LATE HARILAL MAVJIBHAI PATEL,KOLHAPUR V. ACIT, CENTRAL CIRCLE, KOLHAPUR

ITA 2698/PUN/2024

AI Insights

The case involves Late Harilal Mavjibhai Patel, through his legal heir Godavari Harilal Patel, who appealed against the order of the Commissioner of Income Tax (Appeals) confirming the addition of excess stock found during a survey as income from other sources. The excess stock, valued at Rs. 40,05,210, was initially offered as business income by the assessee but was later treated as unaccounted income by the Assessing Officer and taxed under section 115BBE of the Income Tax Act. The Tribunal examined whether the excess stock should be considered as business income or income from other sources, ultimately deciding in favor of the former based on precedents and the nature of the assessee's business.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126811 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2019-2020
• Other Referred Cases: DCIT Vs. Vaishali Agro Soya Products, M/s. Suresh Aluminum Vs. ACIT, Vijay Shriram Gundale Vs. ACIT, Kolhapur Timber And Furniture Mart Vs. ACIT, Bajargan Traders, Kim Pharma (P.) Ltd. vs. CIT, Shri Lovish Singhal vs. ITO, ACIT Vs. Anoop Neema
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHISHEK MESHR AM
• Assessee Lawyers: S.N. PURANIK
• Keywords: Set aside; Business income; Unexplained investment; Income from undisclosed sources; Deemed to accrue or arise in india; Grounds of appeal; Difference in stock; Dismissed; Judgment; HRA; Commissioner; Partners; Commissioner of Income Tax; Identical facts; Purchases; Transactions; Marriage; Department; Explanation; Not pressed; Form 3; Illegality; Unrecorded stock
• Section: 68; 131; 69; 69B; 13; 69A; 133A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “SMC”, PUNE BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER AND MS. ASTHA CHANDRA, JUDICIAL MEMBER आयकर अपील सं. / ITA No.2698/PUN/2024 Assessment Year : 2019-20 Late Harilal Mavjibhai Patel, Through Legal heir Godavari Harilal Patel, 712/1/1 ‘A’ Ward, Ganjimal, Kolhapur – 416 012 Maharashtra PAN : ABLPP1992Q Vs. ACIT, Central Circle, Kolhapur Appellant Respondent आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The captioned appeal at the instance of assessee pertaining to assessment year 2019-20 is directed against the order dated 06.11.2024 passed by CIT(A), Pune-11 u/s.250 of the Income Tax Act, 1961 ( in short ‘the Act’) which inturn is arising out of the Assessment order dated 30.09.2021 passed u/s.143(3) of the Act. 2. Brief facts of the case are that the assessee is an individual engaged in the business of trading in supply of building material, hardware material, laminates, chip boards and plywoods etc. in the name of sole proprietorship concern M/s. Kaneeta Enterprises. Survey u/s.133A of the Act conducted on 13.02.2019 at the business premises of the assessee. Tentative trading account was prepared on 12.02.2019 for calculating the Appellant by : Shri S.N. Puranik Revenue by : Shri Abhishek Meshram Date of hearing : 13.02.2025 Date of pronouncement : 25.04.2025 ITA No.2698/PUN/2024 Late Harilal Mavjibhai Patel 2 closing stock as on 12.02.2019 which amounted to Rs.49,05,313/-. However, the physical inventory of stock as on 13.02.2019 was calculated at Rs.89,10,523/- by the survey team thus giving rise to the excess stock of Rs.40,05,210/-. Assessee was asked to explain the excess stock to which it was responded that the business and godown premises are not separately and clearly identifiable but is mixed part of lots of stock which includes regular stock also. Further, assessee offered it as regular business income for the current year. Subsequently, assessee filed the return of income on 22.10.2019 showing income of Rs.45,62,440/-. Case of the assessee selected for compulsory scrutiny followed by validly serving statutory notices. The only issue dealt with by ld. AO was regarding the excess stock which was offered to tax by the assessee as business income in the audited Profit and Loss Account. However, ld. AO was of the considered view that the excess stock is not part of the business income but is an unaccounted income liable to be taxed as income from other sources. Accordingly, ld. AO reduced the amount of excess stock of Rs.40,05,210/- from the business income and taxed it as deemed income u/s.69 r.w.s.115BBE of the Act and assessed the income of Rs.45,62,440/-. 3. Aggrieved assessee preferred appeal before ld.CIT(A) but failed to succeed. Now the assessee is in appeal before this Tribunal by raising the following grounds : “1. Commissioner of Income Tax (Appeals) has erred in confirming the alleged excess stock found in Survey, addition u/s 68. Appellant prays to hold that Sec.68 has no application. Appellant prays to cancel the applicability of Sec. 115BBE accepting the same as Business Income to which Normal Tax rate will be applicable. ITA No.2698/PUN/2024 Late Harilal Mavjibhai Patel 3 2. CIT(A) has erred in not following the Jurisdictional Pune ITAT decision on the identical issue brought his Notice. Appellant prays for following ratio of said decision. 