Sh. Minishi Kumar Bansal Contractor, Bathinda V. The Asstt. Commissioner of Income-tax, Bathinda

ITA 391/ASR/2013

• Counselvise Citation: 39120914 RSA 2013
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 11-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Opportunity of cross examination; Additional evidence
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.391(ASR)/2012 ASSESSMENT YEAR:2009-10 PAN :AAKFM5866E SHRI MUNISH KUMAR BANSAL, CONTRACTOR, VS. JT. COMMR . OF INCOME TAX, 19358, ST. NO.4, BIBIWALA ROAD, RANGE-1, BATHINDA. BATHINDA. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.SUDHIR SEHGAL RESPONDENT BY:SH.TARSEM LAL, DR DATE OF HEARING:02/09/2013 DATE OF PRONOUNCEMENT:12/09/2013 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), BATHINDA, DATED 28.03.2013 FOR THE ASSESSMENT YEAR 2009-10. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE WORTHY CIT(A), BATHINDA HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE A.O. TO THE TUNE OF RS.1,51, 67,000/- AS PER PAGE 9 OF THE ORDER OF A.O. 2 2. THAT THE WORTHY CIT(A), BATHINDA HAS ERRED IN CONFI RMING THE FACT THAT AS PER BANK RECORD STOCK DECLARED BY THE ASSESSEE TO THE BANK WAS TO THE TUNE OF RS.1,69,17,000/- AS ON 31.3.2009 AND HAS FAILED TO CONSIDER THE FACT THAT NO STOCK STATEMENT WAS FURNISHED TO THE BANK AS ON 31.03.2009 BY THE ASSES SEE AND THE BANK RECORD ITSELF STATES THAT STOCK GIVEN TO BANK WAS ONLY FOR 30.03.2009. 3. THAT THE WORTHY CIT(A), BATHINDA HAS ERRED IN TAKIN G INTO CONSIDERATION THE CLOSING STOCK OF THE ASSESSEE AT RS.1,69,17,000/- AS ON 30.03.2009 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, TH E WORTHY CIT(A) HAS ERRED IN NOT CONSIDERING THE VALID EXPLA NATION OF THE ASSESSEE BASED ON THE BASIS OF ENTRIES IN THE BOOK S OF ACCOUNTS AND THE MAJOR PART OF THE STOCK WHICH WAS LYING AS WORK IN PROGRESS WAS BOOKED AS SALES AS ON 31.03.2009 TO TH E TUNE OF RS.1,66,13,401/- AND BY TAKING INTO CONSIDERATION T HE WORK DONE TO THE TUNE OF RS.14,46,401/- AS ON 31.03.200 9, THE STOCK AS ON 31.03.2009 WAS EXACTLY THE SAME AS PER BOOKS OF ACCOUNTS AND, AS SUCH, NO ADDITION WAS CALLED FOR. 5. THE CIT(A) HAS ERRED IN NOT ADMITTING THE ADDITIONA L EVIDENCE SPECIALLY, WHEN THE AO HAS ALREADY GIVEN THE REMAND REPORT ON THE BASIS OF SUBMISSIONS MADE BEFORE HIM. 6. NOTWITHSTANDING THE ABOVE SAID GROUND OF APPEAL,, T HOUGH THERE WAS NO ADDITIONAL EVIDENCE WHICH THE CIT(A) HAS NOT ADMITTED DURING THE COURSE OF APPELLATE PROCEEDINGS AND EACH AND EVERYTHING HAS BEEN BORNE OUT FROM THE ASSESSMENT ORDER AND AND BOOKS OF ACCOUNTS AND OTHER CONTENTIONS RAISED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 7. NOTWITHSTANDING THE ABOVE SAID GROUND OF APPEAL, , IT IS SUBMITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN NOT CONSIDERING THE RECONCILIATION SUBMITTED DURING THE COURSE OF A PPELLATE 3 PROCEEDINGS BASED ON CONTENTIONS RAISED BEFORE THE A.O. AS PER BOOKS OF ACCOUNTS. 8. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD OR DISPOS ED OFF. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PARTNERSHIP FIRM CARRYING ON THE BUSINESS OF CIVIL CONTRACTOR AT BAT HINDA. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y.2009-10, THE AO OBS ERVED THAT THE ASSESSEE HAD RAISED LOAN FROM PUNJAB NATIONAL BANK, BATHINDA AND CLOSING STOCK OF THE FIRM AS ON 31.03.2009 AS PER AUDITED BALANCE SH EET WAS RS.17,50,000/- BUT THE SAME WAS REPORTED TO THE BANK AT RS.1,69,17 ,000/- IN THE STOCK STATEMENT SUBMITTED TO THE BANK ON 30/31/03/2009. T HE AO HAS DISCUSSED THESE FACTS IN PARA 3 ON PAGE 2 OF THE ASSESSMENT O RDER AND THE FIGURES OF STOCK REPORTED BY THE ASSESSEE TO THE BANK BASED ON STOCK STATEMENTS SUBMITTED BY THE ASSESSEE TO THE BANK, HAS BEEN REP RODUCED. THE STATEMENT OF SR. BRANCH MANAGER, P.N.B, ARYA SAMAJ CHOWK, BAT HINDA, WAS RECORDED ON OATH ON 22.11.2011 IN WHICH HE STATED THAT THE P ARTY SUBMITS STOCK STATEMENT AT THE END OF THE MONTH AND THE BANK OFFI CE PHYSICALLY VERIFIES THIS STOCK IN POSSESSION OF THE PARTY. THE STATEMENT HAS BEEN REPRODUCED IN THE ASSESSMENT ORDER. FURTHER, THE A/R OF THE ASSESSEE SUBMITTED WRITTEN SUBMISSIONS DURING THE COURSE OF ASSESSMENT PROCEED INGS IN WHICH HE STATED THAT THE CLOSING STOCK/WORK IN PROGRESS AS PER AUD IT REPORT FOR THE YEAR 4 ENDING 31.03.2009 AND IN THE STOCK STATEMENT SUBMIT TED TO THE BANK ON 31.03.2009 ARE SAME. HOWEVER, THE AO DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND MADE ADDITION OF RS.1,51,67,000/- ON A CCOUNT OF UNDISCLOSED INVESTMENT U/S 69 AGAINST WHICH THE ASSESSEE IS IN APPEAL. 3. