TaxTMI 
TaxTMI 
2001 (10) TMI 250
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....ant to the assessment year under consideration, the assessee obtained loan facility from the Punjab National Bank, R.S. Pura, as shown limit of Rs. 2 lacs against the hypothecation of stock. The AO obtained the copy of the stock statement from the bank furnished by the assessee to verify the position of stock and noticed that there was difference in the stock statement as furnished to the bank vis-a-vis declared by the assessee in the books of account. After taking the peak difference in the stock as on 31st Aug., 1989, to the tune of 1,700 qtls., the AO made the addition of Rs. 6,00,000 considering the same as purchases outside the books of account not disclosed to the Department. 3. In the first appeal before the learned CIT(A) it was s....
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....84) 43 CTR (P&H) 214 : (1984) 148 ITR 135 (P&H); 2. Uganda Industries Co. vs. CIT (1985) 48 CTR (Guj) 341 : (1986) 158 ITR 567 (Guj); 3. CIT vs. Rama Krishna Mills Ltd. (1974) 93 ITR 49 (Mad); and 4. CIT vs. Prem Singh & Co. (1986) 51 CTR (Del) 275 : (1987) 163 ITR 434 (Del). After considering the submissions of the assessee, the learned CIT(A) came to the conclusion that he was unable to sustain the addition of Rs. 6 lacs in the trading results because the AO had not given any reason for coming to the conclusion that there was difference in the two stocks and the difference represented the income of the assessee. Even he had not mentioned the relevant section in which the addition had been made. The learned CIT(A) further observed ....
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....dered the stock statement submitted to the bank by the assessee and noticed that there was difference in the stock statement in comparison to the stock actually shown by the assessee in the books of account. It is also noticed that the assessee explained before the AO that the stock statement submitted before the AO was inflated to obtain higher cash credit (C/C) limit. In this regard, an affidavit is also furnished which is placed at p. 1 of the paper book and the contents of that affidavit are reproduced below: "1, Om Parkash S/o Hans Raj, age 45 years, resident of Jammu do hereby solemnly affirm and declare as under: 1. That I have availed C/C limit of Rs. 2 lakhs from Punjab National Bank, R.S. Pura. 2. That security lodged with t....
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.... suppressed the sales or purchases and was having more quantity of the stock than reflected in the books of account. 7. From the facts of the case as discussed above, it appears that the action of the AO was not tenable in the eyes of law and considering that the learned CIT(A) rightly deleted the addition. There is nothing available on the record to show that the assessee was having higher stock than the disclosed stock in the books of account. It is also noticed that the AO did not controvert the explanation of the assessee vide letter dt. 5th March, 1993, submitted to him (copy on record) that the stock statements to the bank were based on rough estimates and not on actual/physical verification and the same were inflated to avail the b....