3. Commissioner of Income Tax(Appeals) has no authority or Jurisdiction to Substitute other Sections like 69,69A, 69B for Sec.68 applied by Assessing Officer. Appellant prays to cancel the same. 4. CIT(A) is not just and fair in confirming applicability of special rate of Tax u/s 115BBE. 5. Appellant denies liability to Interest u/s 234, same may please be cancelled. 6. Appellant prays to cancel the levy of interest charged u/s.234. 7. Appellant prays to add, alter, amend, modify and/or withdraw the ground.” 4. Ld. Counsel for the assessee submitted that during the course of survey itself assessee has stated that the excess stock is normal business income and the reason for excess stock was mainly on account of mixed stock at godown and the business premises and also lots of stock. The excess stock being business income should not have been taxed by ld. AO u/s.115BBE of the Act. Reference was also made to the summary of stock valuation where the stock was kept at 11 locations which included 8 godowns and the list of physical stock indicates that there are hundreds of small items and value of stock of some of the items are as low as Rs.430/-. Referring to this detail, it was submitted that since the varieties of stock are more than hundreds of numbers and stock being kept at various godowns, there are possible chances of not calculating the physical stock correctly. However, the assessee in order to buy peace of mind has offered the excess stock as business income. Reference also made to the paper book regarding the copy of record of survey proceedings, ITA No.2698/PUN/2024 Late Harilal Mavjibhai Patel 4 statement recorded during survey placed at pages 7 to 12 and further reliance was placed on the following decisions : 1. DCIT Vs. Vaishali Agro Soya Products – ITA No.634/Pun/2024 dated 11.09.2024 2. M/s. Suresh Aluminum Vs. ACIT – ITA No.62/Ind/2024, dated 09.08.2024 3. Vijay Shriram Gundale Vs. ACIT – ITA No.79/Pun/2023 dated 03.08.2023 5. On the other hand, ld. Departmental Representative supported the orders of the lower authorities and submitted that the excess stock is nothing but investment of unaccounted income of preceding years as well as current year and therefore has rightly been taxed as income from other sources. 6. We have heard the rival contentions and perused the record placed before us. The only issue for our consideration is whether the ld.CIT(A) was justified in affirming the action of the AO of treating the excess stock as income from other sources and applying tax rate u/s.115BBE of the Act as against the excess stock being declared as regular business income by the assessee and having paid normal taxes. We notice that the assessee was subjected to survey proceedings u/s.133A of the Act on 13.02.2019. Stock of the assessee was located at multiple godowns and in total there are 11 locations where the stock of the assessee was kept and further going through the paper book at pages 40 to 49 we notice that the excess stock in hand contains various items based on thickness/size/measurement and are hundreds in numbers. Further, we also notice that assessee was not maintaining regular quantitative stock records and the survey team estimated the opening stock as on 13.02.2019 on the basis of tentative trading account. Undisputedly, excess stock of Rs.40,05,210/- was calculated by the survey team and the same ITA No.2698/PUN/2024 Late Harilal Mavjibhai Patel 5 was accepted by the assessee as normal business income and duly offered to tax by including the excess stock in its profit and loss account and paying due taxes. Now during the course of survey the assessee was confronted with the issue of excess stock. Reply of the assessee to question No.20 is relevant wherein it was specifically asked to explain the difference of excess stock and the same reads as under : “Q.No.20 On going through the tentative Trading Account in respect of M/s. Kaneeta Enterprises, it is seen the stock as on 12.02.2019 is at Rs.49,05,313/- whereas the stock as per the inventories recorded by the survey party totals to Rs.89,10,523/. Thus, there is a difference of Rs.40,05,210/. Please explain the difference. Ans. The excess stock found of Rs.40,05,210/ at the business and godown premises during the survey is not separately and clearly identifiable. but is a mixed part of lots of stock found at the business and godown premises which includes other regular stock also. The resultant difference in stock may be on account of various reasons. However, to cover up the irregularities, the resultant so-called difference in stock worked out on the basis of tentative Trading Account is offered to tax as our regular business income over and above current year's (i.e. AY 2019-20) normal income.” 