TaxTMI 
TaxTMI 
2010 (10) TMI 26
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....handi/1999 for the assessment year 1995-96 proposing to raise the following substantial questions of law : "(a) Whether the variation between the stocks hypothecated with the bank and the stock shown in the books of account empowers the Assessing Officer to invoke the provisions of section 69 of the Income-tax Act, 1961 and make additions of difference in stock as appeared in the books of account towards unexplained investment in the stocks ? (b) Whether the assessing authority was right in equating the hypothecation of stock with that of pledging of stock when the two situations are not identical and have separate meaning and thus erred in invoking the provisions of section 69 of the Income-tax Act, 1961 ? (c) Whether the order pa....
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.... of stocks as on December 31, 1994. The bank stated that the records of the visits to the units of the assessee-company on other dates/occasions during the year 1994-95, were not available with them. In the proforma report as on December 31, 1994, it was confirmed by the Regional Officer of the bank that the assessee was having stock with it as per the statement given to the bank. The position of non-availability of records of the bank's visits to the units of the assessee-company on dates other than December 31, 1994, was reflected in the Assessing Officer's report submitted to the learned Commissioner of Income-tax (Appeals). The learned Commissioner of Income-tax (Appeals) took this fact into consideration in arriving at the conclusion t....
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....ew of these glaring facts, an adverse inference does call for to be drawn against the assessee and the assessment order cannot be given a summary go-by in this regard. 14. The other reason recorded by the learned Commissioner of Income-tax (Appeals) for arriving at the conclusion that he did is that the Assessing Officer could not justify the rejection of the arguments of the assessee that had the stock statement been confronted to the director Shri Bhupinder Singh, he would have admitted a huge inflation in the value of consumable stores as shown to the bank. The statement of Shri Bhupinder Singh, director of the assessee-company who looked after the dealings of the assessee with the banks, was recorded under section 131 of the Act, on ....
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....tness and Shri Bhupinder Singh, as the assessee tries to make out, '. . . would have admitted a huge inflation in the value of consumable stores as shown to the bank . . .' it would have served no purpose. Obviously, therefore, there was no reason for the Assessing Officer to reject the argument raised by the assessee. The learned Commissioner of Income-tax (Appeals) has observed that the Assessing Officer could not bring on record anything to defend his case. To our mind, in view of the above discussion, there was nothing to be brought on record by the Assessing Officer. The facts are self-speaking. 16. Still further, though the learned Commissioner of Income-tax (Appeals) has observed that there being numerous decisions and the law bei....
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....nt, was not sufficient to make addition. Reliance has been placed on the judgment of the Madras High Court in CIT v. N. Swamy [2000] 241 ITR 363 and the judgment of this court in CIT v. Chauhan Papers Pvt. Ltd. I. T. A. No. 358 of 2006, dated October 12, 2006. 5. We are unable to accept the submissions. 6. Whether difference between the statement of value of stock furnished to the bank and entries in the books of account, justifies addition, is a question of fact in each individual case. The object of assessment is to tax the real income of the assessee. The Assessing Officer has to determine the same on the basis of books of account and other material available. The burden of showing taxable income is on the Revenue. The said burden ....
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....as held in Parimisetti Seetharamamma v. CIT [1965] 57 ITR 532 (SC), referred to in the above judgment. For discharging the said burden, it is not necessary that some positive evidence must be led by the Revenue. In a given case, even by drawing inference from the material available, if explanation of the assessee is found to be unreliable, the claim of the assessee can be rejected. In such situation, the burden on the Revenue can be held to have been discharged. In the present case, the assessee had given stock statement to the bank which was at variance with entries in books of account. No doubt, it was a statement to a third party, but neither the said statement was denied by the assessee nor any valid explanation furnished about the disc....