SHRI RAJENDRA KUMAR AGARWAL, Sehore V. The ITO 2(3), Bhopal

ITA 424/IND/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5807 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 21-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 29-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: N D PATWA S
• Keywords: Unexplained investment; Corroborative evidences
• Section: 143(3); 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.A.NO. 424/IND/2014 A.Y. : 2009-10. SHRI RAJENDRA KUMAR AGARWAL, ITO, 2(3), SEHORE VS. BHOPAL APPELLANT RESPONDENT PAN NO. AATPA9887E APPELLANTS BY : SHRI ASHISH GOYAL AND SHRI N. D. PATWA, ADVOCATES RESPONDENT BY : SHRI R. A. VERMA, DR O R D E R PER D.T.GARASIA, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A), BHOPAL, DATED 14.03.2014 FOR THE ASSESSM ENT YEAR 2009-10. DATE OF HEARING : 21 . 12 .201 5 DATE OF PRONOUNCEMENT : 0 9 .0 2 .2016 SHRI RAJENDRA KUMAR AGARWAL, SEHORE VS. ITO, 2(3), BHOPAL I.T.A.NO. 424/IND/2014 A.Y. 2009-10 2 2 2. GROUND NO.1 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT ACCEPTING T HE BOOK RESULTS AS DONE BY THE ASSESSING OFFICER WITHOUT POINTING OUT ANY SPECIFIC DEFECTS IN THE MAINTENANCE OF ACCOUNT BOOKS BY THE APPELLANT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF KIRANA GOODS. THE ASSESSEE HAS FURNISHED THE RETURN OF INCOME FOR ASS ESSMENT YEAR 2009-10 ON 29.09.2009 DECLARING TOTAL INCOME O F RS. 3,60,557/-. THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S 143(3) ON 29.12.2011. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICE D THAT THE ASSESSEE HAS OBTAINED C.C. LIMIT FROM BANK ON HYPOT HECATION OF THE STOCK. THE AO OBTAINED THE COPY OF STOCK STA TEMENT SUBMITTED ON 31.3.2009 TO THE BANK OF INDIA, SEHORE BRANCH AND IT WAS NOTICED THAT THE ASSESSEE HAS SHOWN STOC K OF RS. 33,04,500/- AS ON 31.3.2009, WHEREAS IN THE BOOKS O F ACCOUNT, THE ASSESSEE HAD SHOWN CLOSING STOCK OF RS . 20,52,592/-. THUS, THERE WAS DIFFERENCE OF RS. 12,5 1,592/-. SHRI RAJENDRA KUMAR AGARWAL, SEHORE VS. ITO, 2(3), BHOPAL I.T.A.NO. 424/IND/2014 A.Y. 2009-10 3 3 THE AO ASKED THE ASSESSEE TO EXPLAIN EH REASON OR D IFFERENCE, BUT THE AO STATED THAT THE ASSESSEE HAD NOT FURNISH ED ANY EXPLANATION IN RESPECT OF THE DIFFERENCE IN THE STA TEMENT OF CLOSING STOCK AS ON 31.3.2009 FURNISHED TO THE BANK AND CLOSING STOCK SHOWN IN PROFIT AND LOSS ACCOUNT AND BALANCE SHEET. THE AO NOTICED THAT THERE WAS A HUGE DIFFERE NCE IN VARIOUS ITEMS OF STOCK AS UNDER :- S.NO. NAME OF THE ITEM QTY. AS PER BANK STATEMENT (QTLS) QTY. AS PER TRADING A/C (QTLS.) 1. PULSES 375 250.1 2. RICE 540 450.1 3. POHA 130 80.47 4. THE AO NOTICED THAT THE VALUATION OF PARMAL DID NOT MATCH AS PER TRADING ACCOUNT VIS--VIS THE BANK STO CK