7. Now from going through the above reply of the assessee given during the course of survey and also considering the estimated opening stock as on the date of survey calculated by the survey team, huge number of items of stock held at the assessee’s business premises located at 11 locations, we find that the assessee has duly explained the source of excess stock and same is from business income and is therefore liable to be taxed as regular business income and both the lower authorities have erred in treating it as income from other sources and taxing the assessee u/s.115BBE of the Act. Our view is further supported by the recent decision of Coordinate Bench in the case of Kolhapur Timber And Furniture Mart Vs. ACIT vide ITA ITA No.2698/PUN/2024 Late Harilal Mavjibhai Patel 6 No.2697/Pun/2024 order dated 27.03.2025 where also similar issue has been raised and this Tribunal after referring to various decisions and decided the issue in favour of the assessee holding that the source of excess stock is business income observing as follows : “8. We have heard rival contentions and perused the record placed before us. The only issue for our consideration is whether the value of excess stock found at the premises of the assessee during the course of survey u/s 133A of the Act on 12.02.2019 is to be treated as ‘business income’ or ‘income from other sources’. We note that the assessee is a partnership firm and its only source of income is from machinery packing small furniture items, small cupboard etc. and other packing material. The alleged excess stock was calculated by the Department on the basis of Tentative Trading Account prepared on the date of survey. During the course of survey, the assessee was asked to explain the difference found in the stock of Rs.50,05,145/-. It was specifically stated in reply to question no.20 that the stock at the business showroom and godown premises are not separately and clearly identifiable but it is mixed part of lots of stock which includes regular stock also. It was further stated that the resultant difference in stock is part of business income and will be offered to tax as regular business income. 9. We further notice that the nature of business of the assessee is such that full sheet of timber, rubber ply or other material is taken as cost for deciding/quoting sale price, but actually pieces and parts remains which are used and because of this reason gross profit is estimated and specific detail of each and every small items could not be prepared. We further notice that no incriminating document/evidence was found during the course of survey which could prove that there were some out of record transactions carried out by the assessee or proof of any other undisclosed income. Also no other document was found towards unrecorded sales/unrecorded purchases. Considering the facts and circumstances of the case, in our considered view, source of alleged excess stock is business income and the assessee had given necessary explanation to explain the excess stock. 10. We are thus of the considered view that the excess stock found during the course of survey is from regular business income of assessee firm having no other source of income and has been rightly disclosed at business income in the audited financial statements as well as computation of income as business income and both the learned lower authorities erred in treating it as income from other sources and further erred in invoking section 68 r.w.s. 115BBE of the Act. Under similar set of facts and circumstances, this Tribunal in plethora of decisions have consistently held that if the unexplained income is from business sources then section 115BBE cannot be invoked. We would like to reproduce below to finding of Co-ordinate Bench of Indore Tribunal in the case of M/s. Suresh Aluminium vs. ACIT vide ITA No.62/Ind/2024 dated 09.08.2024 and the same reads as under :- “6. I have heard rival contentions and perused the record placed before me and have carefully gone through the decisions referred and relied by both the sides. The only issue for my consideration is that whether Ld. CIT(A) erred in ITA No.2698/PUN/2024 Late Harilal Mavjibhai Patel 7 confirming the action of the Ld. A.O applying the provisions of Section 115BBE of the Act for taxing the surrendered income in the form of excess stock at Rs.52,25,297/- found during the course of survey u/s 133A of the Act. I observe that the assessee has accepted the excess stock and have offered it to tax and paid due taxes as per the normal provisions of Income Tax