TaxTMI 
TaxTMI 
2007 (5) TMI 622
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.... Tribunal was justified in upholding the order of the CIT(A) who deleted the additions made on account of discrepancy in the value of closing stock as per books of account and the value declared to the bank ?" 2. The question aforesaid was proposed for reference in the background of the facts that in relation to the assessment year 1982-83, the assessee Udaipur Chemicals & Fertilizer (P.) Ltd., a company engaged in manufacture of single superphosphate from processing of raw phosphates with sulphuric acid, filed a return declaring loss of Rs. 7,02,880. While passing the assessment order on 26-3-1985, the learned Assessing Officer observed that many facts were similar to those of the last year like valuation of closing stock as per the asses....
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.... to the bank. 3. In appeal before the Commissioner of Income-tax (Appeals) ['CIT(A)'], the assessee contended that no addition should have been made in relation to the value of assets because the value was shown on higher side to the banking authorities for the purpose of obtaining the loan and there was no discrepancy in the actual stock. The assessee referred to the decision of appellate authorities in its own case for the assessment year 1981-82. After considering the factual position and the order passed in relation to the assessee for the assessment year 1981-82, the learned CIT(A) found that in the absence of any material to the contrary indicating any real discrepancy in the quantity of the stock as reflected in the books of account....
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....essee by way of undervaluation of stock; and that the Assessing Officer was justified in making the additions. 7. Learned counsel for the Department has, in support of the application, referred to the decisions in Coimbatore Spg. & Wvg. Co. Ltd. v. CIT [1974] 95 ITR 375 (Mad.), Dhansiram Agarwalla v. CIT [1993] 201 ITR 192 (Gau.), Century Foams (P.) Ltd. v. CIT [1994] 210 ITR 625 1 (All.), V. Rajan v. CIT [1974] 96 ITR 64 (Mad.) and S. Murugappa Chettiar v. CIT [1988] 174 ITR 2452 (Ker.). 8. Having given a thoughtful consideration to the matter and having examined the record, we are satisfied with the correctness of the decision of the appellate authorities and are clearly of opinion that no question of law arises for consideration in thi....
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....stock as stated to the bank and as stated in books. The learned Assessing Officer has merely proceeded on the discrepancy in the two figures in valuation of the closing stock, debtors and advances as per the books of account at Rs. 20,13,748 and as declared to the bank at Rs. 23,37,248; and has directly proceeded to make addition of the difference amount of Rs. 3,23,500. Mere variation in the valuation of assets as declared to the bank and as stated in the books of account was not conclusive; and the amount of difference itself could not have been taken up for addition without further requisite inquiry about the true stock position and value of the assets. 11. The learned Assessing Officer preferred to rely merely upon the fact that for su....
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.... is pertinent to observe that the difference was not only in the valuation of the stock but also in the items of the stocks hypothecated which on solemn declaration by the assessee was certain as 'checked' and acted upon by the bank after due verification. If there was actual discrepancy in the stocks hypothecated to the bank and that shown in the accounts which the assessee failed to explain by any acceptable explanation or material, no exception can be taken to the addition made by the authorities and it was open to the Tribunal to come to such a conclusion that the assessee had stocks outside the account books. ..." (p. 631) 14. In the case of Coimbatore Spg. & Wvg. Co. Ltd. (supra) again, the quantity of pledged cotton stocks as stated....