK OF RS. 2,5 5,273/- WAS FOUND. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSE SSEE RAISED CERTAIN OBJECTIONS ON THE BASIS OF WHICH SOME RELIEF WAS GIVEN TO THE ASSESSEE. ULTIMATELY, ADDITION WAS MADE U/S 69 OF THE AMOU NT INVESTED IN UNDISCLOSED CLOSING STOCK. RELYING ON THE DECI SION IN THE CASE OF RAMANLAL KACHARULAL TEJMAL VS. CIT, (1984) 146 I TR 368, THE TRIBUNAL HELD THAT THE AO HAS RIGHTLY INVOKED THE PROVIS ION CONTAINED IN SECTION 69 AS THE ASSESSEE HAD MADE INVESTMENT IN AN ASSET, WHETHER STOCK-IN- TRADE OR INVESTMENT IS IRRELEVANT. THE MATTER WAS AGITATED BEFORE THE HONBLE BOMBAY HIGH COURT. TWO QUESTIONS AROSE O UT OF WHICH THE ITA NO. 5892(DEL)/2010 8 MAIN QUESTION IS-WHETHER, THERE IS ANY EVIDENCE TO SHOW THAT THE COTTON OF THE VALUE OF RS. 1,06,066/- REPRESENTED THE PROPE RTY OF THE APPLICANT AND THAT THE VALUE THEREOF WAS INCOME OF THE APPLICAN T ASSESSABLE U./S 69 OF THE INCOME-TAX ACT 1961, ON THE GROUND THAT TH E APPLICANT HAS NOT EXPLAINED THE SOURCE OF ITS ACQUISITION? THIS Q UESTION WAS ANSWERED IN AFFIRMATIVE AND AGAINST THE ASSESSEE. IT HAS IN TER-ALIA BEEN HELD THAT IT CAN NEVER BE SUGGESTED THAT, IN THESE CIRCUMS TANCES, THERE WAS NO NEXUS BETWEEN THE ASSESSEE AND THE INVESTMENT IT HAS FURTHER BEEN HELD THAT EVEN THE EXPLANATION OF THE ASSESSEE THAT SOME RAW COTTON BELONGING TO RAMANLAL & COMPANY WAS IN THE PROCE SS OF BEING CONVERTED INTO BALES AND IT WAS THIS RAW COTTON WHICH WAS SHOWN BY THE BANKS IN THEIR STATEMENT AS PRESSED COTTON BALES WAS TO TALLY UNSUPPORTED BY EVIDENCE. THEREFORE, IT CANNOT BE SAID THAT THE RE IS NO EVIDENCE TO SUPPORT THE CONCLUSION ARRIVED AT BY THE TRIBUNA L. 4.2 FURTHER, RELIANCE HAS BEEN PLACED ON THE DEC ISION IN THE CASE OF ITO VS. SMT. SUNDARI CHIMANDAS, (2010) 124 ITD 460 ( CHENNAI). IN THIS CASE, SURVEY WAS CONDUCTED U/S 133A ON 6.11.2002 . IN THE COURSE OF SURVEY, SOME DISCREPANCIES WERE FOUND IN STOCK WITH REGARD TO THE VALUATION. THE ASSESSEE OFFERED AN ADDITIONAL INC OME OF RS. 1.15 CRORE FOR ITA NO. 5892(DEL)/2010 9 TAXATION IN TWO YEARS, RS. 55.00 LAKH IN ASSES SMENT YEAR 2002-03 AS TAXABLE UNDER THE RESIDUARY HEAD; AND RS. 60.00 LAKH IN ASSESSMENT YEAR 2003-04 AS BUSINESS INCOME. THE TRIBUNAL HELD TH AT WHEN INVESTMENT WAS NOT RECORDED IN THE BOOKS OF ACCOUNT AND THE ASSESSEE FAILED TO OFFER SATISFACTORY EXPLANATION ABOUT THE NATURE AND S OURCE OF SUCH INVESTMENT, NO QUESTION WOULD ARISE OF TREATING SUCH INVEST MENT, WHICH WAS DEEMED TO BE THE INCOME OF THE ASSESSEE, AS A DEDUCTIB LE PURCHASE IN THE FINANCIAL YEAR FOR THE REASON THAT SUCH INCOME DID NOT FA LL UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. 