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THE WRITTEN SUB MISSIONS, WHICH FOR THE SAKE OF CONVENIENCE ARE REPRODUCED AS UNDER: IT IS HEREBY SUBMITTED THAT THE A.O. HAS ERRED IN LAW AND ON FACTS BY NOT CONSIDERING THE STOCK STATEMENT AS ON 31.03.2 009 AVAILABLE BOTH WITH BANK AND THE A.O. THE A.O. ALSO IGNORED THE FACT THAT BALANCE SHEET AS ON 31.03.2009 SUBMITTED TO BANK WAS SAME AS SUBMITTED TO INCOME TAX DEPARTMENT. SO THERE IS NO DIFFERENCE I N STOCK AS PER RECORDS OF BANK AND INCOME TAX DEPARTMENT. HENCE T HE ADDITION MADE BY THE AO IS WRONG AND IS NOT IN ACCORDANCE WITH THE FACTS. SO THE SAME MAY KINDLY BE REPEALED. II) A) THE AO IN HIS REMAND REPORT DATED 04.03.2003 HAS STATED THAT AS PER THE BANK RECORD THE CLOSING STOCK OF THE APP ELLANT AS ON 31.03.2009 WAS RS.1,69,17,000/- BUT AS PER BOOKS OF THE ASSESSEE THE SAME WAS RS.17,50,000. THUS, THE ADDIT ION OF RS.1,51,67,000/- ON ACCOUNT OF PRESUMPTION OF UNDIS CLOSED ASSET WAS RIGHTLY MADE BECAUSE OF THE FAILURE OF TH E ASSESSEE TO DISLODGE THIS ADVERSE PRESUMPTION BY LEADING ANY EV IDENCE, DOCUMENTARY OR ORAL OR CIRCUMSTANTIAL AT THE ASSTT. STAGE. B) IN PARA 4 OF THE REMAND REPORT, THE CONTENTIONS OF THE AO ARE REPRODUCED AS UNDER. IT IS A FACT AS EMERGING FROM THE RECORDS THAT VIDE LETTER DATED 02.08.2011 RECEI VED BY THE A.O. ON 03.08.2011, THE CHIEF MANAGER, PNB, BATHINDA HAD SUPPLIED THE AUDITED BALANCE SHEET FIL ED BY THE ASSESSEE TO THE BANK AND THAT VIDE ITS LETTER D ATED 21.11.2011, RECEIVED BY THE AO ON 22.11.2011, THE S AME 5 CHIEF MANAGER, PNB, BATHINDA HAS SUPPLIED NOT THE STOCK STATEMENT BUT THE PHOTOCOPY OF THE ANNUAL STOCK REGISTER WHICH CONTAINS RELEVANT ENTRIES OBTAINED FROM THE STOCK STATEMENTS, THE DOCUMENT OF PRIMARY EVIDE NCE ON THE BASIS OF WHICH THE ADVERSE INFERENCE IS SEEN TO HAVE BEEN DRAWN BY THE AO. IT IS ALSO A FACT THAT T HE ENTRY OF CLOSING STOCK OF RS.1,69,17,000/- AS APPEARING I N THE STOCK REGISTER RELATES TO 30/03/2009, AS CONTENDE D BY THE ASSESSEE. IT IS ALSO APPARENT FROM THE ASSESSME NT ORDER THAT THE AO HAS TAKEN THE FIGURE AS ON 30.03.2009 T O BE SAME AS FOR 31.03.2009. III) THE A/R OF THE ASSESSEE AFTER RECEIVING A COPY OF THE REMAND REPORT FILED REPLY DATED 08.03.2009 IN WHICH HE STATED THAT NO ADVERSE PRESUMPTIONS ARE POSSIBLE IN THE FA CTS OF THE CASE, AS IT IS A CLEAR CASE OF MISINTERPRETATION OF THE FACTS ON RECORD. IV) THE A/R OF THE ASSESSEE FURTHER FILED A RECONCI LIATION STATEMENT IN WHICH IT HAS BEEN STATED THAT THE AMOU NT OF RS.1,69,17,000/- WAS IN FACT WORK IN PROGRESS ON 30 .03.2009 AND OUT OF THE SAME RS.1,66,13,401/- WAS BOOKED AS SALES ON 31.03.2009 AND A SUM OF RS.14,46,401/- WAS THE AMOU NT OF WORK DONE ON 31.03.2009 AND HE HAS WORKED OUT THE C LOSING STOCK AS PER BALANCE SHEET AT RS.17,50,000/-. 4. THE LD. CIT(A) CONFIRMED THE ACTION OF THE A.O. AND THE FINDINGS OF THE LD. CIT(A) 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 02.08.2011 THAT THE STOCK AS PER STOCK STATEMENT DATED 30/31.03.2009 FURNISHED BY THE ASSESSEE TO THE BANK WAS AMOUNTING TO RS.1,68,17,000/-. THE AO HAS REPRODUC ED THE COPIES OF THE STOCK REGISTER ON PAGE 2 OF THE ASSTT. ORDER. 6 II) SH.TEJINDER SHARDA, SR. BRANCH MANAGER OF PNB, BATHINDA STATED IN HIS STATEMENT RECORDED BY THE AO ON OATH ON 22.11.2011 THAT THE PARTY SUBMIT STOCK INVENTORY STATEMENT AT THE END OF THE MONTH AND THEREAFTER OFFICIALS OF BANK PHYSICALLY VERIFY THIS STOCK IN POSSESSION OF THE PARTY. BUT THE A/R OF THE APPEL LANT HAS REMAINED SILENT ON THIS ISSUE AND HAS GIVEN NO COMMENTS EI THER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR DURING THE COU RSE OF APPELLATE PROCEEDINGS. III) THE A/R OF THE APPELLANT STATED DURING THE COURSE O F ASSESSMENT PROCEEDINGS THAT .THE CLOSING STOCK/WORK IN PROGR ESS AS PER AUDIT REPORT FOR THE YEAR ENDING 31.03.2009 AND THE STOCK STATEMENT SUBMITTED TO THE PNB, BATHINDA AS ON DATE ARE SAME AS PER OUR RECORD. IT HAS ALSO BEEN STATED BY HIM D URING THE COURSE OF APPELLATE PROCEEDINGS VIDE SUBMISSIONS DA TED 22.01.2013 THAT THE AO ERRED IN LAW AND ON FACTS B Y NOT CONSIDERING THE STOCK STATEMENT AS ON 31.03.21009 A VAILABLE BOTH WITH THE BANK AND THE A.O. BUT THE AO HAS CATE GORICALLY STATED IN HIS REMAND REPORT DISCUSSED SUPRA THAT TH E BANK OFFICERS DID NOT PROVIDE THE COPY OF BANK AND THE FIGURES OF STOCK AS ON 30/31.03.2009 HAS BEEN REPRODUCED FROM THE COPY OF THE STOCK REGISTER AS MAINTAINED BY THE BANK ON THE BASIS OF STOCK STATEMENTS. THE COPY OF THE STOCK REGISTER OF THE BANK WAS PROVIDED BY THE BANK TO THE DEPARTMENT. IV) THE CONTENTION OF THE A/R OF THE ASSESSEE REGARDING FILING OF STOCK STATEMENT WITH THE BANK ON 31.03.2009 REFLECT ING THE STOCK AS PER BALANCE SHEET AS ON 31.03.2009 STANDS REBUTTED FROM THE FACT THAT IN THE STOCK REGISTER MAINTAINED BY THE BANK THE ONLY ENTRY IS OF STOCK AMOUNTING TO RS.1,68,17, 000/- AS PER STOCK STATEMENT SUBMITTED BY THE ASSESSEE ON 30/31/ 03/2009 AND THERE IS NO MENTION OF ANY STOCK STATEMENT FILE D BY THE ASSESSEE ON 31.03.2009 REFLECTING STOCK OF RS.17,50 ,000/-. THE A/R OF THE ASSESSEE HAS NOT GIVEN ANY COMMENTS ON T HIS VITAL ISSUE BECAUSE HE HAS REPEATEDLY STATED THAT THE STO CK AS REPORTED IN THE STOCK STATEMENT FILED BY HIM ON 31.03.2009 T