TaxTMI 
TaxTMI 
2015 (4) TMI 185
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....ne of Rs. 1,69,17,000 as on March 31, 2009 and has failed to consider the fact that no stock state ment was furnished to the bank as on March 31, 2009 by the assessee and the bank record itself states that stock given to bank was only for March 30, 2009. 3. That the worthy Commissioner of Income-tax (Appeals), Bathinda has erred in taking into consideration the closing stock of the assessee at Rs. 1,69,17,000 as on March 30, 2009 as per the annual stock register of the bank without there being any stock statement of the assessee with the bank. 4. Notwithstanding the above said ground of appeal, the worthy Commissioner of Income-tax (Appeals) has erred in not considering the valid explanation of the assessee based on the basis of entries in the books of account and the major part of the stock which was lying as work in progress was booked as sales as on March 31, 2009 to the tune of Rs. 1,66,13,401 and by taking into consideration the work done to the tune of Rs. 14,46,401 as on March 31, 2009, the stock as on March 31, 2009 was exactly the same....
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....been reproduced in the assessment order. Further, the authorised representative for the assessee submitted written submissions during the course of assessment proceedings in which he stated that the closing stock/work in progress as per audit report for the year ending March 31, 2009 and in the stock statement submitted to the bank on March 31, 2009 are same. However, the Assessing Officer did not accept the explanation of the assessee and made an addition of Rs. 1,51,67,000 on account of undisclosed investment under section 69 against which the assessee is in appeal. 3. During the course of appellate proceedings, learned counsel appearing on behalf of the assessee submitted the written submissions, which for the sake of convenience are reproduced as under : "It is hereby submitted that the Assessing Officer has erred in law and on facts by not considering the stock statement as on March 31, 2009 available both with bank and the Assessing Officer. The Assessing Officer also ignored the fact that balance-sheet as on March 31, 2009 submitted to bank was same as submitted to Income-t....
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....nbsp; (iv) The authorised representative for the assessee further filed a reconciliation statement in which it has been stated that the amount of Rs. 1,69,17,000 was in fact work in progress on March 30, 2009 and out of the same Rs. 1,66,13,401 was booked as sales on March 31, 2009 and a sum of Rs. 14,46,401 was the amount of work done on March 31, 2009 and he has worked out the closing stock as per balance-sheet at Rs. 17,50,000." 4. The learned Commissioner of Income-tax (Appeals) confirmed the action of the Assessing Officer and the findings of the learned Commissioner of Income-tax (Appeals) are pertinent, which are reproduced for the sake of convenience as under : "(i) It is an undisputed fact that appellant raised loan from PNB, Bathinda and the bank authorities communicated to the Department vide their letter dated August 2, 2011 that the stock as per stock state ment dated March 30/ 31, 2009 furnished by the assessee to the bank was amounting to Rs. 1,68,17,000. The Assessing Officer has repro duced the copies of the stock register on page 2 of the assessment o....
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....tement filed by him on March 31, 2009 tallies with the stock as reflected in the balance-sheet as on March 31, 2009. As regards the contention of the authorised representative that the balance-sheet reflecting stock of Rs. 17,50,000 on March 31, 2009 was also available with the bank, the same is also factually wrong because the stock statement was filed on March 30/ 31, 2009 but the balance- sheet was filed later on and the bank officers physically verified the stock as on March 30/ 31, 2009. (v) The authorised representative for the assessee filed a reconciliation statement in which it has been stated that the closing stock/work in progress as per balance sheet amounting to Rs. 17,50,000 is correct because out of the work-in-progress of Rs. 1,69,17,000 on March 30, 2009, Rs. 1,66,13,401 was booked as sales on March 31, 2009 and the work done on March 31, 2009 was Rs. 14,46,401. I am not going into the merits of the reconciliation chart because this chart was not furnished before the Assessing Officer during the course of assessment proceedings and the authorised representative for the assessee has no....
