The Income Tax Officer, Muktsar V. M/s Sanman Rice Mills, Muktsar

ITA 455/ASR/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7816 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 10-07-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 06-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAHUL DHAWANLD
• Assessee Lawyers: ADITYA KUMAR CAS
• Keywords: Unexplained investment; Depreciation
• Section: 143(3); 133(6); 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TR IBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH.T.S. KAPOOR, ACCOUNTANT MEMBER AND SH.N.K.CHOUDHRY, JUDICIAL MEMBER I.T.A. NO.455(ASR)/2016 ASSESSMENT YEAR:2012-13 INCOME TAX OFFICER, WARD-II(2), MUKTSAR. VS. M/S SANMAN RICE MILLS, SADARWALA ROAD, MUKTSAR. PAN:AFUPV-2701A (APPELLANT) (RESPONDENT) APPELLANT BY: SH. RAHUL DHAWAN (LD. D R) RESPONDENT BY: SH. ASHWANI KUMAR & SH. ADITYA KUMAR (CAS) DATE OF HEARING: 14.09.2017 DATE OF PRONOU NCEMENT:18.09.2017 ORDER PER N. K. CHOUDHRY: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE REV ENUE DEPARTMENT, ON FEELING AGGRIEVED AGAINST THE ORDER DATED 20.06.2 016, PASSED BY THE LD. CIT(A)-, BATHINDA, RELEVANT TO THE ASST. YEAR : 2012-13. 2. THE REVENUE DEPARTMENT HAS RAISED THE FOLLOWING GR OUNDS OF APPEAL. (I) THE LD. CIT(A) HAS ERRED IN NOT TAKING INTO CONSIDERATION, THE JUDGMENTS OF PUNJAB & HARYANA HI GH COURT IN THE CASE OF M/S B.T. STEELS LTD. VS. C1T, IT A NO. 186 OF 2004- AND FAILING TO APPRECIATE THE RATI O OF THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF SHAKUNTLA THUKRAL VS. CIT (366 JTR 644). (II) THE LD. CIT(A) HAS ERRED IN IGNORING THAT STOC K STATEMENTS DULY SIGNED BY THE ASSESSEE WERE SUBMITT ED BY THE ASSESSEE TO THE BANK AND THE BANK AS PER ITS PROCEDURE GOT THE STOCK VERIFIED. IT A NO.455(ASR)/2016 AS ST. YEAR: 2012-13 2 (III) THE LD. CIT(A) HAS ERRED BY FAILING TO APPREC IATE THAT THE STOCK STATEMENT GIVEN BY THE ASSESSEE TO T HE BANK IS AN ADMISSION AND BINDING ON THE ASSESSEE AS PER SECTION 34 OF THE EVIDENCE ACT IN VIEW OF THE JUDGM ENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CHUHARMAL VS. C1T(1998) 172 ITR 250(SC) WHEREIN IT WAS HELD THAT SALUTARY PRINCIPLE OF COMMON LAW JURISPRUDENCE IMBEDDED IN SECTION 110 OF EVIDENCE ACT COULD BE AP PLIED TO THE TAXATION PROCEEDINGS. (IV) THE LD. CIT(A) HAS ERRED BY FAILING TO APPRE CIATE THAT THE ONUS WAS ON THE ASSESSEE TO PROVE THE DIFFERENCE ON STOCK AND REBUT THE PRESUMPTION OF UNDISCLOSED STOCK AS SUBMITTED TO THE BANK AND THAT ASSESSEE HAD FAILED TO DISCHARGE THIS ONUS. (V) THE LD. CIT (A) HAS ERRED BY FAILING TO APPRECIATE THAT THE ASSESSEE WAS NOT AT LIBERTY TO SUPPLY TWO DIFFERENT SETS OF INFORMATION AT THE SAME TIME TO T HE BANK AND THE I.T. DEPARTMENT AND SUCH CONDUCT WOULD COMP EL AN INFERENCE THAT ASSESSEE WAS NOT SHOWING HIS CORR ECT INCOME SOMETHING HE WAS LEGALLY BOUND TO DO. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE BRIEF FACTS OF THE CASE ARE THAT RETURN OF INCOME WA S FILED BY THE ASSESSEE ON 29.09.2012 DECLARING AN INCOME OF RS.5,91,940/-. