Bank stock statement alone cannot sustain turnover addition when the books-versus-bank discrepancy is satisfactorily explained.

A higher stock statement furnished to a bank for credit facilities does not, by itself, justify an addition where the difference from the books of account is otherwise satisfactorily explained. Applying that settled principle, the Orissa High Court noted that enhancement of turnover based only on the stock position shown to the bank, after rejection of the accounts, lacked legal support. The addition could therefore not be sustained on that material alone, and the issue was answered in favour of the petitioner and against the Department.

---

---

Issues: Whether the enhancement of turnover by Rs. 9,20,000 on the basis of stock position shown to the bank, after rejection of accounts, was sustainable in law.

Analysis: The issue was treated as covered by the settled legal position that a higher stock statement furnished to a bank for credit facilities, by itself, does not justify an addition where the difference between the books of account and the bank statement is otherwise satisfactorily explained. On that basis, the enhancement made only on account of the stock declaration before the bank could not be sustained.

Conclusion: The issue was answered in favour of the petitioner and against the Department.

---