ALLIES WITH THE STOCK AS REFLECTED IN THE BALANCE SHEET AS ON 3 1.03.2009. AS REGARDS THE CONTENTION OF THE A/R THAT THE BALANCE SHEET REFLECTING STOCK OF RS.17,50,000/- ON 31.03.2009 WA S ALSO 7 AVAILABLE WITH THE BANK, THE SAME IS ALSO FACTUALLY WRONG BECAUSE THE STOCK STATEMENT WAS FILED ON 30/31.03.2 009 BUT THE BALANCE SHEET WAS FILED LATER ON AND THE BANK OFFIC ERS PHYSICALLY VERIFIED THE STOCK AS ON 30/31.03.2009. V) THE A/R OF THE ASSESSEE FILED A RECONCILIATION STAT EMENT IN WHICH IT HAS BEEN STATED THAT THE CLOSING STOCK/WOR K IN PROGRESS S PER BALANCE SHEET AMOUNTING TO RS.17,50,000/- IS CORRECT BECAUSE OUT OF THE WORK IN PROGRESS OF RS.1,69,17,0 00/- ON 30.03.2009, RS.1,66,13,401/- WAS BOOKED AS SALES O N 31.03.2009 AND THE WORK DONE ON 31.03.2009 WAS RS.14,46,401/-. I AM NOT GOING INTO THE MERITS OF T HE RECONCILIATION CHART BECAUSE THIS CHART WAS NOT FUR NISHED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE AR OF THE ASSESSEE HAS NOT MADE ANY REQUEST FOR ADM ITTING THE SAME AS ADDITIONAL EVIDENCE UNDER RULE 46A. I AM AL SO NOT REQUIRED TO GIVE ANY FINDING ON THIS RECONCILIATION CHART IN THE ABSENCE OF ANY REQUEST FROM THE AR OF THE ASSESSEE TO ADMIT THE RECONCILIATION CHART AS ADDITIONAL EVIDENCE AND THE REASONS BECAUSE OF WHICH THE SAME COULD NOT B FILED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. BUT T HESE FINDINGS ARE BEING RECORDED ONLY IN VIEW OF THE CON TENTIONS OF THE AR OF THE ASSESSEE IN HIS WRITTEN SUBMISSIONS F ILED ON 25.03.2013 THAT THIS RECONCILIATION CHART WAS SUBMI TTED IN ACCORDANCE WITH MY DIRECTIONS DURING THE COURSE OF HEARING ON 22.03.2013 . IT IS MATTER OF RECORD THAT NO SUCH DI RECTIONS WERE GIVEN BY ME IN THE ORDER SHEET ENTRY ON 22.03.2013. BE THAT AS IT MAY, RULE 46A OF THE INCOME TAX ACT WITH REGARD TO THE ADMISSION OF ADDITIONAL EVIDENCE PROVIDES AS UNDER: 46A(1) THE APPELLANT SHALL NOT BE ENTITLED TO PRODUCE BEFORE THE DEPUTY COMMISSIONER(APPEALS) OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS), ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER THAN T HE EVIDENCE PRODUCED BY HIM DURING THE COURSE OF PROCEEDINGS BEFORE THE ASSESSING OFFICER EXCEPT IN THE FOLLOWING CIRCUMSTANCES, NAMELY:- 8 (A) WHERE THE ASSESSING OFFICER HAS REFUSED TO ADMIT EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED; OR (B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE ASSESSING OFFICER; OR (C) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING BEFORE THE ASSESSING OFFICER ANY EVIDENCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL; OR (D) WHERE THE ASSESSING OFFICER HAS MADE THE ORDER APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELLANT TO ADDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. IN THE APPELLANTS CASE, NONE OF THE CONDITIONS R EFERRED TO IN RULE 46A IS SATISFIED AND I HOLD THAT SINCE THE A/R OF THE ASSESSEE DID NOT FURNISH THE RECONCILIATION CHART BEFORE THE A O, HE IS NOT ENTITLED TO PRODUCE THE SAME IN APPEAL BEFORE CIT (A) UNDER SUB RULE (1) OR SUB RULE (4) OF RULE 46A. THE ITAT, M UMBAI BENCH, MUMBAI HAS HELD IN THE CASE OF SAGAR SARHADI VS. ITO 73 DTR (MUMBAI) (TRIB) 192 HELD THAT THE ASSESSEE THOUGH IN POSSESSION OF THE DOCUMENT, HAVING NOT PRODUCE TH E SAME BEFORE AO WHILE RELYING TO RELEVANT QUERY MADE B Y THE AO, IS NOT ENTITLED TO PRODUCE THE SAME IN APPEAL BEFORE CIT(A) EITHER UNDER SUB RULE (1) OF SUB RULE (4) OF RULE 46A. NOW COMING TO THE ADDITION MADE BY THE AO ON A/C OF DIFFERENCE IN CLOSING STOCK AMOUNTING TO RS.1,51, 67,000/- THE FINDINGS ARE AS UNDER: IN VIEW OF THE FINDINGS OF THE AO IN THE ASSESSME NT ORDER BASED ON STOCK STATEMENT/STOCK REGISTER MAINTAINED BY T HE BANK AND THE STATEMENT OF THE BANK OFFICER REGARDING PHYSI CAL VERIFICATION OF STOCK, THE AO HAS DISCHARGED THE ONUS OF PROVI NG THAT THE STOCK AS SHOWN BY THE ASSESSEE TO THE BANK WAS MO RE THAT WHAT HE WAS SHOWING TO THE DEPARTMENT BY RS.1,51,67,00 0/-. THE APPELLANT HAS FAILED TO REBUT THE FINDING OF THE AO THAT IT 9 POSSESSED LARGER QUANTITY OF STOCKS THAN THE STOC K DECLARED IN THE BOOKS OF ACCOUNT, EITHER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR DURING THE COURSE OF APPELLATE PRO CEEDINGS. THE APPELLANT HAS ALSO FAILED TO BRING ANY EVIDEN CE ON RECORD IN SUPPORT OF THE CONTENTION RAISED IN THE APPEAL TH AT THE STOCK STATEMENT FILED WITH THE BANK DECLARING STOCK OF RS.1,69,17,000/- WAS INFLATED TO GET THE LOAN FRO M THE BANK BECAUSE THE AO HAS PROVED THAT THE APPELLANT POSS ESSED THE STOCK AMOUNTING TO RS.1,69,17,000/- ON 31.03.2009 . 