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRU TINY UNDER CASS WITH REMARKS LARGE INCREASE IN UNSECURED LOA NS. IT IS SUBMITTED THAT THE ASSESSEE IS RUNNING A RICE SHELLER AT MUKTSAR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS FOUND THAT THE ASSESSEE HAS SHOWN GP AT 11.36% & NP AT 0. 37% AS COMPARED TO THE LAST YEAR I.E. 12.58% AND 0.28% RESPECTIVELY. AS THE GROSS PROFIT AND NET PROFIT WERE FO UND LOWER THAN THAT OF LAST YEAR, THE ASSESSEE WAS ASKED TO FILE THE JUSTIFICATION REGARDING MANUFACTURING OF RICE, TRADING , STOCK QUANTITY AND RATE SUBMITTED TO THE BANK ON 31.03.201 2, CLAIMING OF DEPRECIATION, INTEREST, BONUS AND NON CHARGING OF IN TEREST ON ADVANCES. THE ASSESSEE FILED REPLY DATED 24.03.2015 STATIN G THAT THE SEPARATE ACCOUNTS ARE NOT POSSIBLE. IT IS ALSO SUBMITTED THAT DETAIL OF HYPOTHECATED BY THE ASSESSEE TO THE BANK WERE ALSO IT A NO.455(ASR)/2016 AS ST. YEAR: 2012-13 3 CALLED FOR U/S 133(6) FROM PUNJAB NATIONAL BANK, MUKT SAR. IT IS SUBMITTED THAT ON EXAMINATION OF BANK STATEMENT OF VA LUATION OF STOCK IT WAS NOTICED THAT THERE IS A HUGE DIFFERENCE IN T HE VALUE OF STOCK AS PER BOOKS OF ACCOUNT OF THE ASSESSEE AS REPORTED IN THE AUDIT REPORT AS PER BANK ASSESSMENT. THE ASSESSEE ALSO STATED THAT THE FIGURES FOR VALUATION OF STOCK AS MADE I N THE STOCK STATEMENT FURNISHED TO THE BANK WERE ON ESTIMATED BASIS KEEPING IN VIEW THE FUTURE PROFIT AND IN ORDER TO A VAIL EXCESS OVERDRAFT. THE FIGURE ARE IMAGINARY AND FIGURE MENT IONED IN THE INCOME TAX RETURN ARE REAL THE REPLY OF THE ASSESSEE WAS FOUND NOT CONVINCING. ACCORDINGLY, THE DIFFERENCE IN VALUE OF STOCK WORKS OUT AT RS.1,37,95,965/- AS PER BOOKS OF ACCOUNT AND AS REPORTED IN THE AUDIT REPORT AND AS PER BANK STATEMEN T. ACCORDINGLY, A RELIANCE WAS ALSO MADE ON THE CASE OF SMT. SHAKUNTLA THUKRAL VS. CIT REPORTED IN 366-ITR-644(P& H) WHEREIN THE HON'BLE HIGH COURT HAS UPHELD THE ADDITIO N ON ACCOUNT OF DIFFERENCE IN THE VALUE OF STOCK SHOWN BY THE ASSESSEE IN THE STATEMENT GIVEN TO THE BANK VIS-A VIS THE STOCK SHOWN IN THE BOOKS OF ACCOUNT. ACCORDINGLY, AN ADDITION OF RS.1,37,95,965/- WAS MADE TO THE RETURNED INCOME. IT WAS ALSO SUBMITTED THAT ON EXAMINATION OF THE TRAD ING AND PROFIT & LOSS ACCOUNT IT WAS NOTICED THAT THE ASSESSEE H AS DEBITED HUGE EXPENSES ON ACCOUNT OF LABOUR, DAILY WAGES LABOUR AND MACHINERY REPAIR AND MISC. EXPENSES. THE ASSESSEE ALSO NOT SHOWN ANY SALE OF SCRAP DURING THE YEAR AND THE VOUCHERS PRODUCED FOR THESE EXPENSES WERE FOUND SELF PREPARED AND THE SATISFACTION OF THE SAME COULD NOT BE AUTHENTICATED. ACCO RDINGLY, A DISALLOWANCE OF RS.1,00,000/- WAS ALSO MADE AND ADDED TO THE INCOME. IT A NO.455(ASR)/2016 AS ST. YEAR: 2012-13 4 IT IS ALSO SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON EXAMINATION OF PROFIT & LOSS ACCOUNT IT WA S ALSO NOTICED THAT THE ASSESSEE HAS DEBITED CAR EXPENSES AT RS.86,505/-, DEP. CAR AT RS.2,30,918/-, MOBILE EXPENS ES AT RS.1,00,836/- AND TELEPHONE EXPENSES AT RS.9932/-. OUT OF THESE EXPENSES AN ADDITION OF RS.71,365/- WAS ALSO MADE T O THE INCOME RETURNED. IN VIEW OF THE ABOVE FACTS THE TOTAL INCOME WAS ASSESSED AT RS.1,45,59,270/- VIDE ORDER U/S 143(3) DATED 28.03 .2015. A DEMAND OF RS.58,93,350/- WAS CREATED. THE PENALTY PROC EEDINGS U/S 271(1) (C) FOR FURNISHING OF INACCURATE PARTICULARS O F INCOME WERE ALSO INITIATED. 