Act. Ld. A.O invoked provisions of Section 115BBE of the Act treating the surrendered income as unexplained investment and thus calculated the tax on higher rate as provided u/s 115BBE of the Act. 6.1 The question before me is whether the surrendered income is to be treated as ‘business income or as Income from other source u/s 69 of the Act’. For this the nature of surrendered income needs to be examined. Undisputedly except the physical stock taken and calculation of excess stock, no other incriminating material was found during the course of survey nor any other reference to any evidence has been made in the assessment order which could indicate that the assessee carries out any other activity or has income from any other source. Now coming to the surrender of excess stock, I note that on the day of survey physical stock was taken and as per the inventory of stock sheet placed at page 37 of paper book 6 items are mentioned and after taking the quantity and applying the rate, value of physical stock calculated at Rs.79,84,723/-. Now for calculating the excess stock, survey team has to take note of the value of stock shown in the books of accounts. Now the assessee admittedly is not maintaining the stock records. This fact is proved firstly, at the time of survey no stock record was found and secondly even in the tax audit report, auditor has not mentioned about any stock records being maintained by the assessee nor any quantitative details is appearing in Form 3CD annexed to Form 3CB. The assessee admits to be calculated the closing stock on an estimated basis applied the method cost or market value, whichever is less and taking gross profit rate into consideration. In other words the closing stock is estimated by the assessee. Now on the date of survey when the survey team noticed that assessee is not maintaining any stock records then they based on the records of opening and closing stock as well as gross turnover calculated the stock in hand as per books as on 27.02.2019 at Rs.27,59,426/- and same is referred in Question-18 in the statement recorded during the survey proceedings (copy placed at page-35 of the paper book). I find that there is no calculation by the survey team as to how they arrived at the book stock of Rs.27,59,426/-. It itself proves that survey team has estimated the stock in hand and then calculated the excess stock after reducing the value of physical stock calculated by them. Now the Ld. A.O has invoked the provisions of Section 69 of the Act which provides that “where in the financial year immediately preceding the assessment year, the assessee has made investment which are not recorded in the books of accounts, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of investment or explanation offered by him, is not in the information of the A.O, satisfactory the value of the investments may be deemed to be the income of the assessee of such financial year’. So far as the contentions of the Ld. Counsel for the assessee, it has been claimed through out the proceedings and further supported by the affidavit placed before Ld. CIT(A) that there is no unexplained investment but it is purely business income which accumulated from past period and now offered to tax. Now provisions of Section 69 of the Act comes into play when there are certain investment which are not recorded in the books of accounts but in the case of the assessee since the stock records ITA No.2698/PUN/2024 Late Harilal Mavjibhai Patel 8 are not maintained and they are merely estimated there is no concrete evidence of any unaccounted investment in stock. Had there been the stock records available at the time of survey and the quantitative details of the same was available in the stock records and then during the course of survey if the excess stock in quantitative form had been found then the case of the revenue could have been more stronger. 6.2 But in the instant case I observe that the assessee estimated the stock at the year end and even the revenue authority have estimated the stock in hand on survey date at Rs.27,59,426/-. But the method applied by survey team for calculating such stock and whether it was actually the stock as per books is nowhere discernable from the records. Further it is also noted that no other incriminating material was found during the survey proceedings. So in all it is purely an exercise based on estimation and there is no concrete evidence put- forth by the revenue authorities which could support their action of treating the alleged surrender as Income from other sources and not business Income for invoking Section 115BBE of the Act. 6.3 Under these given facts and circumstances I find that the alleged sum surrendered by the assessee was only to buy peace of mind and it was admittedly business income which has been