STATEMENT. THE ASSESSEE HAD ALSO SHOWN HEAVY SHORTA GE IN QUANTITY-WISE DETAILS FURNISHED I.E. 871 KGS. IN PU LSES, 2433 KGS. IN RICE AND 440 KG. IN POHA. THEREFORE, THE AO CONCLUDED THAT ALL THESE FACTS LEAD TO THE CONCLUSION THAT PR OPER STOCK RECORDS WERE NOT MAINTAINED BY THE ASSESSEE AND HEN CE THE RESULTS SHOWN BY THE ASSESSEE CANNOT BE ACCEPTED. ACCORDINGLY, IN THE ABSENCE OF ANY EXPLANATION BY T HE ASSESSEE REGARDING DIFFERENCE IN STOCK, THE AO MADE ADDITION OF RS. SHRI RAJENDRA KUMAR AGARWAL, SEHORE VS. ITO, 2(3), BHOPAL I.T.A.NO. 424/IND/2014 A.Y. 2009-10 4 4 12,51,592/- U/S 69 OF THE ACT ON ACCOUNT OF UNEXPLA INED INVESTMENT IN THE EXCESS STOCK AS SHOWN IN THE BANK STATEMENT. 5. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE. 6. THE LD. AUTHORIZED REPRESENTATIVE HAS FILED THE WRI TTEN SUBMISSION, WHICH READS AS UNDER :- GROUND NO. 1-2 : ADDITION FOR STOCK STATEMENT STOCK AS PER BANK STATEMENT : RS. 33,04,500 STOCK AS PER AUDITED ACCOUNTS : RS. 22,52,592 DIFFERENCE ADDED BY LD. AO. RS. 12,51,908 THE QUANTITY AND VALUE AS PER BANK STATEMENT VIS- -VIS AUDITED ACCOUNTS IS GIVEN AS UNDER:- STOCK ITEM PER BANK STATEMENT PER AUDITED ACCOUNTS DIFFERENC E QTY. (QTLS) RATE VALUE QTY. (QTLS) RATE (CALCU LATED) VALUE QTY RATE VALUE PULSES 375.00 4,200 15,75,000 250.10 3,900 9,75,390 124.90 300 5,99,610 RICE 540.00 2,100 11,34,000 450.10 1,640 7,38,164 8 9.90 460 3,95,836 POHA 130.00 1,850 2,40,500 80.47 1,755 1,41,225 49. 53 95 99,275 PARMAL - - 80,000 61.90 2,500 1,54,750 - - (74,750) KIRANA - - 2,75,000 - - 43,063 - - 7,31,937 TOTAL 33,04,500 20,52,592 12,51,908 THE DIFFERENCE DUE TO QUANTITY IS RS. 4,87,110/- FO R PULSES (124.90 QTLS. X RS. 3,900), RS. 1,47,436 FO R SHRI RAJENDRA KUMAR AGARWAL, SEHORE VS. ITO, 2(3), BHOPAL I.T.A.NO. 424/IND/2014 A.Y. 2009-10 5 5 RICE ( 89.90 QTLS. X RS. 1,640/-) AND RS. 3,986 FOR POHA. THE TOTAL COMES TO RS. 6,38,532. THE DIFFERENCE DUE TO RATE IS THE BALANCE AMOUNT OF RS. 6,13,376/-. SUBMISSIONS : AT THE OUTSET, IT IS SUBMITTED THAT IT IS A SETTLED LAW THAT ENTERPRISES INFLATE THEIR STOCK, WHILE SUBMITT ING THE BANK STATEMENTS, TO GET A HIGHER CASH CREDIT LIMIT FROM BANK. IN ANY CASE, THE PRESENT CASE IF T HE STOCK WAS SUBMITTED TO THE BANK AT A HIGHER FIGURE, SAME COULD NOT HAVE BEEN A BASIS FOR MAKING ADDITION, WITHOUT ANY CORROBORATIVE EVIDENCES. THE JUDGMENTS HAVE NOT BEEN DISTINGUISHED BETWEEN WHETHER THE QUANTITY OF STOCK WAS HIGHER OR VALUE O F STOCK WAS HIGHER. IN BOTH THE CASES, THE ADDITION F OR STOCK HAS BEEN DELETED, IF THERE WAS NO CORROBORATIVE EVIDENCE TO SHOW THAT ASSESSEE HAD MADE INVESTMENT IN STOCK. RELIANCE IS PLACED ON FOLLOWING CASES :- SHRI RAJENDRA KUMAR AGARWAL, SEHORE VS. ITO, 2(3), BHOPAL I.T.A.NO. 424/IND/2014 