4.3 IN THE CASE OF CIT VS. MEHTA GWAR GUM & CO., (2008) 219 CTR (RAJ.) 58, RELIED UPON BY THE LD. COUNSEL, THE FACTS ARE THAT SURVEY WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 31.1 2.1999. EXCESS STOCK OF RS. 4,51,010/- WAS ALLEGEDLY FOUND. THE ASSESS EE DID NOT OBJECT TO THIS EXCESS STOCK. IN THE RETURN FILED BY IT, SALES WERE SHOWN AT RS. 5,48,01,800/- AND GROSS PROFIT WAS SHOWN AT 0.93%. THE AO REJECTED THE BOOKS OF ACCOUNT U/S 145(3) AND ESTIMATED TH E GP RATE AT 3%, LEADING TO ADDITION OF RS. 19,57,521/-. THE EX CESS STOCK FOUND WAS ALSO BROUGHT TO TAX BY INVOKING THE PROVISION CONTAINED IN SECTION 69. THE HONBLE COURT MENTIONED THAT THE ASSESSEE HAD FILED THE RETURN OF INCOME ITA NO. 5892(DEL)/2010 10 SHOWING GROSS PROFIT RATE AT 0.93%. THIS RETUR N PERTAINS TO THE ENTIRE FINANCIAL YEAR AND THE STOCK IN QUESTION HAS BEE N DULY ACCOUNTED FOR THEREUNDER. THE REVENUE LAID MUCH STRESS ON THE FACT THAT THE BOOKS OF ACCOUNT HAVE BEEN REJECTED AND THEREAFTER THE STOC K WAS REQUIRED TO BE TAKEN INTO ACCOUNT FOR QUANTIFYING THE TOTAL INCOM E. THE FINDING OF THE HONBLE COURT IS THAT ALTHOUGH THE BOOKS OF ACC OUNT WERE REJECTED, THE FIGURE OF SALES SHOWN BY THE ASSESSEE HAD BEE N ACCEPTED. THE FIGURE OF SALE WAS ARRIVED AT AFTER DULY ACCOUNTING FOR THE ALLEGED EXCESS STOCK FOUND ON 31.12.1999. SECTION 69 COMES INTO OPERA TION WHEN AN INVESTMENT IS NOT RECORDED IN THE BOOKS OF ACCOUNT AND TH E ASSESSEE EITHER OFFERS NO EXPLANATION OR THE EXPLANATION IS NOT FOUND TO BE SATISFACTORY. SINCE THE FIGURE OF SALES HAS BEEN SHOWN AFTER CONSIDERING THE ALLEGED EXCESS STOCK, THE QUESTION OF APPLICABILITY OF SECTION 69 DOES NOT ARISE. 4.4 HAVING CONSIDERED THE FACTS AND THE CASES REFERRED TO ABOVE, WE ARE OF THE VIEW THAT THE DECISION IN THE CASE O F MEHTA GWAR GUM & COMPANY (SUPRA) IS NOT APPLICABLE FOR THE REASO N THAT THE ASSESSEE HAD ACCOUNTED FOR THE STOCK DISCREPANCY IN THE SALES, BUT THE GROSS PROFIT DECLARED BY THE ASSESSEE WAS NOT ACCEPTED BY RE JECTING THE BOOKS OF ACCOUNT, WHICH WAS ESTIMATED AT A HIGHER PERCE NTAGE. IN THIS CASE, SUCH ITA NO. 5892(DEL)/2010 11 FACTS ARE MISSING. WE FIND THAT THE FACTS OF THE CASE OF GIGGLES (P) LTD. (SUPRA) ARE APPLICABLE. THE AO HAS MADE ADDITIO N UNDER SECTIONS 69A AND 69B, WHILE IN THAT CASE THE ADDITION WAS MADE U/S 