offered to tax and by no canon can be treated as unexplained investment u/s 69 of the Act. Ld. CIT(A) thus erred in confirming the addition of Ld. A.O of taxing the excess income as per the provisions of Section 115BBE of the Act. Though plethora of decisions have been referred by Ld. Counsel for the assessee which supports the view taken by me, however I would like to first refer and rely to the finding of this Tribunal in the case of Italian Edibles Pvt. Ltd (supra) wherein the Tribunal referring to plethora of decisions held as under: “11. Therefore, once the facts emerging from record shows that the excess stock found during survey was a part of entire lot of stock of assessee, part of which is recorded in books of account and part of the same was not found recorded and therefore, treated as excess stock at the time of survey and consequently surrendered by the assessee and also offered to tax in the return of income then the excess stock cannot be treated as deemed income u/s 69 or 69B of the act in view of the judgment of Hon'ble Rajasthan High Court and Coordinate Bench of this Tribunal cited above. Accordingly, this issue is decided in favour of the assessee and against the revenue. The orders of the authorities below qua this issue is set aside. The assessee succeeds to this extent. Accordingly in the facts and circumstances of the case and by following the decision of this tribunal in M/s Brij Mohandas Devi Prasad (supra), we do not find any error or illegality in the impugned order of the CIT(A) same is upheld.” 6.4 Further reliance is placed on the following finding given in the decision of this Tribunal in the case of DCIT V/s Krishna Kumar Verma (supra) as under: “7. After considering the above factual matrix of the case now we proceed to consider the proposition relied by learned representative of both the sides. The Ld. Senior DR has relied on the judgment of Punjab & Haryana High Court in the case of Kim Pharma (P.) Ltd. vs. ITA No.2698/PUN/2024 Late Harilal Mavjibhai Patel 9 CIT(supra) to submit that where the amount surrendered during survey was not reflected in the books of accounts and no source from where it was derived was declared by the assessee, then it is assessable as deemed income of assessee u/s. 69A of the Act and not as business income. In this case the Assessing Officer made addition of surrendered amount u/s. 69 of the Act as the assessee could not explain the source from where it was derived by the assessee. In the present case undisputedly the Assessing Officer has not made any addition u/s. 69 or any provision of the Act and has accepted return income of the assessee. In the present case we are in agreement with the contention of the learned AR that the orders of the authorities below clearly reveal that the amount of excess stock & excess cash found during the course of survey business income of the assessee as the assessee is in the business of trading in jewellery, metal of bullion and the excess stock found during the search & survey was accumulated from transaction of metal of bullion carried out in the forward community trading and mediation and the same was surrendered as excess stock and offered to taxation as business of the assessee. The Ld. CIT(DR) could not dislodge the contention and observations of the Ld. CIT(A) that the surrendered amount was pertaining to excess stock & excess cash which was business income of the assessee and such additional income offered by the assessee for taxation was nothing but business income of the assessee. Therefore it was offered for taxation under the head income from business and profession. In the present case since the assessee in his statement recorded during the course of search & survey explained that the source of excess stock was the income earned during the relevant financial period from the trading of bullion, jewellery etc. and income from Adat/dalali and regarding excess cash found in his business premises the assessee also explained that though it was not recorded in the books of accounts but it was accrued to him on account of sale of jewellery in cash and the same pertains to his business activity of trading in business of jewellery. Therefore in the present case the assessee has successfully explained the source of excess stock and excess cash found during the course of search & survey operation and surrendered during the said operation. The Ld. CIT(DR) has not disputed or controverted very factual position that the assessee filed return of income including the surrendered amount and which was acceptedby the Assessing Officer without any dispute and without making any further addition in the hands of assessee u/s. 69A or any other section of the Act. In view of above as the assessee has successfully explained and established the source