A.Y. 2009-10 6 6 (A) CIT VS. KHAN AND SIROHI STEEL ROLLING MILLS, 152 TAXMAN 224 ( ALL ) (B) CIT VS. VEERDIP ROLLERS P. LIMITED, 323 ITR 341 (GUJ). (C) CIT VS. RAMKRISHNA MILLS (COIMBATORE) LIMITED, 93 ITR 49 (MAD) (D) CIT VS. RELAXO FOOTWEAR, 259 ITR 744 (RAJ) (E) CIT VS. PREM SINGH & CO., 163 ITR 434 (DEL) (F) ITO VS. BHAGWATI PRASAD RASIKA, 232 CTR 101 (CHATTIS). (G) CIT VS. PADMAVATHI COTTON, 236 ITR 340 (MAD) (H) INDIA MOTOR PARTS & ACCESSORIES PVT.LTD., 60 ITR 531 (MAD). (I) CIT VS. N.SWAMY (2002) 125 TAXMAN 233 (MAD.) (J) CIT VS. APCOM COMPUTERS P.LTD., 292 ITR 630 (MAD). SHRI RAJENDRA KUMAR AGARWAL, SEHORE VS. ITO, 2(3), BHOPAL I.T.A.NO. 424/IND/2014 A.Y. 2009-10 7 7 6. LD CIT(A) QUOTED THE FOLLOWING PHRASE FROM THE STOCK STATEMENT SUBMITTED TO THE BANK: 'WE HEREBY CERTIFY THAT THE QUALITY, QUANTITY AND RATES OF THE STOCKS NOTED ABOVE HYPOTHECATED TO THE BANK ARE TRUE AND THE SAID STOCKS ARE EITHER OUR OWN ABSOLUTE PROPERTY OR THAT WE HAVE SUCH AN INTEREST IN THEM AS ENTITLES US TO HYPOTHECATE THEM TO THE BANK TO THE FULL EXTENT OF THE BANK ADVANCES TO US AGAIN THESE GOODS AND THAT THEY ARE NOT SUBJECT TO ANY LIEN. CLAIM OR CHARGE OF ANY SORT AND ON THE STRENGTH OF THIS DECLARATION OF OURS THE ADVANCE HAS BEEN TAKEN. IN ORDER TO VERIFY OUR ABOVE STATEMENT THE BANK IS AT LIBERTY TO HAVE THE GOODS COUNTED AND/ OR WEIGHED AT ANYTIME OF OUR EXPENSE AND WE HEREBY AGREE TO ACCEPT AS CONCLUSIVE PROOF THE RESULT OR SUCH CHECKING AND/ OR WEIGHMENT AS CERTIFIED BY AN OFFICER OF THE BANK. SHRI RAJENDRA KUMAR AGARWAL, SEHORE VS. ITO, 2(3), BHOPAL I.T.A.NO. 424/IND/2014 A.Y. 2009-10 8 8 THE PRICES DETAINED IN THE ABOVE STATEMENT ARE EITHER THE MARKET PRICES OR THE COST PRICE WHICHEVER ARE LOWER. THE ABOVE STOCKS ARE FULLY COVERED AGAINST FIRE AND ALL RIOT RISKS AND EMERGENCY RISKS INSURANCE. THE BANK'S NAME BOARD DISPLAYING THE HYPOTHECATION CHARGE IS PROMINENTLY EXHIBITED AT OUR BUSINESS PREMISES.' THE APPELLANT SUBMITS THAT: - A) THE SUBMISSION OF THE APPELLANT, SINCE BEGINNING IS THAT THE STOCK STATEMENT SUBMITTED TO THE BANK WAS INFLATED. THIS DECLARATION, THEREFORE HAS NO VALUE. GIVING SUCH DECLARATION INCORRECTLY MAY BE A VIOLATION OF THE BANK'S TRUST AND POLICY, HOWEVER, THIS DOES NOT PROVE THAT THE ASSESSEE HAD EXCESS STOCK ON THAT DATE. A PERSON CANNOT INCRIMINATE HIMSELF BY GIVING A WRONG STATEMENT. B) THE APPELLANT SIGNED THIS STATEMENT IN THE PRINTED FORM OF THE BANK. THIS PRINTED FORM COULD SHRI RAJENDRA KUMAR AGARWAL, SEHORE VS. ITO, 2(3), BHOPAL I.T.A.NO. 424/IND/2014 A.Y. 2009-10 9 9 NOT HAVE BEEN MODIFIED BY THE ASSESSEE, WHILE SIGNING IT. IT IS A SETTLED LAW THAT THE BORROWERS SIGN ON SUCH THE PRE-PRINTED DOCUMENTS, WHICH COULD NOT BE MODIFIED BY THE