5. THE LD. COUNSEL FOR THE ASSESSEE, MR. SUDHIR SEH GAL, ARGUED AND SUBMITTED THAT THIS IS CASE OF CONTRACTOR AND THE O NLY GROUND OF APPEAL IS WITH REGARD TO THE ADDITION OF RS.1,51,67,000/- ON A/C O F ALLEGED STOCK STATEMENT AS PER AO SUBMITTED TO THE BANK TO THE TUNE OF RS. 169.17 LACS AS ON 31.03.2009 AND , WHEREAS THE STOCK AS PER REGULAR B OOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE IS TO THE TUNE OF RS.17, 50,00/- AS ON 31.03.2009. HE SUBMITTED THAT THE AO HAS RELIED UPON THE JUDGME NT OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF DEVGAN R ICE & GENERAL MILL AS REPORTED IN 263 ITR 391 AND INTERESTINGLY THE FACTS AS MENTIONED BY THE AO REGARDING THE STOCK STATEMENT FURNISHED TO THE BANK ARE TOTALLY UNRELIABLE, MISLEADING AND THE SAME IS PROVED BY THE REMAND REP ORT OF THE AO WHERE SUCH FACTUAL FACTS HAD BEEN ADMITTED BASED ON DOCUM ENTARY RECORD THAT THERE WAS NO STOCK STATEMENT FURNISHED TO THE BANK AS ON 31.03.2009 AND THE CIT(A) HAS IGNORED SUCH REMAND REPORT WITHOUT FIND ING ANY FAULT OF THE 10 ASSESSEE. HE FURTHER SUBMITTED THAT THE SUBSEQUENT REMARKS BY THE AO AT PAGE 5, 6 & 7 OF THE ORDER ARE TOTALLY INCORRECT AN D CANNOT BE RELIED UPON SINCE THE FIRST NECESSARY STEP IS ITSELF WRONG AND WHICH WILL BE PROVED FROM THE SUBSEQUENT SUBMISSIONS AND THE SEQUENCE OF EVEN TS ARE AS UNDER: I) THE RETURN WAS FILED ON THE BASIS OF AUDITED BO OKS OF ACCOUNT AND COPY OF WHICH HAS BEEN SUBMITTED IN THE PAPER BOOK AT PAGES 1 TO 8 AND THE ASSESSEE IS ENGAGED IN THE BUSINESS OF C IVIL CONTRACTS AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS IS EVIDENT FROM PARA-2 OF THE ORDER, THE A.O. HAD MENTIONED AS UNDER: IN RESPONSE TO THESE NOTICES, SH. RAJNISH BANSAL , ADVOCATE, COUNSEL FOR THE ASSESSEE ATTENDED THE ASSTT. PROC EEDINGS FROM TIME TO TIME AND FURNISHED INFORMATION AS REQUIRE D. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, BOOKS OF ACCOUN TS, BILLS AND VOUCHERS WERE PRODUCED WHICH WERE TEST CHECKED T HE CASE WAS DISCUSSED WITH HIM. II) SUCH BOOKS OF ACCOUNTS HAD NEITHER BEEN REJECTED U/ S 145(3) AND NOR ANY DEFECTS HAD BEEN POINTED OUT AFTER DETA ILED SCRUTINY OF BOOKS OF ACCOUNTS/BILLS/VOUCHERS AND OTHER DETAI LS SUBMITTED BY THE ASSESSEE FROM TIME TO TIME. III) THE AO HAS VERY SMARTLY MENTIONED THE STOCK OF 16 9.17 LACS AS ON 30/31/03/2009 WHICH IS FACTUALLY INCORRECT, M ISLEADING AND WHICH HAVE BEEN ADMITTED BY THE AO IN THE REMAN D REPORT THAT THERE WAS NO STOCK STATEMENT AS ON 31.03.2009. IV) COPY OF LETTER OF CHIEF MANAGER IN WHICH IT HAS BE EN STATED CATEGORICALLY THAT INVENTORY FOR THE PERIOD ENDING 31.03.2009 PRESENTLY IS NOT TRACEABLE. V) THEN, THERE IS A STATEMENT OF CHIEF MANAGER WHICH W AS RECORDED AT THE BACK OF THE ASSESSEE BY THE A.O. ON 22.11.2011 IN WHICH, HE HAS AGAIN RELIED UPON THE DRAWING POW ER REGISTER. HE HAS CATEGORICALLY STATED THE DATE AS ON 30 TH OF 11 MARCH, 2009 ONLY FOR CALCULATING AND FOR ALLOWING W ITHDRAWALS AND COPY OF THAT STATEMENT IS AT PAGE 43 TO 44 OF T HE PAPER BOOK. THE STATEMENT WAS NEVER CONFRONTED TO THE ASSESSEE DURING THE ASSTT. PROCEEDINGS AND PROOF OF PHYSICAL VERIFICATI ON WAS NEVER ASKED FOR AND NEITHER SUBMITTED BY THE CHIEF MANAGE R TO THE A.O. IT APPEARS THAT SINCE THE CHIEF BANK MANAGER C ATEGORICALLY MENTIONED THE DATE AS 30 TH MARCH ONLY AND WHICH NEVER SUITED THE AO AND THEREFORE, THE AO THOUGHT NOT TO CONFRON T THE SAME TO THE ASSESSEE. VI) THERE IS A LETTER AT PAGE 46, DATED 21.11.2011 AND AT PAGE 47, THE DRAWING POWER REGISTER COPY IS THERE WHICH ALSO MENTIONS THE DATE AS ON 30.03.2009 ONLY AND NO STOCK STATEME NT IS THERE AS ON 31.03.2009. VII) EVEN IN THE REMAND REPORT, WHICH IS PLACED AT PAGE S 23 TO 24 THOUGH AT PAGE 23, THE AO HAS MENTIONED THE BRIEF FACTS OF THAT WHILE MAKING THE ADDITION, BUT THEN AT PAGE 24, HE HAS CATEGORICALLY STATED THAT THE STOCK OF 169.17 LACS AS PER BANK AS ON 30.03.2009 AND NOT ON 31.03.2009. 5.1. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT FROM THE ABOVE SEQUENCE OF EVENTS, IT IS CLEARLY ESTABLISHED THAT THERE WAS NO DISCREPANCY IN THE STOCK STATEMENT AS ON 31.03.2009 AS PER BANK VIZ BOOKS OF ACCOUNTS AND AS SUCH, THE WHOLE BASIS OF MAKING THE ADDITION BY THE AO IS ON FLIMSY GROUND AND BY MENTIONING TWO DATES IN THE ASSTT. ORDER AT PAG E 2 AS 30 TH /31 ST OF MARCH, 2009, THE AO HAS TRIED TO MISLEAD THE FACTUAL FACT S. THERE WAS NO STOCK STATEMENTS AS ON 31.03..2009 WITH THE BANK. THE CAS H CREDIT LIMIT OF THE ASSESSEE WAS AGAINST THE HYPOTHECATION OF STOCK ONL Y AND THE JUDGMENT OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF SIDHU RI CE & GENERAL MILLS 12 (PAGES 1 TO 3 OF JUDGMENT SET) CLEARLY CLINCHES THE ISSUE IN FAVOUR OF THE ASSESSEE, WHEREIN IT WAS HELD THAT EXCEPT THE PHOTO COPY OF THE STATEMENT, THERE IS NO OTHER MATERIAL AND ALSO THE ORIGINAL ST OCK STATEMENT HAD NOT BEEN PRODUCED AND, THEREFORE, THE WHOLE BASIS OF ADDITIO N WAS INCORRECT. HE ALSO SUBMITTED THAT THERE IS NO STOCK STATEMENT, AT ALL AND THE FACTS ARE MORE STRONGER. BESIDES, THAT IT MAY BE STATED THAT EVEN THERE ARE NUMBER OF JUDGMENTS BOTH OF JURISDICTIONAL HIGH COURT AND OTH ER COURTS, IN WHICH, IT HAS BEEN HELD THAT IT IS GENERAL TENDENCY TO GIVE I NFLATED STATEMENTS OF STOCK TO THE BANK TO AVAIL THE LIMIT AND NO ADDITION