TaxTMI 
TaxTMI 
2013 (10) TMI 291
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....turing MS Seamless pipes. For the A.Y 200910, the return of income was filed showing income of Rs. 72,41,714/=. Case of the assessee was selected for scrutiny and a notice under section 143 (2) of the Act was issued. 2.2 The Assessing Officer noted that the respondentassessee had shown secured loan of Rs. 13,78,76,163/=; which included cash credit facility from Canara Bank against hypothecation of stock of Rs. 11,03,22,151/=. It was further noticed that the closing stock, as per the books was shown at Rs. 6,86,41,931/= and a copy of the bank stock statement as on 31st March 2009 which was furnished by it to the Bank for securing the cash credit was much higher. 2.3 On seeking the explanation, it was explained by the assessee that the difference in the stock as per the audited books of account and the stock, as per the statement furnished to the Bank against the cash credit [hypothecated limit] was for the purpose of availing the credit from the Bank. It was contended by the assesseerespondent that the stock as on 31st March 2009; as shown to the Bank, was only on estimating and inflated figures for the purpose of continuing the credit facility was tendered. The stock of 2654.....
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....be entertained in as much as here, it is not only the question of valuation of the stock shown on a higher side to the Bank, but, there is also a question of difference in the quantity of the stock shown in the books of account and the statement furnished to the banking authorities. She further urged that the decisions of this Court she is conscious of and yet in absence of any contention in respect of the quantity, the order of the Tribunal must be held to be perverse, and therefore, a close scrutiny is required of the question proposed before this Court. 4. Having thus heard learned counsel for the Revenue and on careful extensive examination of the material on the record, we are essentially of the opinion that the issue is in the realm of factual matrix and does not propose any substantial question of law. 5. At the outset, it is necessary to refer to the judgment of this Court rendered in case of CIT, CentralII v. M/s. Meico Boards Private Limited [Tax Appeal No. 2041 of 2010 :: Decided on 5th December 2011] where this Court was examining the central question with respect to description of the closing stock ie., the one reflected in the statement submitted to the Bank for....
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....rs. Mauna Bhatt that the Tribunal has erred in making this observation that it was for the A.O to establish that the sale is not genuine and the observation that the A.O has failed to establish any unaccounted purchases outside the books of account to establish that the stock as per the books is incorrect, is contrary to the material on record when admittedly the statement before the bank is different than the books of account. However, this submission referring to this observation has to be considered in light of the entire discussion wherein the Tribunal has, referring to the CIT (A) order in detail has accepted the explanation given by the assessee and in that context has stated that when the books of account or the accounting system has been found to be genuine supported by vouchers, etc., the addition was not justified. 6. It is required to be mentioned that the stocks are hypothecated and not pledged, which was explained by the assessee and therefore in order to avail higher credit facilities the statement was given, but the stock was with the assessee, and therefore, the submissions are misconceived." 7. This Court in case of CIT v. Veerdip Rollers Private Limited [Sup....
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....the factum of difference in the quantity of the stock shown in the books of account and in the documents furnished to the banking authorities for the purpose of availing credit facilities/loan. However, this version is not acceptable in as much as the Tribunal has noted that there was no physical verification of the stock by the banking authorities as on 31st March 2009. Although much reliance was placed by the Assessing Officer and CIT [A] on the godown visit by the Bank Manager after closing of the year ie., on 25th April 2009, however, no physical verification and counting of the stock took place during such visit and even otherwise, the Bank Manager's report indicates that 3000 tonnes of Coil was already included in the stock of the month of March 2009 and because of such inclusion, the stock position of March 2009 has shown the increase in quantity. It also found that the stock register was maintained by the assessee giving complete quantity details; including monthwise details of raw materials, finished goods and semifinished goods. 9.1 Again, the Court cannot be oblivious of the fact that the assessee had been subjected to statutory audit under the Companies Act, 1956 and....