4. ON FEELING AGGRIEVED AGAINST THE ORDER PASSED BY THE A SSESSING OFFICER, THE ASSESSEE PREFERRED TO FILE THE FIRST APPEAL BEFORE THE LD. CIT(A), WHO WHILE DELETING THE ADDITION MADE BY THE ASSESSING OFFICER OBSERVED AS UNDER: THAT IN THE INSTANT CASE THERE IS NO DIFFERENCE IN THE QUANTITY OF STOCK STATEMENTS SUBMITTED TO THE BANK AND THE APPELLANT' S BOOKS. THERE IS ONLY DIFFERENCE IN THE VALUE OF STOCK IN RESPECT OF FOUR ITEMS VIZ. (I) BASMATI PADDY (II) BASMATI RICE (III) SELA RICE (IV ) RAW RICE, WHICH DIFFERENCE HAS BEEN WORKED OUT OF RS.1,37,95,965/- IT IS ALSO AN ADMITTED FACT THAT THE APPELLANT'S STOCK WAS HYPOTH ECATED AND NOT PLEDGED WITH THE BANK IN AS MUCH AS THE STOCK WAS I N THE POSSESSION OF THE APPELLANT AND NOT OF THE BANK. IN HYPOTHECAT ION STATEMENTS ONLY APPROXIMATE FIGURES ARE FURNISHED FOR THE STOCK TO BE SHOWN TO COVER THE HYPOTHECATION LOANS. THE SAID FIGURES CANNOT BE CONSIDERED TO BE SACROSANCT OR BE TAKEN AT THEIR FACE VALUE TO BE TR UE AND CORRECT AS THEY ARE NEITHER COUNTED, NOR VERIFIED OR ACTUALLY MEASURED BY THE FINANCING BANK. BANKERS NORMALLY DO NOT TAKE OBJECT ION TO THE IT A NO.455(ASR)/2016 AS ST. YEAR: 2012-13 5 ESTIMATED BALLPARK FIGURES AS THE LOANS TAKEN ARE O THERWISE SECURED BY OTHER SECURITIES OFFERED BY THE LOAN TAKERS. IT IS ALSO NOT IN DISPUTE THAT WHEN ESTIMATED FIGURES ARE SUBMITTED TO THE BANK FO R HYPOTHECATION PURPOSES ONLY, THEY ARE GENERALLY INFLATED TO GET A CCOMMODATION. THE LD. CIT(A) HAS HELD THAT THE DECISION OF HON'BLE PUN JAB & HARYANA HIGH COURT IN THE CASE OF SMT. SHAKUNTLA THAKRAL REP ORTED IN [2014] 366 ITR 644 IS NOT APPLICABLE IN THE CASE OF THE AP PELLANT ASSESSEE. ACCORDINGLY, THE ADDITION OF RS.1,37,95,965/- MADE TO THE INCOME OF THE ASSESSEE HAS BEEN DELETED. HOWEVER, THE LD. CIT(A) HAS SUSTAINED THE ADHOC AND ESTIMATED ADDITIONS OF RS. 1 LAC OF AND RS. 71,365/- MADE ON ACCOUN T OF BEING REASONABLE IN VIEW OF MARGINAL DIP IN THE GP AND NP FIGURES IN THE YEAR UNDER CONSIDERATION AS COMPARED TO THE IMMEDIATELY PRECE DING ASSESSMENT YEAR. 5. THE REVENUE DEPARTMENT PREFERRED TO FILE THE INSTA NT APPEAL AGAINST THE ORDER PASSED BY THE LD. CIT(A). IN SUPPORT OF ITS APPEAL, THE LD. DR SUBMITTED THAT THE DETAILS OF STOCK HYPOTHE CATED BY THE ASSESSEE TO THE BANK WAS CALLED FOR AND ON EXAMINATION OF BANKS STATEMENTS VALUATION OF STOCK IT WAS NOTICED THAT THERE WAS HUGE DIFFERENCE IN THE VALUE OF STOCK AS PER BOOKS OF ACCOUNT O F THE ASSESSEE AS REPORTED IN THE AUDIT REPORT AND AS PER BANK STATEM ENTS. THE ASSESSEE SUBMITTED THAT THE FIGURES FOR VALUATION OF STOCK AS MADE IN THE STOCK STATEMENTS FURNISHED TO THE BANK ON ESTIMATED B ASIS KEEPING IN VIEW THE FUTURE PROFIT AND IN ORDER TO AVAIL EXCE SS OVERDRAFT. THE STOCK STATEMENTS SUBMITTED TO THE BANK WERE DULY SIGNED BY THE IT A NO.455(ASR)/2016 AS ST. YEAR: 2012-13 6 