COUL D BE MADE ON THAT BASIS ON THE CASE OF HYPOTHECATION OF STOCKS. RELIANCE HAS B EEN PLACED ON THE FOLLOWING DECISIONS: I) CIT VS. SANTOSH BOX FACTORY PVT. LTD. (2011) 44 IT R REPS 437 (P&H) II) ITO VS DEVI DAYAL RICE MILLS (2002) 75 TTJ (ASR) 2 4 III) SH.GURBHEJ SINGH PROP. M/S. RANA CEMENT STORE ITA NO.513(ASR)/2011 FOR AY 2007-08. IV) CIT VS. VEERDIP ROLLERS PVT. LTD. (2010) 323 ITR 34 1 (GUJ.) V) CIT VS. N.SWAMY (2000) 241 ITR 363 (MAD) VI) CIT VS. KHAN & SIROHI STEEL ROLLING MILLS (2006) 20 0 CTR (ALL) 595. VII) ASHOK KUMAR VS. ITO (2006) 201 CTR (J&K) 178 13 VIII) CIT VS. DASS INDUSTRIES (2008) 303 ITR 199 IX) CIT VS SRI PADMAVATHI COTTON MILLS (1999) 236 ITR 340 (MAD) X) ABDUL RASHID DAR VS. DEPARTMENT OF INCOME TAX ITA NO.513/2011 (ASR) XI) ITO WARD-1, LUDHIANA VS. BHARTI SALES CORPN. ITA NO.2228/CHD/92 (CHD. BENCH) XII) CIT VS. SHEENA EXPORTS (P&H) ITA NO.382/2011 5.2. THE LD. COUNSEL FURTHER STATED THAT AOS RELIA NCE ON THE JUDGMENT OF DEVGAN RICE & GEN. MILLS IS TOTALLY MISLEADING IN T HE SENSE THAT THE CLOSING IN QUANTITY AND VALUATION HAD BEEN GIVEN AND THE S TOCK AS PER RETURN WAS PROVED TO BE FALSE AND UNDER SUCH CIRCUMSTANCES, TH E HIGH COURT HAD GIVEN THE JUDGMENT. IN THE CASE OF THE ASSESSEE, THERE I S NO STOCK STATEMENT AT ALL AND AS SUCH THE OBSERVATION MADE BY THE AO IS TOTAL LY UNCALLED FOR AND UNRELIABLE AND DOES NOT HAVE ANY LINK OR RELATION T O THE FACTS OF THE CASE AND, THUS, THE ADDITION IS NOT LIABLE TO BE MADE. EVEN, THE VARIOUS JUDGMENTS COVER THE CASE OF THE ASSESSEE, AS WELL. 5.3. THE LD. COUNSEL FOR THE ASSESSEE FURTHER STATE D THAT THE FINDING OF THE CIT(A) IS AGAIN INCORRECT APPLICATION OF FACTS, WH ICH IS BORNE OUT AS UNDER: I) HE HAS PROCEEDED AT PAGE 2 PARA 1(I) ON THE BA SIS OF INCORRECT FACTS OF STOCK STATEMENT MENTIONING THE DATE OF S TOCK DECLARATION TO THE BANK AT 169.17 LAKHS AS ON 30/ 31.03.2009, WHICH IS NOT CORRECT AT ALL. 14 II) THE CIT(A) AT PAGE 3 PARA -2 IN COL.(A) HAS WRONGLY MENTIONED THAT THE AO IN HIS REMAND REPORT DATED 4.3.2013 HA S MENTIONED ABOUT THE STOCK AS ON 31.03.2009 AT RS.169.17 LAKHS WHICH IS FACTUALLY WRONG AND INCORRECT. THE AO IN HIS REMAND REPORT HAS CATEGORICALLY STATED AS PER COPY AT PAGE 24 OF THA T STOCK OF RS.169.17 LAKHS WAS DECLARED AS ON 30.03.2009 ONLY. THUS, THE WHOLE BASIS IS NOT CORRECT. III) AT PAGE 3 HE HAS RELIED UPON THE STATEMENT OF BANK MANAGER THAT STOCK IS PHYSICALLY VERIFIED AND WHEN ON 31.03 .2009, THERE IS NO STOCK STATEMENT, THE QUESTION OF PHYSICAL VER IFICATION OF STOCK DOES NOT ARISE AT ALL AND NEITHER IN DRAWING POWER REGISTER AT PAGE 47, THERE IS ANY MENTION OF THE SAME. IV) AT PAGE 3 & 4 OF THE ORDER OF CIT(A), THOUGH CIT(A) HAS REPRODUCED THE OBSERVATION OF THE AO IN THE REMAND REPORT THAT THE DATE FOR STOCK OF 169.17 LAKHS SHOULD BE READ A S ON 30.03.2009 ONLY, BUT STILL HE HAS UPHELD THE ADDITI ON, WHICH IS AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. V) THE FINDINGS OF THE CIT(A) ON THE STATEMENT OF CHI EF MANAGER HAD NOT BEEN CONFRONTED TO US AND, THEREFORE, THE R ELIANCE ON THE STATEMENT OF CHIEF MANAGER, WHICH IS A GENERAL STAT EMENT CANNOT BE APPLIED HERE, PARTICULARLY THE FACT THAT THERE WAS NO STOCK STATEMENT AS ON 31.03.2009 AND WHICH IS UNDIS PUTED FACT. VI) THE CIT(A) HAS MENTIONED IN PARA (III) AT PAGE 5 HA S ACCEPTED THAT NO STOCK STATEMENT AS ON 30/31/03.2009 HAS BEE N PROVIDED TO THE BANK AND HAS RELIED UPON ONLY ON THE DRAWING POWER REGISTER MAINTAINED BY THE BANK. THUS, WHEN THERE I S NO STOCK STATEMENT AS ON 31.03.2009 OR 30.03.2009, THERE CAN NOT BE ANY RELIANCE BY THE A.O. AND CIT(A) ON THE STATEMENT OF THE CHIEF MANAGER ABOUT ALLEGED PHYSICAL VERIFICATION AND WHY THAT STATEMENT HAD NOT BEEN CONFRONTED TO THE ASSESSEE. VII) THAT CIT(A) IN PARA (IV) PAGE 5 HAS AGAIN TRIED TO CONFUSE THE FACT BY MENTIONING TWO DATES OF 30/31/03.2009 AND H E HAS STATED THAT THERE IS NO MENTION OF STOCK STATEMENT OF 15 RS.17,50,000/- AS ON 31.03.2009 TO THE BANK MEANING THEREBY THAT NO STOCK STATEMENT WAS FURNISHED TO THE BANK A ND NEITHER IT IS AVAILABLE WITH THE BANK AS PER THEIR LETTER, DA TED 20.10.2011 AT PAGE 45 OF THE PB AND THEN HOW IS THE ONUS UPON THE ASSESSEE TO DISPROVE A FACT WHICH NEVER EXISTED. VIII) THE ASSESSE HAD STATED THAT THE STOCK AS PER BOOKS AND THE BANK WAS THE SAME AS ON 31.03.2009 AND ALSO STATED THAT SAME BALANCE SHEET WAS FILED BY THE ASSESSEE TO THE BANK . IN FACT, THE ASSESSEE WANTED TO STATED THAT AS PER BOOKS AS ON 3 1.03.2009 IS THE SAME AS PER BANK AS WELL AND AS PER TRADING ACC OUNT, THERE IS NO STOCK STATEMENT AS ON 31.03.2009, HOW THE ADD ITION CAN BE CONFIRMED. THE REPLY HAS BEEN MISREAD AND TOTAL FAC TS IN THE REPLY HAS TO BE READ. THUS, WHOLE CONFUSION HAS BEE N CREATED BY MENTIONING OF TWO DATES IN THE ASSESSMENT ORDER AND THEN THE CIT AT PAGE 6 OF THE ORDER HAS MENTIONED THE DATE A S 30/31.03.2009, WITHOUT ANY REASON AND WHICH IS