of excess stock and excess cash as his business activity and of trading in jewellery and gems and activity of Adat/dalali thus the benefit of proposition rendered by Hon'ble Punjab & Haryana High Court in the case Kim Pharma (P.) Ltd. vs. Commissioner of Income Tax (supra) is not available for the department in the present case. 8. In view of forgoing discussion we reach to a logical conclusion that the Assessing Officer without making any addition u/s. 69A or any other provision of the Act has accepted returned income of the assessee wherein the assessee has included surrendered amount on account of excess stock and excess cash as business income and has successfully explained the source from where the said surrendered excess stock and excess cash was earned, which was business activity of assessee of ITA No.2698/PUN/2024 Late Harilal Mavjibhai Patel 10 trading in jewellery & gems and Adat/dalali in the same field. The coordinate bench of the Tribunal in the various orders including order in the case of Shri Lovish Singhal v/s. ITO (supra) by following the judgment of Hon'ble Rajasthan High Court in the case of Bajrang Traders (supra) observed that the excess stock found during the course of survey and surrendered made thereof was found to be taxable as business income under the head \"Income from business & profession\". Identical facts and circumstances as noted above have been found to be existing in the present case then the Ld. CIT(A) was correct and justified in dismissing the contention of the AO and holding that the AO was not right in observing that the assessee is liable to be taxed as per provision of section 115BBE. Therefore, we too have no hesitation in concluding that the facts of present case do nothing the impugned income in the clutches of section 69/69A/69B and therefore do not warrant application of section 115BBE at all. We conclude so and dismiss the ground raised by revenue being devoid of merit.” 6.5 Reliance is further placed on the decision of this Tribunal in the case of ACIT V/s Anoop Neema (supra) wherein this Tribunal observed as under: “8. We on perusal of the above finding and the various judgments and decisions referred hereinabove by Ld. CIT(A) find that the alleged excess stock was not kept separately at any other place and was part of the total business tock found at the assessee's business premises are sufficient enough to indicate that the alleged investment in excess stock is part of the business income we also find that alleged excess stock was duly accepted by assessee as part of unaccounted business and source thereof stated during the course of search itself and no other incriminating material was found during search proceedings and therefore is not an undisclosed income as held by the L.d. AO. We, therefore, find no infirmity in the finding of Ld. CIT(A) rightly holding that the provision of Section 115BBE of the Act are not applicable on the surrendered income on account of excess stock valuing at Rs. 1,41,75,568/-found during the course of search. Thus, grounds no. 1 to 3 raised by the revenue are dismissed”. 6.6 On examining the facts of the instant case and in the light of the above decisions I find that the ratio laid down in these decision is applicable on the facts placed before me and therefore respectfully following the same and also considering the fact that the alleged excess stock was found at the business premises and related to the same business which is carried out by the assessee and more importantly there is no case of difference in quantity of excess stock being found at the business premises and lastly the excess stock has been calculated by the survey team on estimated basis only, I reverse the finding of Ld. CIT(A) and Ld. A.O is directed to calculate the tax on the surrendered stock under normal provisions of I.T. Act and not to apply the provisions of Section 115BBE of the Act. In the result Ground No.1 & 2 raised by the assessee are allowed. Ground No.3 being general in nature which needs no adjudication. 7. In the result appeal of the assessee is allowed.” ITA No.2698/PUN/2024 Late Harilal Mavjibhai Patel 11 11. Similar view also taken by Co-ordinate Bench of Pune in the case of Vijay Shriram Gundale vs. ACIT vide ITA No.79/PUN/2023 and others dated 03.08.2023 and the same reads as under :- “7. Heard both the parties and perused the material available on record. There is no dispute regarding offering of additional income on account of excess stock for an amount of Rs.37,00,000/- during the course of survey. We note that as rightly pointed by the ld. AR which is not disputed by the ld. DR crediting the said additional income to profit and loss account and by including in the computation of income in the total income of the assessee which clearly demonstrate the assessee