BORROWER, CANNOT BIND THE BORROWER. THE BORROWER, IN ANY CASE, IS BOUND TO BANK AND NOT TO THE INCOME-TAX DEPARTMENT. THE CORRECT POSITION CAN BE EXPLAINED BY THE BORROWER BEFORE THE INCOME-TAX DEPARTMENT. ALTERNATIVE PLEA :- THE ASSESSEE HAS MAINTAINED REGULAR BOOKS OF ACCOUNTS. THE ASSESSEE HAS MAINTAINED CASH BOOK, LEDGER, JOURNAL ETC. (A) ALL THESE BOOKS ARE AUDITED BY CA. NO DEFECT WAS FOUND. (B) THE ID ASSESSING OFFICER ALSO DID NOT FIND ANY DEFECT IN THE BOOKS OF ACCOUNTS. (C) NO UNACCOUNTED PURCHASES WERE EVER NOTICED SHRI RAJENDRA KUMAR AGARWAL, SEHORE VS. ITO, 2(3), BHOPAL I.T.A.NO. 424/IND/2014 A.Y. 2009-10 10 10 BY THE ID ASSESSING OFFICER OR BY THE ID CIT(A). (D) THE GROSS PROFIT AND NET PROFIT OFFERED BY IS QUITE SUFFICIENT IN THE FACTS OF THE CASE. THUS, NO ADDITION IS CALLED FOR. IN ALTERNATIVE, IT IS SUBMITTED THAT IF CLOSING STO CK IS INCREASED, CREDIT SHALL BE GIVEN IN THE OPENING STOCK OF NEXT YEAR. V.K.J. BUILDERS AND CONTRACTORS, 15 ITJ 295 ( S. C. ) INDIAN MACHINERY, 61 ITR 236 (PAT). 7. ON THE OTHER HAND, THE LD. DR RELIED UPON THE ORDER OF CIT(A) AND LD. DR HAS ALSO RELIED UPON THE DECIS ION OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF RECON M ACHINE TOOLS P.LTD., (2006) 286 ITR 637 (KAR.) AND THE DEC ISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF B.T. STEELS LIMITED, 328 ITR 471 ( P & H). SHRI RAJENDRA KUMAR AGARWAL, SEHORE VS. ITO, 2(3), BHOPAL I.T.A.NO. 424/IND/2014 A.Y. 2009-10 11 11 8. THE LD. DR SUBMITTED THAT IN THE INSTANT CASE, THE ASSESSEE WAS GIVEN SHOW CAUSE NOTICE TO EXPLAIN THE DIFFERENCE SHOWN IN THE BANK AND IN THE BOOKS OF AC COUNT, BUT THE ASSESSEE DID NOT GIVE ANY EXPLANATION TO AO . THE AO HAS ALSO REJECTED THE BOOK RESULT U/S 135 OF THE IN COME-TAX ACT, 1961. THEREFORE, THE CIT(A)S ORDER MAY BE CON FIRMED. 9. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) HAS DISMISSED THE APPEAL. 10. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT IN THIS CASE IT IS ADMITTED FACTS ON R ECORD THAT THE ASSESSEE HAS OBTAINED CC LIMIT FROM BANK ON HYPOTHE CATION OF THE STOCK. IN THE BANK STATEMENT SUBMITTED BY THE A SSESSEE, IT WAS NOTICED THAT THE ASSESSEE HAS SHOWN THE STOCK O F RS. 33,04,500/- ON 31 ST MARCH, 2009, WHEREAS IN THE BOOKS OF ACCOUNT, THE ASSESSEE HAD SHOWN CLOSING STOCK OF RS . 20,52,592/-. THE ASSESSEE WAS ASKED TO EXPLAIN THE DIFFERENCE, BUT THE ASSESSEE HAD NOT FURNISHED ANY EXPLANATION WITH RESPECT TO DIFFERENCE IN STATEMENT OF CLOSING STOCK FURNISHED TO SHRI RAJENDRA KUMAR AGARWAL, SEHORE VS. ITO, 2(3), BHOPAL I.T.A.NO. 424/IND/2014 A.Y. 2009-10 12 12 THE BANK AND CLOSING STOCK SHOWN IN THE PROFIT AND LOSS ACCOUNT AND THE BALANCE SHEET. 