MISL EADING DECISION OF THE CIT(A). AS ALREADY STATED THAT THE STATEMENT OF THE CHIEF MANAGER WAS NEVER CONFRONTED AND IT IS SE TTLED LAW THAT NO RELIANCE CAN BE PLACED ON STATEMENT RECORDE D AT THE BACK OF THE ASSESSEE AND NO OPPORTUNITY OF CROSS EXAMINA TION HAS BEEN GIVEN AND, AS SUCH, IT IS A SETTLED LAW, THAT IF THE PRINCIPLES OF NATURAL JUSTICE HAVE NOT BEEN ADHERED TO AND NO OPPORTUNITY OF CROSS EXAMINATION HAS BEEN GIVEN, THEN THE ADDIT ION CANNOT BE SUSTAINED. RELIANCE IS BEING PLACED ON THE FOLLO WING JUDGMENTS: A) KISHAN CHAND CHELLAM RAM VS. CIT (1980) 124 ITR 713 (SC) B) KALRA GLUE FACTORY VS. SALES TAX TRIBUNAL & OTH ERS (1987) 167 ITR 498 (SC) C) DOLLY FARMS & RESORTS PVT. LTD. VS. DCIT (2001) 15 INCOME TAX REPORTS 159 ( ITAT, DELHI A THIRD MEMBER) D) CIT, PATIALA VS. M/S. RADHEY SHAM SITA RAM (200 3) 22 INCOME TAX REPORTS 667 (P&H) THUS, THE ADDITION HAS BEEN MADE BY THE A.O. ON TH E DIFFERENCE BETWEEN THE STATEMENT AS FURNISHED ON 30.03.2009 A ND FORM THAT 16 BASIS FOR MAKING THE ADDITION AS ON 31.03.2009 IS WHOLLY MISCONCEIVED. IX) AS REGARDS THE FINDING OF THE CIT(A) IN PARA 5 & 6 IS CONCERNED, THE ORDER SHEET ENTRIES OF THE CIT(A) RE VEALS AT PAGE 48 THAT SH. RAJNISH BANSAL HAD BEEN APPEARING BEFOR E THE CIT ON DIFFERENT DATES AND ON 22.03.2013, HE APPEARED A ND SOME RECONCILIATION CHART WAS ASKED TO BE PRODUCED VIZ-A -VIZ 30.03.2009/31.03.2009, WHICH WAS SUBMITTED AS PER L ETTER PLACED AT PAGE 26 & 27 ALONGWITH SUPPORTING PAPER F ROM PAGES 28 TO 42 OF THE PAPER BOOK. X) EVEN THE CIT(A) HAS DEALT WITH THE REPLY IN HIS ORD ER AND HAS NOT STATED THAT THE PAPERS WERE PLACED OTHERWISE. T HUS, CIT(A) HAD ASKED FOR THE EXPLANATION AND THE SAME WAS SUBM ITTED OTHERWISE, THERE WAS NO NEED TO DEAL WITH THE SAME BY APPLYING RULE 46A. XI) THESE FACTS HAD BEEN MENTIONED BY THE CIT AT SL. NO .(IV) PAGE - 4 OF THE ORDER AND THIS FINDING HAS BEEN GIVEN IN P ARA (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 22 ND MARCH 2013 AND, THEREFORE, THE FINDING OF THE CIT THAT NO DIRECTIONS WERE GIVEN AND THEN ON THE CONTRARY, THE APPLICATION OF RULE 46A AND THEN STATING THAT NO REQUEST WAS MA DE IS CONTRADICTORY IN VIEW OF THE FOLLOWING SUBMISSIONS: A) THE AO HAS MENTIONED THAT THE BOOKS OF ACCOUNT HAD BEEN PRODUCED ON NUMBER OF DATES ALONGWITH BILLS, VOUCHERS ETC AND THEY HAVE BEEN TEST CHECKED AND THE COPY OF GR OSS RECEIPT ACCOUNT AT PAGES 30 TO 37 AND THE BANK ACCOUNT AT PAGE 38 TO 41 IS PART AND PARCEL OF THAT SAME SET OF BOOKS OF AC COUNTS AND THE CONTENTION AS PER PAGE 28 OF PAPER BOOK THAT SINCE THE CERTAIN AMOUNT HAD BEEN RECEIVED FOR THE WORK COMPLETED ON 31 ST MARCH, 2009 AND, THEREFORE, IT WAS MERELY A CASE O F TRANSFER FROM THE WORK IN PROGRESS AS ON 30.03.2009 TO THE WORK DONE ON 31 ST OF MARCH, 2009 AND BY ADDING SMALL WORK DONE AS ON 31.03.2009, THE BALANCE STOCK OF RS.17,50,000/- WA S SHOWN AS THE CLOSING STOCK AS PER PROFIT & LOSS ACCOUNT AT PAGE 17 OF THE PAPER BOOK. 17 B) THUS, WHEN THE TOTAL RECEIPTS AS PER PAGE 17 TA LLY WITH THE TOTAL GROSS RECEIPT AT PAGE 37, THEREFORE, EVERYTH ING HAS BEEN LOOKED INTO AND VERIFIED AND, THUS, IT WAS NO NEW EVIDENCE, AT ALL AND, THEREFORE, THE OBSERVATION OF THE CIT ON THIS ASPECT IS NOT A CORRECT FINDING. C) THE CITS FINDING AT PAGE 7 IN LAST PARAGRAPH IS A GAIN INCORRECT, BECAUSE HE HAS AGAIN CONFUSED THE FACT B Y MENTIONING THE STOCK STATEMENT/STOCK REGISTER TOGE THER AND WITHOUT PRODUCTION OF STOCK STATEMENT GIVEN BY THE ASSESSEE TO BANK AND NEITHER THERE WAS ANY STATEMEN T OF STOCK AS ON 31.03.2009 FURNISHED BY THE ASSESSEE, I T HAS BEEN ADMITTED BY THE A.O. AND BY THE BANK, AND THUS , THE WHOLE BASIS OF MAKING THE ADDITION IS TOTALLY UNCA LLED FOR AND THE ONUS IS ON THE DEPARTMENT TO PROVE, RATHER ON THE ASSESSEE ON WHICH, THE CIT IS AGAIN INCORRECT AND, THEREFORE, THE ADDITION AS MADE BY THE A.O. AND CONFIRMED BY THE CIT DESERVES TO BE DELETED. D) RELIANCE IS BEING PLACED ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF SH. DAULAT RAM RAVAT M AL AS REPORTED IN 87 ITR 349 IN WHICH IT HAS BEEN AS U NDER: THERE SHOULD BE SOME DIRECT NEXUS BETWEEN THE CONCLUSION OF FACT ARRIVED AT BY THE AUTHORITY CONCERNED AND THE PRIMARY FACTS UPON WHICH THAT CONCLUSION IS BASED. THE USE OF EXTRANEOUS AND IRRELEVANT MATERIAL IN ARRIVING AT THAT CONCLU SION WOULD VITIATE THE CONCLUSION OF FACT BECAUSE IT IS DIFFICULT TO PREDICATE AS TO WHAT EXTENT THE EXTRANEOUS AND IRRELEVANT MATERIAL HAS INFLUENCED THE AUTHORITY IN ARRIVING AT THE CONCLUSION OF FAC T. HERE THE DEPARTMENT IS MAKING THE ADDITION ON THE ALLEGED DIFFERENCE IN THE STOCKS AND THEN HEAVY ONU S LIES UPON THEM TO FURNISH THE ALLEGED STOCK STATEMENT ON 31 ST OF MARCH, 2009 AND WHICH THEY HAVE THEMSELVES STATE D THAT NO STOCK LIST FURNISHED TO THE BANK AS ON 31 ST OF MARCH, 2009, THUS, NO ADDITION IS CALLED FOR. 18 THUS, ON ALL THESE ISSUES, THE ADDITION IS NOT J USTIFIED: A) NO