Bank stock statements upheld where assessee failed to disprove signatures after remand, so additions sustained.

Additions based on bank stock statements were upheld where the assessee, after remand and express opportunity to disprove ownership or signature and to cross examine bank officials, failed to produce contrary evidence; concurrent factual findings that stock statements prepared by the bank's godown keeper informed drawing power and reflected overdraft usage made the records reliable. The weeded out nature of older physical files did not vitiate the bank's procedural evidence or preclude upholding the additions. Appeal dismissed and assessments based on those statements sustained.

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Issues: (i) Whether the addition based on bank stock statements made in non-compliance with this Court's order dated 06.08.2004 is legally sustainable? (ii) Whether the impugned orders are liable to be set aside because the relevant bank record had been weeded out and the question of whether the stock statement was signed by any partner remained unanswered?

Issue (i): Whether the addition made on the basis of bank stock statements is legally sustainable despite this Court's earlier directions.

Analysis: The remand directed opportunity to the assessee to prove that the stock statements were not signed by the firm and to cross-examine bank officials was complied with by examining the bank's officer who stated the bank's procedure and that stock statements formed the basis for drawing-power and were prepared by the bank's godown keeper and confirmed by the firm by signature. The assessee did not dispute having availed overdraft facilities consistent with the stock statements nor produce contrary evidence after being granted opportunity to disprove the statements. The authorities recorded concurrent findings on these facts.

Conclusion: The addition based on the bank stock statements is sustained; the addition is legally sustainable against the assessee.

Issue (ii): Whether the orders must be set aside because the bank record was weeded out and it remained unanswered whether any partner signed the stock statement.

Analysis: The bank witness explained that older records had been weeded out but described the bank's procedure showing that stock statements were maintained, prepared by the godown keeper, and used for determining drawing-power; the assessee was afforded opportunity to disprove ownership or signature of the statements but failed to produce contrary evidence. Given the direct link between the stock statements and overdraft facilities and the concurrent factual findings, the absence of original records did not preclude upholding the addition.

Conclusion: The impugned orders are not required to be set aside on the ground of weeded-out records or alleged non-signature; the challenge on this ground fails.

Final Conclusion: The appeal is dismissed and the questions framed are answered against the assessee, leaving intact the assessments founded on the bank stock statements after remand and opportunity to the assessee.

Ratio Decidendi: Where an assessee avails overdraft facilities based on bank stock statements and, after being granted opportunity on remand to disprove ownership or signature and to cross-examine bank officials, fails to produce contrary evidence, concurrent factual findings upholding the reliability of the bank records and additions based thereon are sustainable.

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