11. WE HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER AND THE AO HAS VERIFIED THE BOOKS OF ACCOUNT AND THE AO WAS OF THE VIEW THAT BOOK RESULT OF THE ASSESSEE IS NOT RE LIABLE. THEREFORE, HE HAS REJECTED THE BOOK RESULT. WE FIND THAT SIMILAR ISSUE HAD COME UP BEFORE VARIOUS HIGH COURTS AND PARTICULARLY BEFORE THE HON'BLE KARNATAKA HIGH COUR T IN THE CASE OF RECON MACHINE TOOLS P.LTD., (2006) 286 ITR 637 (KAR.), WHEREIN UNDER THE SIMILAR FACTS, THE ORDER OF THE T RIBUNAL WAS CONFIRMED. THEREFORE, IN OUR OPINION, NO INTERFEREN CE IS REQUIRED. MOREOVER, WE FIND THAT THE LD. CIT(A) HAS DEALT WITH THIS ISSUE IN DETAIL IN HIS ORDER IN PARA 4.4, WHIC H READS AS UNDER :- 4.4 WE HAVE CAREFULLY CONSIDERED THE SUBMISSI ON OF THE APPELLANT AND FACTS OF THE CASE. IT IS PERTINEN T TO NOTE THAT THE APPELLANT HAD OBTAINED CC LIMIT FROM THE B ANK ON HYPOTHECATION OF STOCK. THE APPELLANT FURNISHED STO CK STATEMENT AS ON 31/03/2009 BEFORE THE BANK AND AS PER SHRI RAJENDRA KUMAR AGARWAL, SEHORE VS. ITO, 2(3), BHOPAL I.T.A.NO. 424/IND/2014 A.Y. 2009-10 13 13 THIS STATEMENT, THE APPELLANT WAS HAVING STOCK OF RS.33,04,500/- AS ON 31/03/2009 . IT IS PERTINENT TO NOTE THAT THE APPELLANT HIMSELF HAD VERIFIED THE QUALITY , QUANTITY AND RATES OF STOCKS, WHICH WERE HYPOTHECAT ED TO THE BANK. THE RELEVANT CERTIFICATE GIVEN BY THE APP ELLANT IS REPRODUCED AS UNDER: - 'WE HEREBY CERTIFY THAT THE QUALITY, QUANTITY AND RATES OF THE STOCKS NOTED ABOVE HYPOTHECATED TO THE BANK ARE TRUE AND THE SAID STOCKS ARE EITHER OUR OWN ABSOLUTE PROPERTY OR THAT WE HAVE SUCH AN INTEREST IN THEM AS ENTITLES US TO HYPOTHECATE THEM TO THE BANK TO THE FULL EXTENT OF THE BANK ADVANCES TO US AGAIN THESE GOODS AND THAT THEY ARE NOT SUBJECT TO ANY LIEN. CLAIM OR CHARGE OF ANY SORT AND ON THE STRENGTH OF THIS DECLARATION OF OURS THE ADVANCE HA S BEEN TAKEN. IN ORDER TO VERIFY OUR ABOVE STATEMENT THE BANK IS AT LIBERTY TO HAVE THE GOODS COUNTED AND/OR WEIGHED AT ANY TIME OF OUR EXPENSE AND WE HEREBY AGREE TO ACCEPT AS CONCLUSIVE PROOF THE RESU LT SHRI RAJENDRA KUMAR AGARWAL, SEHORE VS. ITO, 2(3), BHOPAL I.T.A.NO. 424/IND/2014 A.Y. 2009-10 14 14 OR SUCH CHECKING AND/OR WEIGHMENT AS CERTIFIED BY AN OFFICER OF THE BANK. THE PRICES DETAILED IN THE ABOVE STATEMENT ARE EITH ER THE MARKET PRICES OR THE COST PRICE WHICHEVER ARE LOWER. THE ABOVE STOCKS ARE FULLY COVERED AGAINST F IRE AND ALL RIOT RISKS AND EMERGENCY RISKS INSURANCE. THE BANK'S NAME BOARD DISPLAYING THE HYPOTHECATION CHARGE IS PROMINENTLY EXHIBITED AT OUR BUSINESS PREMISES. ' FROM THE ABOVE, IT IS, THUS, CLEAR THAT THE APPELLA NT HAD PREPARED THIS STOCK STATEMENT AFTER PHYSICAL VERIFICATION AND GIVEN THE CERTIFICATE UNDER HIS SIGNATURE TO THE BANK. IT MAY ALSO NOT BE OUT OF PL ACE TO MENTION HERE THAT THE BANK OFFICIALS ALSO INSPEC