DEFECTS IN BOOKS AND SUPPORT IS DELIVERED F ROM THE JUDGMENTS AS PLACED AT PAGES 10,15, 26,34,44 OF T HE JUDGMENT SET INCLUDING OF THE HONBLE AMRITSAR BENCH. B) THERE WAS NO STOCK STATEMENT AVAILABLE WITH TH E BANK AS ON 31.03.2009. C) VARIOUS CASES HAVE HELD THAT WHERE LIMIT WAS AGAINST HYPOTHECATION OF STOCK AND NOT AGAINST PLEDGING O F 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 JURISDICTIONAL BENCH AND HIGH COURT, NO ADDITION IS CALLED. .6. THE LD. DR, 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 CE RTIFICATE THAT THE DOCUMENTS WERE FILED BEFORE THE LOWER AUTHORITIES A ND NO NEW EVIDENCE HAS BEEN ENCLOSED. IN THIS REGARD, IT IS SUBMITTED THAT THE DOCUMENTS AS APPEARING AT PAGES 26,27,28 & 29 CONSTITUTE NEW EVIDENCE AS T HE SAME WERE ALLEGEDLY FILED BEFORE THE LEARNED CIT(A) BUT THE LEARNED CI T(A) HAD TAKEN NO COGNIZANCE OF THE SAME FOR THE REASONS THAT HE HIMS ELF HAD NEVER ASKED THE ASSESSEE TO FURNISH THE SAME AND FURTHER THAT THE ASSESSEE HAD NEVER MOVED AN APPLICATION FOR THE ADMISSION OF ADDITION EVIDEN CE BY INVOKING THE PROVISIONS OF RULE 46A OF THE INCOME TAX RULES, 196 2. SINCE THE LEARNED CIT(A) HAD TAKEN NO COGNIZANCE OF THESE DOCUMENTS, THESE DOCUMENTS, 19 THEREFORE, CONSTITUTE FRESH EVIDENCE WHICH CAN BE F ILED BEFORE THE HON'BLE BENCH ONLY IF THE HON'BLE BENCH ASKS FOR THE SAME A S PER THE PROVISIONS OF RULE 29 OF THE INCOME TAX APPELLATE TRIBUNAL RULES, 1962. HE FURTHER STATED THAT WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTE D THAT GENESIS OF THE ADDITION MADE IS LIKE THAT THE A.O. HAD DISCOVERED THAT IN THE AUDITED BALANCE SHEET, THE ASSESSEE HAD SHOWN THE VALUE OF THE CLOS ING STOCK AT RS. 17,50,000/- BUT AS PER THE STOCK STATEMENT SUBMITTE D TO THE BANK THE VALUE HAD BEEN SHOWN AT RS. 1,69,17,000/-. THE SENIOR BRA NCH MANAGER, PUNJAB NATIONAL BANK, ARYA SAMAJ CHOWK, BATHINDA HAD CONFI RMED VIDE LETTER DATED 02.08.2011 THAT THE STOCK AS PER STOCK STATEM ENT DATED 30/31.03.2009 FURNISHED BY THE ASSESSEE TO THE BANK WAS AMOUNTING TO RS. 1,69,17,000/-. THE ASSESSEE ON BEING CONFRONTED WITH THE DIFFERENC E HAD CONTENDED IN HIS REPLY FILED BEFORE THE A.O. ON 21.11.2011 (PAGES 19 & 20) OF THE ASSESSEES PAPER BOOK (APB) THAT THE STOCK STATEMENT SUBMITTED TO THE BANK AS ON DATE ARE SAME AS PER OUR RECORDS AND AS SUCH THERE IS NO UNACCOUNTED/UNDISCLOSED STOCK. IT IS PERTINENT TO MENTION HER THAT THE ASSE SSEE HAS NOT BROUGHT ON RECORD BEFORE THE A.O. THAT HE HAD SUBMITTED ANY ST OCK STATEMENT ON 31.03.2009 OTHER THAN THE ONE SUBMITTED BY HIM WITH THE BANK ON 30/31.03.2013 AS RECORDED IN THE DRAWING POWER REGI STER OF THE CONCERNED 20 BANK WHICH SHOWS THE DRAWING POWER OF THE ASSESSEE AS ON 31.03.2009 AT RS. 1 CRORE AND VALUE OF SECURITY AT RS. 1,69,17,00 0/-. 6.1. THE LD. DR FURTHER SUBMITTED THAT THE STORY O F RECONCILIATION STATEMENT WHICH THE ASSESSEE SOUGHT TO BE FILED BEF ORE THE LEARNED CIT(A) WHICH THE LEARNED CIT(A) DID NOT ADMIT, HAS NO RELE VANT AT ALL UNLESS THE ASSESSEE PROVED BEFORE THE A.O. THAT HE HAD FURNISH ED A STATEMENT OF STOCK TO THE BANK ON 31.03.2009 SHOWING STOCK IN HAND AS ON THAT DATE AT RS. 17,50,000/- AS CLAIMED IN HIS AFOREMENTIONED REPLY DATED 21.11.2011. THUS, THE WHOLE OF THE ARGUMENT OF THE ASSESSEE IS COMPLE TELY OFF THE TANGENT AND DOES NOT DESERVE TO BE TAKEN ANY COGNIZANCE OF. IT IS FURTHER SUBMITTED THAT THE LEARNED CIT(A) HAS GIVEN IRREFUTABLE REASONS FO R REJECTING THE APPEAL OF THE ASSESSEE WHICH ARE APPEARING AT PAGE 4,5,6,7 & 8. THE ASSESSEE HAS NOT BEEN ABLE TO CONTROVERT ANY OF THE FINDINGS OF THE LEARNED CIT(A) AND NO GROUND OF APPEAL HAS BEEN TAKEN ON THE FINDINGS OF THE LEARNED CIT(A). ALL THE GROUNDS OF APPEAL PERTAIN TO THE SO CALLED ADDI TIONAL EVIDENCE SOUGHT TO BE FILED BY THE ASSESSEE BEFORE THE LEARNED CIT(A) OF WHICH THE LEARNED CIT(A) TOOK NO COGNIZANCE FOR APPRECIABLE REASONS A S DISCUSSED ABOVE. 6.2. IT IS FURTHER PERTINENT TO MENTION HERE THAT T HE FACTUM OF STOCK DECLARED TO THE BANK ON 30/31.03.2009 HAS BEEN CONFIRMED IN HIS STATEMENT BY THE 21 CHIEF MANAGER OF THE BRANCH IN THE FOLLOWING IRREFU TABLE WORDS AS APPEARING AT PAGE 7 OF THE ASSESSMENT ORDER: THE PARTY SUBMIT STOCK INVENTORY STATEMENT AT THE END OF MONTH AND THEREAFTER OFFICIALS OF BANK PHYSICALLY VERIFY THIS TOCK IN POSSESSION OF THE PARTY. AFTER PHYSICAL VERIFIC ATION OF STOCK, THE DRAWING POWER IS ALLOWED TO THE PARTY. ONE OFFICER PHYSICALLY CHECKS THE STOCK AND INCUMBENT INCHARGE OFFICER, S IGN THE DRAWING POWER REGISTER. THE SAME PROCEDURE HAS BEE N ADOPTED BY THE BANK IN THE PRESENT CASE. ON THE BASIS OF V ALUATION OF INVENTORY OF STOCK AFTER PHYSICAL VERIFICATION THE DRAWING POWER OF THE PARTY HAS BEEN CALCULATED AND ALLOWED AT RS . 