ASSESSEE AND THERE IS NOTHING MENTIONED IN THESE STATEMENT S THAT THESE ARE ESTIMATED FIGURES. THE FIGURES ARE IMAGINARY AND FIGURE MENTIONED IN THE INCOME TAX RETURN ARE REAL. ACCORDING LY, THE AO HAS RIGHTLY INFERRED THAT THERE WAS SOMETHING WRONG IN T HE BOOKS OF ACCOUNT OF THE ASSESSEE AND THE ASSESSEE HAS WITH HOLD THE INFORMATION FOR THE REASON BEST KNOWN TO HIM. THE LD. DR ALSO SUBMITTED THAT THE LD. CIT(A) HAS ER RED IN HOLDING THAT THE ASSESSEE'S STOCK WAS HYPOTHECATED AND PLED GED WITH THE BANK AS MUCH AS THE STOCK WAS IN THE POSSESSION OF THE ASSE SSEE AND NOT OF THE BANK. IN THE HYPOTHECATED STATEMENTS O NLY APPROXIMATELY FIGURES ARE FURNISHED FOR THE STOCK TO BE SHOWN TO COVER UP THE HYPOTHECATION LOANS AND THE SAID FIGURES CANNOT BE CONSIDERED TO BE SACROSANCT OR BE TAKEN AT THEIR FACE VALUE TO BE TRUE AND CORRECT AS THEY ARE NEITHER COUNTED, NOR VERIFIED OR ACTUALLY MEASURED BY THE FINANCING BANK. IT IS SUBMITTED THAT THE DIFFERENCE OF RS.1,37,95,965/- WAS CORRECTLY WORKED OUT AS PER DETAILS AS PER BOOKS OF A CCOUNT AS REPORTED IN THE AUDIT REPORT AND AS PER BANK STATEME NTS AS MENTIONED IN THE ASSESSMENT ORDER. ACCORDINGLY, THE DECISION OF HON'BL E PUNJAB & HARYANA HIGH COURT IN THE CASE OF SMT. SHAKUNTLA THAKRA L REPORTED IN [2014] 366 ITR 644 WAS RIGHTLY RELIED UPON BY THE AO . 6. ON THE CONTRARY, THE LD. AR RELIED UPON THE ORDE R PASSED BY THE CIT(A) AND SUBMITTED THAT ORDER UNDER CHALLENGE IS REA SONABLE, LOGICAL IT A NO.455(ASR)/2016 AS ST. YEAR: 2012-13 7 AND BEST ON FACTS AND CIRCUMSTANCES, THEREFORE, DOES NOT D ESERVE TO BE INTERFERED WITH. 7. WE HAVE GONE THROUGH WITH THE FACTS AND CIRCUMSTAN CES OF THE CASE, AS RECENTLY THIS BENCH HAS ALREADY DEALT WITH THE SI MILAR AND IDENTICAL ISSUE IN THE CASE OF ITO VS. M/S. JAIN INDUSTRI ES, IN ITA NO.450(ASR)/2016 FOR ASST. YEAR: 2012-13. FOR THE SAKE OF CONVENIENCE AND BREVITY THE FINDING PART OF THE SAID O RDER IS REPRODUCED HEREIN BELOW. 8. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE THROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE FIRST G ROUND OF APPEAL FILED BY REVENUE IS THAT THE LD. CIT(A) HAD NOT FOL LOWED RATIO OF JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE O F SMT. SHAKUNTALA THAKRAL VS. CIT, [2014] 366 ITR 644. WE FIND THAT LD. CIT(A) HAS CLEARLY DISTINGUISHED THE FACTS OF THE P RESENT CASE WITH THE FACT OF THE CASE LAW RELIED UPON BY ASSESSING O FFICER. HE HAS HELD THAT BOOKS IN THE CASE OF SMT. SHAKUNTALA THAKRAL VS. CIT, [2014] 366 ITR 644 WERE NOT FOUND TO BE ACCURATE BY ASSESSING OFFICER BECAUSE OF THE SPECIFIC DEFECT IN NON RECOR DING OF SALES. HE HAS FURTHER HELD THAT IN THAT CASE STOCK STATEMENT FIELD ON 4.7.2007 WAS REPLACED BY ANOTHER STOCK STATEMENT WH ICH ESTABLISHED THAT NO STOCK INVENTORY WAS PREPARED AS ON THE CLOSE OF THE YEAR. HE HAS FURTHER HELD THAT IN THAT CASE OF SMT. SHAKUNTALA THAKRAL VS. CIT, [2014] 366 ITR 644, SHE HERSELF HAD NOT DISPUTED THAT THE VALUE OF STOCK AS SUBMITTED TO THE BANK W AS ACTUALLY LAYING IN THE BUSINESS PREMISES AS ON 31.03.2005. I T WAS FURTHER HELD BY