T THE STOCK AS THE SAME IS BEING HYPOTHECATED TO THE BANK FOR OBTAINING LOAN. THEREFORE, THE APPELLANT CANNOT DENY THAT THE STOCK STATEMENT FURNISHED BEFORE THE BANK BY THE APPELLANT HIMSELF WAS NOT REFLECTING CORRECT POSITION OF STOCK AS ON 31/03/2009. SHRI RAJENDRA KUMAR AGARWAL, SEHORE VS. ITO, 2(3), BHOPAL I.T.A.NO. 424/IND/2014 A.Y. 2009-10 15 15 FURTHER, IT IS NOTICED THAT THE A.O. HAD ALSO OBSER VED THAT THERE WAS HUGE SHORTAGE SHOWN BY THE APPELLANT AT 877 KG IN PULSES, 2433 KG IN RICE AND 440 KG IN POHA, WHICH WAS ALSO NOT SATISFACTORILY EXPLAINED B Y THE APPELLANT. IT IS DIFFICULT TO BELIEVE SUCH A HU GE SHORTAGE IN THE CASE OF TRADING OF FOOD GRAINS. THU S, THE A.O. WAS JUSTIFIED IN HOLDING THAT THE APPELLAN T HAD NOT PROPERLY MAINTAINED THE RECORD OF STOCK AND THE RESULT SHOWN BY THE APPELLANT WERE NOT RELIABLE . CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE , I AM OF THE OPINION THAT THE A.O. WAS JUSTIFIED IN MAKING ADDITION OF RS. 12,51,592/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN EXCESS STOCK, WHICH WAS NOT SHOWN IN THE PROFIT & LOSS ACCOUNT AND BALANCE- SHEET AS ON 31/03/2009 . IN THIS REGARD, REFERENCE CAN ALSO BE MADE TO SOME OF THE DECISIONS OF HON'BL E HIGH COURTS. THE HON'BLE KARNATAKA HIGH COURT HAD AN OCCASION TO CONSIDER (HE SAME ISSUE IN THE CASE OF RECON SHRI RAJENDRA KUMAR AGARWAL, SEHORE VS. ITO, 2(3), BHOPAL I.T.A.NO. 424/IND/2014 A.Y. 2009-10 16 16 MACHINE TOOLS P. LTD. V. COMMISSIONER OF INCOME-LAX (2006) 286 ITR 0637. IN THIS CASE, THE ASSESSING OFFICER MADE AN ADDITION IN THE LIGHT OF VARIATION OF CLOSING STOCK RECORDED BY THE ASSESSEE IN ITS ACCOUNTS AND THE STOCK STATEMENT DECLARED AND GIVEN TO THE BANK AS ON THE LAST DATE OF THE ACCOUNTING Y EAR RELATING TO THE ASSESSMENT YEAR 1989-90. THE COMMISSIONER (APPEALS) AND THE TRIBUNAL CONFIRMED THE SAID ADDITION MADE BY THE ASSESSING OFFICER. ON APPEAL, THE HON'BLE HIGH COURT HELD AS UNDER (HEADNOTES): 'HELD, (I) ... (II) THAT WITH REGARD TO THE CLOSING SLACK THERE WAS NO ACCEPTABLE EVIDENCE TO DISBELIEVE THE BANK STATEMENT. THE ENTIRE AMOUNT SHOWN PERTAINED ONLY TO THE RAW MATERIALS. IN THE ABSENCE OF ACCEPTABLE MATERIAL. THE FINDINGS COULD NOT BE DISLODGED. SHRI RAJENDRA KUMAR AGARWAL, SEHORE VS. ITO, 2(3), BHOPAL I.T.A.NO. 424/IND/2014 A.Y. 2009-10 17 17 THEREFORE, THE TRIBUNAL WAS JUSTIFIED IN UPHOLDING THE ADDITION ON ACCOUNT OF VARIATION IN THE VALUE OF CLOSING STOCK BETWEEN THE VALUE DECLARED IN THE ACCOUNTS AND THE VALUE DECLARED TO THE BANK. ' SIMILAR VIEW WAS EXPRESSED BY THE HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF B. T. STEELS LTD. V. COMMISSIONER OF INCOME-TAX (2010) 328 ITR 0471 (P & H). IN THIS CASE ALSO, THE ASSESSING OFFICER MADE ADDITIONS