69. THE DECISION IS THAT THE PROVISION IS APPLICABLE WHETHER IT IS INVESTMENT IN STOCK-IN-TRADE OR IN OTHER ASSET. THE DECISION IN THE CASE O F RAMANLAL KACHARULAL TEJMAL (SUPRA) CLEARLY HOLDS THAT THE INCOME BROUGHT TO TAX U/S 69 CANNOT BE CLASSIFIED AS BUSINESS INCOME. THEREFO RE, THE ADDITIONS IN RESPECT OF EXCESS CASH AND EXCESS STOCK IN DIAM ONDS IN QUANTITATIVE TERMS CANNOT BE SAID TO BE BUSINESS INCOME. 4.5 COMING TO THE ADDITION MADE ON ACCOUNT OF VALUATION, WHICH IS IN RESPECT OF STOCK OTHER THAN ABOUT 100 CARAT, IT I S CLEAR THAT IT WAS PART OF BOOK-STOCK, WHICH WAS UNDER-VALUED BY THE ASSESSE E. MERE ACT OF UNDER- VALUATION DOES NOT LEAD TO INFERENCE OF UNACCOUN TED INVESTMENT. IF THE ASSESSEE UNDERVALUES THE STOCK OF BUSINESS, THE CORRECT THING TO BE DONE IS TO VALUE IT PROPERTY AND MAKE ADDITION ON THAT ACCOUNT. IT DOES NOT, HOWEVER, LEAD TO INFERENCE THAT SUCH INCOME IS ALSO TAXABLE UNDER THE RESIDUARY HEAD FOR THE REASON THAT IT IS THE BUSINESS STOCK. IN THIS MANNER, THE FACTS OF THE CASE OF SMT. SUNDARI C HIMANDAS (SUPRA) ARE DISTINGUISHABLE, AS NO SATISFACTORY EXPLANATION WAS FURNISHED ABOUT THE ITA NO. 5892(DEL)/2010 12 NATURE AND SOURCE OF THE INVESTMENT. IN THIS CA SE, NO CASE HAS BEEN MADE OUT THAT THE DIAMONDS WERE PURCHASED AT A VALUE HIGHER THAN THE VALUE RECORDED IN THE BOOKS OF ACCOUNT AT THE TIME OF P URCHASE. THE DIFFERENCE ARISES ONLY ON ACCOUNT OF RE-VALUATION OF THE STOC K OF BUSINESS. THEREFORE, IN SO FAR AS STOCK OF THE BUSINESS IS CONCERNED, THE ADDITION MADE HAS TO BE TAKEN AS BUSINESS INCOME. 4.6 IN VIEW OF THE AFORESAID FINDING, THE AO IS DIRECTED TO VERIFY THE WEIGHT OF UNACCOUNTED DIAMONDS IN QUANTITATIVE T ERMS AS THE FIGURE OF 100.280 CT. IS STATED TO BE ONLY ON ESTIMATED BASIS BY THE LD. COUNSEL HIMSELF IN THE PROCEEDINGS BEFORE THE LD. CIT(APPE ALS). THE VALUE OF SUCH UNACCOUNTED DIAMONDS AND CASH SHALL BE TREATED AS TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES, AND THE INCOME ASSESSED ON RE- VALUATION OF BUSINESS STOCK SHALL BE TAKEN AS T HE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESS ION. 5. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29 APRIL, 2011. SD/- SD/- (I.P. BANSAL) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 29TH APRIL, 2011. SP SATIA ITA NO. 5892(DEL)/2010 13 COPY OF THE ORDER FORWARDED TO: 1. NIKKAMAL JEWELLERS (P) LTD., NEW DELHI. 2. ITO, WARD 13(2), NEW DELHI. 3. CIT(A) 4. CIT 5. THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.