100 LACS AS ON 30.03.2009 ON THE BASIS OF INVENTORY 6.2. THE LD. DR FURTHER SUBMITTED THAT IN THE FIRST PLA CE THE ASSESSEE HAS NOT BROUGHT ON RECORD THAT HE HAD FURNISHED TO THE BANK ANY STOCK STATEMENT OF THE VALUATION OF RS. 17,50,000/- AND IF IT HAD B EEN SO, THE BANK WOULD HAVE REDUCED THE DRAWING POWER AND THE ASSESSEE HAS NOT BROUGHT ANY EVIDENCE ON RECORD THAT THE BANK HAD REDUCED THE DR AWING POWER ON HIS FILING STOCK STATEMENT OF THE MEAGER VALUE OF RS. 1 7,50,000/- AS AGAINST DRAWING POWER OF RS. 100 LAC SANCTIONED ON 30.03.20 09. WITHOUT PREJUDICE TO THE ABOVE SUBMISSIONS AND THE FINDINGS OF THE LE ARNED CIT(A), IT IS PERTINENT TO MENTION HERE THAT THE A.O. HAD RECORDE D A FINDING IN THE ASSESSMENT ORDER THAT THE SUM TOTAL OF PURCHASE VOUCHERS SUBMITTED BEFORE THE DEPARTMENT IS DIFFERENT FROM THE QUANTIT Y OF MATERIAL SHOWN TO THE BANK. THIS CLEARLY MEANT THAT SHOWN TO THE A.O. WAS UNRE LIABLE AND 22 MISLEADING AND IT WAS IN APPRECIATION OF THIS FACT THAT THE A.O. HAD REJECTED SPECIFICALLY THE ASSESSEE PURCHASE ACCOUNT AND MA DE THE IMPUGNED ADDITION. IN VIEW OF THE ABOVE SUBMISSIONS, IT IS S UBMITTED THAT THE APPEAL OF THE ASSESSEE BE REJECTED. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE CLAIM OF THE ASSESSEE IS THAT THE STOCK DECLARE D BEFORE THE BANK IS FOR THE PURPOSE OF RAISING THE LOAN. THE ASSESSEE HAS SUBMI TTED HIS STOCK STATEMENT AS ON 30.03.2009 AT RS.1,69,17,000/- WHEREAS AS ON 31.03.2009 IT WAS RS.17,50,000/- AND THE DIFFERENCE OF RS.1,66,13,40 1/- WAS BOOKED AS SALES ON 31.03.2009. THE ASSESSEE SUBMITTED THE STOCK S TATEMENT AS ON 31.03.2009 SHOWING STOCK AT RS.17,50,000/-. THE AS SESSEE ALSO SUBMITTED AN ADDITIONAL EVIDENCE AND THE EXPLANATION UNDER RULE 46A BEFORE THE LD. CIT(A) WHICH WAS REJECTED SINCE THE SAME WAS NOT FU RNISHED BEFORE THE A.O. THE ARGUMENTS OF BOTH THE PARTIES WERE CONSIDERED AND THE FACTS HAVE BEEN PERUSED AND WE ARE OF THE VIEW THAT THE WHOLE DISPU TE IN THE STATEMENT SUBMITTED AS ON 30.03.2009 HAVING A STOCK AT RS.1,6 9,17,000/- WHETHER IT IS ALSO AVAILABLE AS ON 31.03.2009 OR NOT . THE RECONCILIATION STATEMENT HAS NOT BEEN ACCEPTED BY THE LD. CIT(A) FOR THE REASON SINC E THE SAME WAS NOT PRODUCED BEFORE THE A.O. AT THE OUTSET, THIS IS NOT THE COGENT REASON AS 23 MENTIONED BY THE LD. CIT(A) THAT SOMETHING HAS BEEN NOT PRODUCED BEFORE THE AO THAT CANNOT BE PRODUCED BEFORE THE LD.CIT(A) . THEREFORE, THE LD. CIT(A) HAS NOT ACTED STRICTLY IN ACCORDANCE WITH T HE PROVISIONS OF RULE 46A OF INCOME TAX RULES, 1962. EVEN IF THE RECONCILIATI ON STATEMENT HAS NOT BEEN ACCEPTED, CAN ANY STATEMENT ON ACCOUNT OF I.E . BALANCE SHEET OR PROFIT & LOSS CAN BE READ IN PART, THE ANSWER IS NO . S INCE ANY DOCUMENT OR STATEMENT HAS TO BE READ IN TOTO IN SETTLED RATIO. THE ASSESSEES EXPLANATION SUBMITTED BEFORE THE LD. CIT(A) AS AN ADDITIONAL E VIDENCE WHICH IN FACT IS ON RECORD THAT THE ASSESSEE HAS TRANSFERRED RS.1,66 ,13,401 TO SALES ACCOUNT OUT OF THE STOCK AS ON 31.03.2009. THE LD. CIT(A) W ITHOUT ANY REASON HAS REJECTED THE SAID EXPLANATION. SOMETHING MUST REMA IN I.E EITHER THE CLOSING STOCK AT THE CLOSE OF THE YEAR AND IF IT IS NOT THE RE THEN THERE HAS TO BE THE SALES AS CLAIMED BY THE ASSESSEE. IF THE CLOSING ST OCK OF RS.1,69,17,000/- IS ACCEPTED BY THE LD. CIT(A) THEN ACCORDINGLY THE SAL ES TO THE EXTENT OF RS.1,66,13,401/- HAS TO BE REDUCED WHICH THE LD. CI T(A) HAS NOT TAKEN CARE OF. WHEREAS, ON THE OTHER HAND, THE SALES ARE NOT I N DOUBT BEFORE ANY OF THE AUTHORITIES BELOW AS THEY HAVE BEEN ACCEPTED BY BOT H THE AUTHORITIES BELOW. ONCE THE SALES HAVE BEEN ACCEPTED WHICH INCLUDES TH E SALES OF RS.1,66,13,401/- BOOKED ON 31.03.2009 BY THE LD. CI T(A) THEN THERE IS NO POSSIBILITY OF THE STOCK TO BE AT RS.1,69,17,000/- AS AT 31.03.2009. IT HAS TO 24 BE RS.17,50,000/- WHICH IS THERE AS PER AUDITED ACC OUNTS. THIS IS A SIMPLE ACCOUNTING, WHICH THE LD. CIT(A) COULD NOT UNDERST AND. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON MERIT, WE ACCEPT T HE EXPLANATION GIVEN BY THE ASSESSEE AND THE ARGUMENTS MADE BY THE LD. COUN SEL FOR THE ASSESSEE, MR. SUDHIR SEHGAL AND REJECT THE CONTENTIONS OF THE LD. DR. IN VIEW OF THE ABOVE DISCUSSION, NO ADDITION ON THIS ACCOUNT COULD BE MA DE BY THE A.O. AND ACCORDINGLY, WE REVERSE THE ORDER OF THE LD. CIT(A) . IN THIS RESPECT, WE RELY UPON THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. PUNJAB RICE AND GENE RAL MILLS REPORTED IN (2003) 264 ITR 582 WHERE IT HAS BEEN HELD THAT THE ASSESSEE HAS SUBMITTED SATISFACTORY EXPLANATION FOR THE DISCREPANCIES BETW EEN THE STOCK STATEMENT TO THE BANK AND TO THE INCOME TAX DEPARTMENT, THE TRIB UNAL IS JUSTIFIED IN DELETING THE ADDITION. IN THE FACTS AND CIRCUMSTANC ES OF THE CASE, WE ALLOW, ALL THE GROUNDS OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.391(ASR)/2013 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12TH SEPT., 2013. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER 25 DATED: 12TH SEPT., 2013 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: 2. THE 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.