TO THE DECLARED INCOME OF THE ASSESSEE ON THE BASIS OF STOCK AVAILABLE WITH IT BU T NOT REFLECTED IN THE BOOKS OF ACCOUNT, THE STOCK STATEMENT OF HYPOTHECATED GOODS FURNISHED TO THE BANK WAS ALSO AT VARIANCE WITH THE STOCK ENTERED IN THE BOOKS OF ACCOUNT THE COMMISSIONER (APPEALS) DELETED THE ADDITIONS OBSERVING THAT WITHOUT VERIFICATION FROM THE BANK, THE STOCK STATEMENT FURNISHED TO THE BANK COULD NOT HAVE BEEN RELIED UPON. THE TRIBUNAL SET ASIDE THE ORDER OF THE COMMISSIONER (APPEALS) AND RESTORED THAT OF THE SHRI RAJENDRA KUMAR AGARWAL, SEHORE VS. ITO, 2(3), BHOPAL I.T.A.NO. 424/IND/2014 A.Y. 2009-10 18 18 ASSESSING OFFICER. ON FURTHER APPEAL. THE HON'BLE HIGH COURT HELD AS UNDER (HEADNOTES) : 'HELD, DISMISSING THE APPEAL, THAT WHETHER DIFFEREN CE BETWEEN THE STATEMENT OF VALUE OF STOCK FURNISHED T O THE BANK AND ENTRIES IN THE BOOKS OF ACCOUNT, JUSTIFIED ADDITION, WAS A QUESTION OF FACT IN EACH INDIVIDUAL CASE. THE ASSESSING OFFICER HAD TO DETERMINE THE SAME ON THE BASIS OF BOOKS OF ACCOUNT AND OTHER MATERIAL AVAILABLE. THE BURDEN OF SHOWING TAXABLE INCOME WAS ON THE REVENUE. THE BURDEN COULD BE DISCHARGED BY DRAWING APPROPRIATE INFERENCE FROM THE MATERIAL ON RECORD. THE OBJECT O F ASSESSMENT WAS TO TAX THE REAL INCOME OF THE ASSESSEE. THE ASSESSING OFFICER DREW INFERENCE FROM THE STATEMENT FURNISHED BY THE ASSESSEE TO THE BANK AND MADE THE ADDITION ON THAT BASIS. THE TRIBUNAL HAD HELD THAT THE ASSESSING OFFICER NOT ONLY HAD TH E BANK STATEMENT BEFORE HIM BUT ALSO THE VERIFICATION THEREOF BY THE REGIONAL OFFICER THAT THE STOCK WAS SHRI RAJENDRA KUMAR AGARWAL, SEHORE VS. ITO, 2(3), BHOPAL I.T.A.NO. 424/IND/2014 A.Y. 2009-10 19 19 ACTUALLY LYING WITH THE ASSESSEE. THE ASSESSEE WAS GIVEN DUE OPPORTUNITY TO EXPLAIN THE DIFFERENCE, BU T IT COULD NOT GIVE ANY SATISFACTORY EXPLANATION. IN THE SE CIRCUMSTANCES, THE COMMISSIONER (APPEALS) WAS NOT JUSTIFIED IN DELETING THE ADDITION. THE FINDING REC ORDED BY THE TRIBUNAL BEING A FINDING OF FACT DID NOT CAL L FOR ANY INTERFERENCE.' THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND LEGAL POSITION ON THE ISSUE INVOLVED, THE ADDITION OF RS.12,51,592/- IS CONFIRMED. 12. THE ASSESSEE HAS ALSO RELIED UPON THE VARIOUS DECISIONS BEFORE US OF VARIOUS HIGH COURTS, BUT IN ALL THESE JUDGMENTS FACTS ARE DIFFERENT IN EACH AND EVERY CAS E AND, THEREFORE, THE FACTS OF THIS CASE ARE SIMILAR TO TH E FACTS STATED IN CIT(A)S ORDER. THEREFORE, WE CONFIRM THE ACTION OF THE AO. SHRI RAJENDRA KUMAR AGARWAL, SEHORE VS. ITO, 2(3), BHOPAL I.T.A.NO. 424/IND/2014 A.Y. 2009-10 20 20 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT O N 9 TH FEBRUARY , 2016. SD/- (B.C.MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED :9 TH FEBRUARY, 2016. CPU*