Tarlochan Singh v. DCIT · ITAT Chandigarh on §69: survey-surrendered excess stock is business income, not unexplained investment

Is excess stock found in survey taxable under §69 or as business income?

Business income. Where the excess stock connects to the regularly recorded trading stock, §69's presumptive provisions do not apply.

Facts in brief

• During survey proceedings the assessee voluntarily surrendered an amount for excess stock found.
• The physically found stock was evidently connected to the inventory regularly transacted and recorded in the books.
• The AO nonetheless categorised the difference as income under §69.

Issue before the bench

Whether surrendered stock differences belong under §69 (and its penal rate) or under business income.

Held

The surrendered income could not be taxed under the presumptive provisions of §69; it is assessable as business income.

Practitioner takeaway