LD. CIT(A) THAT REPORTS OF PHYSICAL INSPECT ION CARRIED OUT BY BANK AUTHORITIES IN RESPECT OF SMT. THAKRALS STOCK AT QUARTERLY INTERVAL WAS AVAILABLE FOR THE PERUSAL OF THE AO AN D THE APPELLATE AUTHORITIES. AS REGARDS THE CASE LAWS OF B.T. STEE LS AS RELIED ON BY LD. DR, WE FIND THAT IN THAT CASE THE STOCKS WERE P HYSICALLY VERIFIED BY THE REGIONAL OFFICE OF BANK AND ASSESSEE WAS NOT ABLE TO GIVE EXPLANATION FOR THE DIFFERENCE WHEREAS IN THE PRESE NT CASE THERE IS NO DIFFERENCE IN THE QUANTITATIVE TALLY AND DIFFERE NCE IS ONLY ON ACCOUNT OF ADOPTION OF HIGHER RATES FOR SAME QUANTI TY WHICH WAS SUBMITTED TO BANK AUTHORITIES. FOR THE SAKE OF COMP LETENESS THE QUANTITATIVE TALLY AS PER BOOKS AND AS SUBMITTED TO BANK ALONGWITH ITS VALUATIONS AS RECORDED BY ASSESSING OFFICER AT PAGE 2 OF HIS ORDER IS REPRODUCED BELOW. IT A NO.455(ASR)/2016 AS ST. YEAR: 2012-13 8 INFORMATION AS PER BANK AS ON 31-03-2012 INFORMATION AS PER AUDIT REPORT AS ON 31-03- 2012 SR. NO. ITEM QUANTITY (INQTLS.) RATE (IN RS. AMOUNT (IN RS. ) QUANTITY (INQTLS.) RATE (IN RS.) VALUE (IN RS.) DIFFERENCE 1 . PADDY PR 7320 1400 10248000 7320.50 1230 90042 15 1243785 2. BASMATI PADDY 16390 2200 36058000 1 6406.20 1680 27562416 8495584 3. RICE RAW 1750 1900 3325000 1750.20 1625 2844075 480925 10220294 MOREOVER, WE FIND THAT AMRITSAR BENCH OF HONBLE IT AT IN ITS ORDER DATED 07.02.2016 IN THE CASE OF BABA FARID SO LVEX PVT. LTD. AFTER CONSIDERING THE CASE LAW OF SMT. SHAKUNTLA TH AKRAL (SUPRA) HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE. IN VIEW OF THE ABOVE, THE FIRST GROUND OF APPEAL TAKEN BY REVENUE DOES NO T HOLD ANY FORCE. 9. NOW COMING TO THE ADDITION, WE FIND THAT THE L D. CIT(A) HAS RELIED UPON THE JUDGMENT OF HONBLE PUNJ AB & HARYANA HIGH COURT IN THE CASES OF SANTOSH BOX FACTORY; (II) SIDHU RICE MILLS; AND (III) M/S. DEVI DAYAL RICE MILS. THE LD. CIT(A) HAS ALSO HELD THAT IN TH ESE JUDGMENTS THERE WAS A CLEAR UNANIMITY OF THE OPINIO N TO THE EFFECT THAT STOCK IN THE STATEMENT MADE BEFORE THE BANK FOR HYPOTHECATION PURPOSES CANNOT BE HELD AGAI NST THE ASSESSEE. WE FIND THAT HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SHEENA EXPORTS IN ITA 382 OF 2011 HAS HELD THAT VALUE FURNISHED TO THE BANK WITHOUT ANY DETAIL OR VERIFICATION BY THE BANK MAY NOT CONS TITUTE THE BASIS TO MAKE ADDITIONS IN THE FACE OF OTHER EV IDENCE TO THE CONTRARY. WE FURTHER FIND THAT IN THE PRESEN T CASE ASSESSING OFFICER DID NOT POINT OUT ANY DISCREPANCI ES IN THE BOOKS WITH REFERENCE TO PURCHASE SALE OR CLOSIN G STOCK. THE AMRITSAR BENCH OF TRIBUNAL IN THE CASE O F BABA FARID SOLVEX (PVT.) LTD HAS FOLLOWED THE CASE OF ISHAR INFRASTRUCTURE DEVELOPMENT (PVT) LTD. IN ITA NO. 198(ASR)/2013. THE FINDINGS OF THE TRIBUNAL IN THE CASE OF ISHAR INFRASTRUCTURE DEVELOPMENT (P) LTD. ARE REPRODUCED HEREIN BELOW. 24. IT IS A FACT ON RECORD THAT THE CREDIT FACILIT Y HAS BEEN EXTENDED BY THE BANK TO THE ASSESSEE AGAINST THE HYPOTHECATI ON OF STOCK AND NOT AGAINST PLEDGE OF STOCK, IN WHICH THE CONTROL A ND POSSESSION OF THE STOCK REMAINED WITH THE ASSESSEE. 