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....DTR (Mumbai) (Trib) 192 held that the assessee though in possession of the document, having not produce the same before the Assessing Officer while relying to relevant query made by the Assessing Officer, is not entitled to produce the same in appeal before the Commissioner of Income-tax (Appeals) either under sub-rule (1) or sub-rule (4) of rule 46A. Now coming to the addition made by the Assessing Officer on account of difference in closing stock amounting to Rs. 1,51,67,000 the findings are as under : In view of the findings of the Assessing Officer in the assessment order based on stock statement/stock register maintained by the bank and the statement of the bank officer regarding physical verification of stock, the Assessing Officer has discharged the onus of proving that the stock as shown by the assessee to the bank was more than what he was showing to the Department by Rs. 1,51,67,000. The appellant has failed to rebut the finding of the Assessing Officer that it possessed larger quantity of stocks than the stock declared in the books of account, either during the course of assessment proceedings or during the course of appellate proceedings. The appellant has also....
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....ormation as required. During the course of assessment proceedings, books of account, bills and vouchers were produced which were test checked the case was discussed with him." (ii) Such books of account had neither been rejected under section 145(3) and nor any defects had been pointed out after detailed scrutiny of books of account/bills/vouchers and other details submitted by the assessee from time to time. (iii) The Assessing Officer has very smartly mentioned the stock of Rs. 169.17 lakhs as on March 30/31, 2009 which is factually incorrect, misleading and which have been admitted by the Assessing Officer in the remand report that there was no stock statement as on March 31, 2009. (iv) Copy of letter of chief manager in which it has been stated categorically that inventory for the period ending March 31, 2009 presently is not traceable. (v) Then, there is a statement of chief manager which was recorded at the back of the assessee by the Assessing Officer on November 22, 2011 in which, he has again relied upon the "drawing power register". He has categorically stated the date as on 30th of March, 2009 only for calculating and for allowing withdrawals and copy of that....
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....to avail the limit and no addition could be made on that basis on the case of hypothecation of stocks. Reliance has been placed on the following decisions : (i) CIT v. Santosh Box Factory P. Ltd. [2011] 44 IT Rep. 437 (P&H) ; (ii) ITO v. Devi Dayal Rice Mills [2002] 75 TTJ (Asr) 24; (iii) Sh. Gurbhej Singh Prop. M/s. Rana Cement Store I.T.A. No. 513(Asr)/2011 for the assessment year 2007-08 ; (iv) CIT v. Veerdip Rollers P. Ltd. [2010] 323 ITR 341 (Guj) ; (v) CIT v. Swamy (N.) [2000] 241 ITR 363 (Mad) ; (vi) CIT v. Khan & Sirohi Steel Rolling Mills [2006] 200 CTR (All) 595; (vii) Ashok Kumar v. ITO (2006) 201 CTR (J&K) 178; (viii) CIT v. Das Industries [2008] 303 ITR 199 (All) ; (ix) CIT v. Sri Padmavathi Cotton Mills [1999] 236 ITR 340 (Mad) ; (x) Abdul Rashid Dar v. Department of Income-tax I.T.A. No. 513/ 2011 (Asr) ; (xi) ITO v. Bharti Sales Corpn. I.T.A. No. 2228/Chd/92 (Chd. Bench) ; and (xii) CIT v. Sheena Exports (P&H) I.T.A. No. 382/2011. 5.2. Learned counsel further stated that the Assessing Officer's reliance on the judgment of Devgon Rice and General Mills v. CIT as reported in [2003] 263 ITR 391 (P&H) is totally misleading in t....
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.... particularly the fact that there was no stock statement as on March 31, 2009 and which is undisputed fact. (vi) The Commissioner of Income-tax (Appeals) has mentioned in paragraph (iii) at page 5 has accepted that no stock statement as on March 30/31, 2009 has been provided to the bank and has relied upon only on the drawing power register maintained by the bank. Thus, when there is no stock statement as on March 31, 2009 or March 30, 2009, there cannot be any reliance by the Assessing Officer and the Commissioner of Income-tax (Appeals) on the statement of the chief manager about alleged physical verification and why that statement had not been confronted to the assessee. (vii) That the Commissioner of Income-tax (Appeals) in paragraph (iv) page 5 has again tried to confuse the fact by mentioning two dates of March 30/31, 2009 and he has stated that there is no mention of stock statement of Rs. 17,50,000 as on March 31, 2009 to the bank meaning thereby that no stock statement was furnished to the bank and neither it is available with the bank as per their letter, dated October 20, 2011 at page 45 of the paper book and then how is the onus upon the assessee to disprove a fac....