offered the same as business income. The ld. AR vehemently submitted the assessee explained the difference in valuation stock as per the books explained by the assessee through answers to Q. Nos. 10 and 11 of the statement u/s. 131 of the Act and also in response to notice invoking the provisions u/s. 115BBE of the Act during the course of assessment proceedings. We note that the Q. No. 10 is reproduced by the CIT(A) at page No. 10 of the impugned order and on perusal of the same, we note that the assessee explained the difference of Rs.37,00,000/- as stock purchased on high demand during the marriage seasons and bills will be received late. Therefore, it can be fairly concluded that the excess stock as found during the course of survey is nothing but business income flowing from assessee’s regular business. 8. The Hon’ble High Court of Rajasthan in the case of Bajargan Traders reported in (2017) 86 taxmann.com 295 (Rajasthan) was pleased to observe that the amount surrendered under unrecorded stock has to be brought to tax under the head “business income” as the excess stock which has been found during the course of survey is the investment in procurement of such stock is clearly identifiable and related to the regular business stock of the assessee. The Hon’ble High Court clearly held the investment in excess stock has to be brought to tax under the head “business income” but not under the head “income from other sources”. The Mumbai Benches of the Tribunal in the case of Govind Godomal Lulla (supra) held undisclosed investment in the case of excess stock found during carrying on business and the same is generated out of business income, no provisions of section 69B of the Act would attract. Further, the Jodhpur Benches of the Tribunal in the case of Shri Lovish Singhal (supra) held the excess stock/cash found during the course of survey is taxable under the business and no provision u/s. 115BBE of the Act is attracted. In the present case as discussed above without any dispute the assessee offered additional income under excess stock during the course of survey and same was entered in the books of account as on the last day of financial year ending on 31-03-2019 and offered the said amounts to tax under the business income. Therefore, in our opinion, the ratio laid down by the Hon’ble High Court of Rajasthan in the case of Bajargan Traders (supra) which was followed by the Jodhpur Benches of Tribunal is similar and identical to the issue in the present case. Therefore, the CIT(A) is not justified in confirming the order of AO in excluding the alleged additional income offered during the course of survey and attracting the provisions u/s. 69B of the Act, consequently, the charging u/s. 115BBE of the Act. Thus, the order of CIT(A) is set aside and the grounds raised by the assessee are allowed. ITA No.2698/PUN/2024 Late Harilal Mavjibhai Patel 12 9. The ld. AR submits that the assessee is not interested to prosecute additional grounds. Hence, the same are dismissed as not pressed. 10. In the result, the appeal of assessee is allowed.” 12. Respectfully following the decisions of Co-ordinate Benches and taking the consistent view, we are inclined to hold in favour of the assessee. Accordingly, finding of Ld. CIT(A)/NFAC is set-aside and the excess stock offered by the assessee in its books of accounts is held to be from business income and therefore Ld. Assessing Officer erred in invoking section 68 r.w.s. 115BBE of the Act. Effective grounds of appeal raised by the assessee are allowed.” 8. From going through the above finding of this Tribunal and examining the facts of the instant case in light thereof, we find that the same is squarely applicable on the instant case since the source of excess stock found during the course of survey is from business income and has been rightly offered by the assessee as business income and paid due taxes. Therefore, in our considered view, the excess stock found during the course of survey at assessee’s business premises is Business Income and ld.CIT(A) grossly erred in holding the excess stock of Rs.40,05,210/- as Income from other sources. Thus finding of ld.CIT(A) is reversed and grounds of appeal raised by the assessee are allowed. 9. In the result, the appeal of the assessee is allowed. Order pronounced on this 25th day of April, 2025. Sd/- Sd/- (ASTHA CHANDRA) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; \u0001दनांक / Dated : 25th April, 2025. Satish ITA No.2698/PUN/2024 Late Harilal Mavjibhai Patel 13 आदेश क\u0002 \u0003ितिलिप अ ेिषत / Copy of the Order forwarded to : 1. अपीलाथ / The Appellant. 2. \u000eयथ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, “SMC” ब\u0014च, पुणे / DR, ITAT, “SMC” Bench, Pune. 5. गाड\u0004 फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. "