25. THE AO HAS NOT POINTED OUT ANY DISCREPANCY IN T HE BOOKS OF ACCOUNT OR PURCHASE/SALES OR HAS NOT BROUGHT ON REC ORD TO PROVE THAT EXTRA PURCHASES HAVE BEEN MADE BY THE ASSESSEE AT ANY POINT OF TIME. THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE A UDITED IS NOT IT A NO.455(ASR)/2016 AS ST. YEAR: 2012-13 9 UNDER DISPUTE AND NO DEFECT BY THE AUDITOR HAS BEEN POINTED OUT. IT IS THE REAL INCOME WHICH CAN BE TAXED, WHEREAS IN T HE PRESENT CASES ALL THE ADDITIONS ARE MADE ON CONJECTURES AND SURMI SES. 26. TIME AND AGAIN BEFORE BOTH THE AUTHORITIES BELO W, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THE EXPLANAT ION THAT THE STATEMENT HAS BEEN SUBMITTED BEFORE THE BANK AUTHOR ITIES ONLY ON ESTIMATED BASIS TO AVAIL OF THE BANK LOAN AND THERE IS NO OTHER PURPOSE. THIS CONTENTION OF THE ASSESSEE HAS NOT BE EN REBUTTED AT ANY POINT OF TIME BY THE AO OR BY THE LD. DR. IT I S A FACT THAT THE AO AS NOT POINTED OUT ANY DEFECTS IN THE BOOKS OF ACCO UNT AND IN FACT, THE AO HAS NOT INVOKED THE PROVISIONS OF SECTION 14 5(3) OF THE ACT. AS ARGUED BY THE LD. DR THAT CASH CREDIT LIMIT IS CALCULATED ON THE BASIS OF DP REGISTER, WHICH IN TURN IS MAINTAINED O N PHYSICAL VERIFICATION OF THE STOCK AND NO DOCUMENTARY EVIDEN CE HAS BEEN BROUGHT ON RECORD THAT THE STOCK MENTIONED IN THE . DP REGISTER BY THIRD PARTY I.E. BANK AUTHORITIES, HAS BEEN MAINTAI NED ON PHYSICAL VERIFICATION OF THE STOCK, MAINTAINED BY THE ASSESS EE AT DIFFERENT CITIES IN DIFFERENT STATES. 27. THE AO HAS MUCH RELIED ON THE DECISION IN THE C ASE OF DEVGAN RICE & GENERAL MILLS (SUPRA). THE ISSUE BEFO RE THE HONBLE PUNJAB & HARYANA HIGH COURT, IN THE CASE OF DEVGAN RICE & GENERAL MILLS (SUPRA) WAS WITH REGARD TO THE PROCEE DINGS U/S 148 OF THE ACT AND WHETHER THE SAID PROCEEDINGS U/S 148 OF THE ACT COULD BE INITIATED ON THE BASIS OF INFORMATION REGARDING INFLATING THE VALUE OF THE STOCK IN THE BANK STATEMENT WAS RECEIVED FRO M THE BANK AFTER COMPLETION OF ASSESSMENT U/S 143(3) OF THE ACT.. TH E HONBLE HIGH COURT HAS HELD THAT THE REOPENING IN SUCH CASES CAN BE DONE. HOWEVER, THE DECISION OF HONBLE PUNJAB & HARYANA H IGH COURT IN THE CASE OF DEVGAN RICE & GENERAL MILLS (SUPRA) WAS WITH REGARD TO A DIFFERENT CONTEXT AND DID NOT PROVE THAT THE ASSE SSEE HAD MADE UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. 28. MUCH RELIANCE HAS BEEN PLACED BY THE LD. DR ON THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE C ASE OF SMT. SHAKUNTLA THUKRAL VS. CIT REPORTED AT 366 ITR 644. AS REQUIRED ORDER OF THE CIT(A) IN THE CASE OF SHAKUNTLA THUKRA L WAS PLACED ON RECORD BY THE PARTY AND ON PERUSAL OF THE SAME IN P ARA 2.11 TO 2.18 AND AT PAGE 4 OF CIT(A)S ORDER, IT WAS FOUND THAT THE BOOKS OF THE ASSESSEE WERE NOT ACCURATE BECAUSE OF SPECIFIC DEFE CT OF NON- RECORDING OF SALES IN THE BOOKS OF ACCOUNT .POINTE D OUT. IN PARA 2.8 AT PAGE 6 OF CIT(A)S ORDER IN THE CASE OF SHAKUNTL A THUKRAL, STOCK STATEMENT FILED ON 04.07.2007 HAS BEEN REPLACED BY OTHER STOCK STATEMENT WHICH ESTABLISHES THAT NO STOCK INVENTORY WAS PREPARED AT THE CLOSE OF THE FINANCIAL YEAR, WHEREAS THERE A RE NO SUCH FINDING BY THE AO IN ANY OF THE PRESENT APPEALS. 