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....ven the Commissioner of Income-tax (Appeals) has dealt with the reply in his order and has not stated that the papers were placed otherwise. Thus, the Commissioner of Income-tax (Appeals) had asked for the explanation and the same was submitted otherwise, there was no need to deal with the same by applying rule 46A. (xi) These facts had been mentioned by the Commissioner of Income- tax at SI. No. (iv) page 4 of the order and this finding has been given in paragraph (v) page 6 of the order. It is stated that firstly, the order sheet entries and letter at page 26, clearly demonstrate that hearing was made on March 22, 2013 and, therefore, the finding of the Commissioner of Income- tax that no directions were given and then on the contrary, the application of rule 46A and then stating that no request was made is contradictory in view of the following submissions : (a) The Assessing Officer has mentioned that the books of account had been produced on number of dates along with bills, vouchers, etc., and they have been test checked and the copy of gross receipt account at pages 30 to 37 and the bank account at pages 38 to 41 is part and parcel of that same set of books of account ....
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....ed stock statement on 31st of March, 2009 and which they have themselves stated that no stock list furnished to the bank as on 31st of March, 2009, thus, no addition is called for. Thus, on all these issues, the addition is not justified : (a) No defects in books and support is delivered from the judgments as placed at pages 10, 15, 26, 34, 44 of the judgment set including of the hon'ble Amritsar Bench. (b) There was no stock statement available with the bank as on March 31, 2009. (c) Various cases have been held that where limit was against hypothecation of stock and not against pledging of stock and it is a general practice to give inflated statement of stock to avail higher limit. (e) The statement of chief manager never confronted to the assessee. (f) By relying on the judgments of the jurisdictional Bench and the High Court, no addition is called. 6. The learned Departmental representative, Mr. Tarsem Lal, on the other hand, argued and submitted at the very outset that the assessee has filed a paper book containing as many as 48 pages which carries the certificate that the documents were filed before the lower authorities and no new evidence has been e....
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....o be filed before the learned Commissioner of Income-tax (Appeals) which the learned Commissioner of Income-tax (Appeals) did not admit, has no relevant at all unless the assessee proved before the Assessing Officer that he had furnished a statement of stock to the bank on March 31, 2009 showing stock in hand as on that date at Rs. 17,50,000 as claimed in his aforementioned reply dated November 21, 2011. Thus, the whole of the argument of the assessee is completely off the tangent and does not deserve to be taken any cognizance of. It is further submitted that the learned Commissioner of Income-tax (Appeals) has given irrefutable reasons for rejecting the appeal of the assessee which are appearing at pages 4, 5, 6, 7 and 8. The assessee has not been able to controvert any of the findings of the learned Commissioner of Income-tax (Appeals) and no ground of appeal has been taken on the findings of the learned Commissioner of Income-tax (Appeals). All the grounds of appeal pertain to the socalled additional evidence sought to be filed by the assessee before the learned Commissioner of Income-tax (Appeals) of which the learned Commissioner of Income-tax (Appeals) took no cognizance for....
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....purpose of raising the loan. The assessee has submitted his stock statement as on March 30, 2009 at Rs. 1,69,17,000 whereas as on March 31, 2009 it was Rs. 17,50,000 and the difference of Rs. 1,66,13,401 was booked as sales on March 31, 2009. The assessee submitted the stock statement as on March 31, 2009 showing stock at Rs. 17,50,000. The assessee also submitted an additional evidence and the explanation under rule 46A before the learned Commissioner of Income-tax (Appeals) which was rejected since the same was not furnished before the Assessing Officer. The arguments of both the parties were considered and the facts have been perused and we are of the view that the whole dispute in the statement submitted as on March 30, 2009 having a stock at Rs. 1,69,17,000 whether it is also available as on March 31, 2009 or not. The reconciliation statement has not been accepted by the learned Commissioner of Income-tax (Appeals) for the reason since the same was not produced before the Assessing Officer. At the outset, this is not the cogent reason as mentioned by the learned Commissioner of Income-tax (Appeals) that something has been not produced before the Assessing Officer that cannot b....