29. FURTHER, IN THE CASE OF SHAKUNTLA THUKRAL (SUPR A), THE LD. CIT(A) HAS RECORDED FINDING AT PARA 2.11 (PAGE 24), OF THE ORDER THAT THE HIGHER STOCK AS ON 31.03.2005 WAS GIVEN FOR T HE PURPOSE OF MAKING PAYMENT FOR IMPORT OF MACHINERY CANNOT BE A CCEPTED AS THE PAYMENT FOR PURCHASE OF MACHINERY HAD ALREADY BEEN RELEASED IN IT A NO.455(ASR)/2016 AS ST. YEAR: 2012-13 10 FEBRUARY, 2005. IN PARA 2.12.1 (PAGE 25) OF LD. CIT (A)S ORDER, IT HAS BEEN PERUSED THAT TAT THERE ARE REPORTS OF PHYS ICAL INSPECTION CARRIED OUT BY THE BANK AUTHORITIES IN RESPECT OF A SSESSEES STOCK AT QUARTERLY INTERVALS IS AVAILALE AND SUCH FINDINGS H AS NOT BEEN REBUTTED BEFORE THE ITAT OR BEFORE THE HONBLE HIGH COURT. BUT IN THE PRESENT CASE IN VIEW OF OUR FINDINGS HEREINABOVE, N OTHING HAS BEEN ESTABLISHED THAT PHYSICAL INSPECTION OF THE STOCK HAS BEEN CARRIED OUT AS PER FACTS ON RECORD. FURTHER, IN PARA 2.12.2 (PAGE 25), OF CIT(A)S ORDER IN THE CASE OF SMT. SHAKUNTLA THUKRA L (SUPRA), IT HAS BEEN STATED BY THE LD. CIT(A) THAT THE ASSESSEE HA S NOT DISPUTED THE STOCK OF THE VALUE WHICH WAS SUBMITTED TO THE BANK WAS ACTUALLY LYING IN BUSINESS PREMISES AS ON 31.03.200 5. BUT IN THE PRESENT APPEAL THE ASSESSEE ALL ALONG BEFORE THE AO AND THE LD. CIT(A) AND BEFORE US STATING THAT THE STOCK WAS INF LATED TO GET THE CASH CREDIT LIMIT FROM BANK. THUS, IN THE CASE OF S MT. SHAKUNTAL THUKRAL (SUPRA), THE AO AFTER POINTING OUT DEFECTS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE A CATEGORICAL FINDING HAS B EEN GIVEN THAT THE BOOKS OF ACCOUNT ARE NOT ACCURATE AND MEANING T HEREBY THAT THE BOOKS OF ACCOUNT WERE REJECTED. BUT IN THE PRESENT APPEAL, THERE IS NO SUCH FINDING BY THE AO AND NO BOOKS OF ACCOUNT H AVE BEEN REJECTED AND PROVISIONS OF SECTION 145(3) HAVE NOT BEEN INVOKED. IN THE CASE OF SMT. SHAKUNTLA THUKRAL (SUPRA), THE LD. CIT(A) HAS RELIED UPON THE PHYSICAL INSPECTION CARRIED OUT BY THE BANK AUTHORITIES IN RESPECT OF ASSESSEES STOCK AT QUART ERLY INTERVALS, AS MENTIONED HEREINABOVE AND SUCH FINDINGS HAVE NEITHE R BEEN REBUTTED BEFORE THE LD. CIT(A) OR ITAT OR HONBLE H IGH COURT. BUT IN THE PRESENT CASE, THE ASSESSEE HAS ESTABLISHED THAT NO PHYSICAL INSPECTION OF THE STOCK HAS BEEN CARRIED AS PER FAC TS ON RECORD. 30. FURTHER AND FINALLY, IN THE CASE OF SHAKUNTLA T HUKRAL (SUPRA), THE LD. CIT(A) HAS RECORDED THE FINDING THAT THE AS SESSEE HAS ACCEPTED THAT FACT THAT THE STOCK AS PER STOCK STA TEMENT AS ON 31.03.2005 WAS LYING IN THE PREMISES OF THE ASSESSE E.. BUT IN THE PRESENT APPEAL, THE ASSESSEE ALL ALONG STATED BEF ORE THE AUTHORITIES BELOW AND BEFORE US THAT THE STOCK WAS INFLATED TO GET THE CASH CREDIT LIMIT FROM BANK AND THE ONUS IS ON THE REVENUE TO PROVE THAT THE ASSESSEE OWNED THE STOCK MORE THAN THE STOCK REFLECTED IN THE BALANCE SHEET AS ON 31.03.2005, WH ICH HAS NOT BEEN DONE IN ANY OF THE CASE REFERRED TO HEREINABOV E. 31. IN VIEW OF THE ABOVE DISCUSSION, THE DECISION O F SMT. SHAKUNTLA THUKRAL (SUPRA) AS RELIED UPON BY THE LD. DR IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE PR ESENT CASE. 32. THE DECISIONS RELIED UPON BY THE LD. CIT(A) OF THE HONBLE PUNJAB & HARYANA HIGH COURT, IN THE CASES OF M/S.SA NTOSH BOX FACTORY, M/S. SIDHU RICE MILLS AND IN THE CASE OF M/S. DEVI DAYAL RICE MILLS ARE SQUARELY APPLICABLE TO THE F ACTS OF THE PRESENT CASE AS THE REVENUE AS THE REVENUE HAS NOT BROUGHT ON RECORD DURING THE ASSESSMENT PROCEEDINGS OR BEFORE THE LD. CIT(A) OR EVEN BEFORE US THAT PHYSICAL VERIFICATION OF THE STOCK HAS ACTUALLY BEEN IT A NO.455(ASR)/2016 AS ST. YEAR: 2012-13 11 DONE AND ACCORDINGLY STOCK STATEMENTS SO SUBMITTED BEFORE THE BANK AUTHORITIES AND DP REGISTER CANNOT BE RELIED U PON. 33. IN THE CASE OF CIT VS. VEERDIP ROLLER (P) LTD. (2010) 323 ITR 341 (GUJ), THE FACTS ARE THAT THE AO MADE ADDITION ON ACCOUNT OF DIFFERENCE IN THE VALUE OF CLOSING STOCK FURNISHED TO THE BANK AND THE VALUE OF THE STOCK FOUND IN THE BOOKS OF ACCOUN T FURNISHED TO THE INCOME TAX AUTHORITIES INFLATED STOCK WAS HYPOTHE TICAL AND NOT PLEDGED AND THE BANK OFFICIALS HAD NOT VERIFIED TH E STATEMENT SHOWING INFLATED STOCK SO PRODUCED BY THE ASSESSEE . THE ADDITION ON ACCOUNT OF DIFFERENCE FURNISHED TO THE BANK AS P ER BOOKS OF ACCOUNT U/S 69B OF THE ACT CAN NOT BE SUSTAINED. CO NSEQUENTLY, THE APPEAL WAS DISMISSED BY THE HONBLE GUJRAT HIGH COU RT AGAINST THE SAID DECISION, THE REVENUE WENT IN APPEAL BEFORE TH E HONBLE SUPREME COURT AND THE HONBLE SUPREME COURT VIDE IT S ORDER DATED 13.12.2008 DISMISSED THE SLP FILED BY THE DEPARTME NT. 34. SIMILAR DECISIONS HAVE BEEN MADE BY VARIOUS COU RTS OF LAW REFERRED TO HEREINABOVE: I) CIT VS. SIDHU RICE & GENERAL MILLS REPORTED IN 2 81 ITR 428 (P&H) II) CIT VS. SANTOSH BOX FACTORY (P) LTD.., 44 IT RE PS. 472 (P&H) III) CIT VS. N. SWAMY REPORTEDE IN 241 ITR 363 (MAD RAS) I) ITO VS. DEVI DAYAL RICE MILLS REPORTED IN 75 TTJ 24 (ITAT, AMRITSAR BENCH. II) CIT VS. SIROHI STEEL ROLLING MILLS, REPORTED IN 200 CTR 595 (ALL.) III) ASHOK KUMAR VS. ITO, REPORTED IN 201 CTR 178 ( J & K) IV) CIT VS. DAS INDUSTRIES, REPORTED IN 303 ITR 199 (AL L.) V) CIT VS. SRI PADMAVATHI COTTON MILLS, REPORTED IN 23 6 ITR 340 (MAD.) VI) JAI SHARDA RICE MILLS. VS ITO REPORTED IN 36 ITD 25 4 (ITAT, ASR.) VII) CIT VS. RIDDHI STEEL AND TUBES (P) LTD. REPORTED I N 220 TAXMAN 148 (GUJ.) VIII) CIT VS. APCOM COMPUTERS P. LTD. REPORTED IN (2007) 292 ITR 630 (MAD.). IN VIEW OF THE FACTS AND CIRCUMSTANCES AS ABOVE, AND IN VIEW OF THE JUDICIAL PRECEDENTS, WE DO NOT F IND ANY INFIRMITY IN THE ORDER OF LD. CIT(A), THEREFORE, TH E APPEAL FILED BY THE REVENUE IS DISMISSED. IT A NO.455(ASR)/2016 AS ST. YEAR: 2012-13 12 HENCE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE INSTANT APPEAL AND OF THE AFORESAID ORDER ARE IDENTICAL AND S IMILAR, THEREFORE, THE APPEAL OF THE REVENUE DEPARTMENT IS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENU E DEPARTMENT STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.0 9.2017. SD/- SD/- (T. S. KAPOOR) (N.K.CHOUDHRY ) ACCOUNTANT MEMBER JUDICIA L MEMBER DATED:18.09.2017. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER