The Deputy Commissioner of Income Tax, Bathinda V. M/s. Ishar Infrastructure Developers P.Ltd., Bathinda

ITA 536/ASR/2013

• Counselvise Citation: 53620914 RSA 2013
• Duration Of Justice: 1 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 04-03-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 13-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Keywords: Depreciation; Opportunity of being heard; Question of law; Reason to believe
• Section: 143(3); 142(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO. 198(ASR)/2013 ASSESSMENT YEAR:2009-10 PAN :AABCI2581A DY. COMMR. OF INCOME TAX, VS. ISHAR INFRASTRUCTU RE DEVELOPER (P) LTD; CIRCLE-1, BATHINDA. BATHINDA. (APPELLANT) (RESPONDENT) I.T.A. NO. 536(ASR)/2013 ASSESSMENT YEAR:2010-11 PAN :AABCI2581A DY. COMMR. OF INCOME TAX, VS. ISHAR INFRASTRUCTU RE DEVELOPERS (P) LTD; CIRCLE-1, BATHINDA. BATHINDA. (APPELLANT) (RESPONDENT) I.T.A. NO. 199(ASR)/2013 ASSESSMENT YEAR:2009-10 PAN :AAIFR7212D DY. COMMR. OF INCOME TAX, VS. M/S. ROYAL DEEP CO NSTRUCTION CO. CIRCLE-1, BATHINDA. BATHINDA. (APPELLANT) (RESPONDENT) I.T.A. NO. 200(ASR)/2013 ASSESSMENT YEAR:2009-10 PAN :AAHFB6283B 2 DY. COMMR. OF INCOME TAX, VS. M/S. BHALARIA CONS TRUCTIONS, CIRCLE-1, BATHINDA. BATHINDA. (APPELLANT) (RESPONDENT) I.T.A. NO. 571(ASR)/2013 ASSESSMENT YEAR:2010-11 PAN :AABCE7889F INCOME TAX OFFICER, VS. M/S. EURO INFRASTRUCTURE & POWER LTD. WARD-1(1), BATHINDA. BATHINDA. (APPELLANT) (RESPONDENT) DEPARTMENT BY:SH. TARSEM LAL, DR ASSESSEES BY:SH.P.N.ARORA, ADVOCATE I.T.A. NO. 457(ASR)/2013 ASSESSMENT YEAR:2009-10 PAN :AAHFR9629R DY. COMMR. OF INCOME TAX, VS. M/S. RAM KUMAR BAN SAL CIRCLE-1, BATHINDA. BATHINDA. (APPELLANT) (RESPONDENT) C.O.NO.16(ASR)/2014 (ARISING OUT OF I.T.A. NO. 457(ASR)/2013) ASSESSMENT YEAR:2009-10 PAN :AAHFR9629R .M/S. RAM KUMAR BANSAL VS. DY. COMMR. OF INCOME TA X, BATHINDA. CIRCLE-1, BATHINDA. (APPELLANT) (RESPONDENT) DEPARTMENT BY:SH. TARSEM LAL, DR ASSESSEES BY:S/SH.P.N.ARORA & P.K.SINGLA ADVOCATE DATE OF HEARING:04/02/2015 DATE OF PRONOUNCEMENT:26/03/2015 3 ORDER PER B.P.JAIN,AM: THESE SIX APPEALS OF THE REVENUE IN THE CASE OF FI VE ASSESSES ARISE FROM DIFFERENT ORDERS OF CIT(A), BATHINDA, AS PER D ETAILS GIVEN BELOW. : S.NO. ITA NO. PARTICULARS OF THE CASE DETAIL OF CIT(A) DATE OF ORDER OF CIT(A) ASSTT. YR. 1. 198(ASR)/2013 ISHAR INFRASTRUCTURE DEVELOPERS (P) LTD. BATHINDA 31.01.2013 2009- 10 2. 536(ASR)/2013 -DO- -DO- 30.05.2013 2010- 11 3. 199(ASR)/2013 ROYALDEEP CONSTRUCTION CO. -DO- 31.01.2013 2009- 10 4 200(ASR)/2013 BHALARIA CONSTRUCTIONS -DO- -DO- -DO- 5. 571(ASR)/2013 EURO INFRASTRUCTURE & POWER L:TD. -DO- 27.06.2013 2010- 11 6. 457(ASR)/2013 RAM KUMAR BANSAL -DO- 22.03.2013 2009- 10 7. CO.NO.16(ASR)/14 RAM KUMAR BANSL -DO- -DO- -DO- 4 2. THE ASSESSEE SH. RAM KUMAR BANSAL HAS ALSO FILE D CROSS OBJECTION BEARING NO.16(ASR)/2013. 3. THE REVENUE IN THE CASE OF ISHAR INFRASTRUCTURE DEVELOPERS PVT. LTD., IN ITA NO.198(ASR)/2013 FOR THE ASSESSMENT YEAR 20 09-10, HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN NOT APPRECIAT ING THAT ON THE FACE OF THE FACT THAT THE ASSESSEE HAD HIMSELF SUPP LIED A FIGURE OF RS.6,39,30,292/- AS ITS CLOSING STOCK AS AT 31.0 3.2009 TO ITS BANK, THE ONUS OF PROVING TO THE DEPARTMENT THAT TH E CLOSING STOCK AS DISCLOSED IN ITS I.T. RETURN AT RS.4,66,1 3,761/- WAS THE CORRECT FIGURES, HAD SQUARELY SHIFTED ON IT, WHICH IT HAS FAILED TO DISCHARGE. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN OPINIONED THA T THE AO HAS FAILED TO BRING ANY EVIDENCE ON RECORD TO JUSTIFY T HE ADDITION BECAUSE IT WAS NOT POSSIBLE BY THE BANK STAFF TO C OUNT OR WEIGH THE STOCK WORTH CRORES OF RUPEES LYING IN OPEN AT V ARIOUS PLACES. HE HAS HELD THAT THE AO HAS FAILED TO BRING MATERIA L ON RECORD TO SHOW THAT THE APPELLANT IN FACT POSSESSED LARGER QUANTITY OF STOCK THAN THE STOCK RECORDED IN THE BOOKS OF ACCOU NT AND THAT A MERE REFERENCE TO THE DRAWING POWER REGISTER WAS NO T SUFFICIENT EVIDENCE. 4. THE REVENUE IN THE CASE OF ISHAR INFRASTRUCTUR E DEVELOPERS PVT. LTD., IN ITA NO.536(ASR)/2013 FOR THE ASSESSMENT YEAR 201 0-11 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN NOT AP PRECIATING THAT ON THE FACE OF THE FACT THAT THE ASSESSEE HAD HIMSELF 5 SUPPLIED A FIGURE OF RS.10,82,22,030/- AS ITS CLOSI NG STOCK AS AT 20.03.2010 TO ITS BANK, THE ONUS OF PROVING TO THE DEPARTMENT THAT THE CLOSING STOCK AS DISCLOSED IN ITS I.T. RET URN AT RS.7,52,50,550/- WAS THE CORRECT FIGURES, HAD SQU ARELY SHIFTED ON IT, WHICH IT HAS FAILED TO DISCHARGE. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN OPINIONED THA T THE AO HAS FAILED TO BRING ANY EVIDENCE ON RECORD TO JUSTIFY T HE ADDITION BECAUSE IT WAS NOT POSSIBLE BY THE BANK STAFF TO C OUNT OR WEIGH THE STOCK WORTH CRORES OF RUPEES LYING IN OPEN AT V ARIOUS PLACES. HE HAS HELD THAT THE AO HAS FAILED TO BRING MATERIA L ON RECORD TO SHOW THAT THE APPELLANT IN FACT POSSESSED LARGER QUANTITY OF STOCK THAN THE STOCK RECORDED IN THE BOOKS OF ACCOU NT AND THAT A MERE REFERENCE TO THE DRAWING POWER REGISTER WAS NO T SUFFICIENT EVIDENCE. 5. THE REVENUE IN THE CASE OF M/S. ROYALDEEP CNSTR UCTION CO., IN ITA NO.199(ASR)/2013 FOR THE ASSESSMENT YEAR 2009-10 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN NOT AP PRECIATING THAT ON THE FACE OF THE FACT THAT THE ASSESSEE HAD HIMSELF SUPPLIED A FIGURE OF RS.1,67,04,000/- AS ITS CLOSIN G STOCK AS AT 31.03.2009 TO ITS BANK, THE ONUS OF PROVING TO THE DEPARTMENT THAT THE CLOSING STOCK AS DISCLOSED IN ITS I.T. RET URN AT RS.1,15,60,000/- WAS THE CORRECT FIGURES, HAD SQU ARELY SHIFTED ON IT, WHICH IT HAS FAILED TO DISCHARGE. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN OPINIONED THA T THE AO HAS FAILED TO BRING ANY EVIDENCE ON RECORD TO JUSTIFY T HE ADDITION BECAUSE IT WAS NOT POSSIBLE BY THE BANK STAFF TO C OUNT OR WEIGH THE STOCK WORTH CRORES OF RUPEES LYING IN OPEN AT V ARIOUS PLACES. HE HAS HELD THAT THE AO HAS FAILED TO BRING MATERIA L ON RECORD TO SHOW THAT THE APPELLANT IN FACT POSSESSED LARGER QUANTITY OF 6 STOCK THAN THE STOCK RECORDED IN THE BOOKS OF ACCOU NT AND THAT A MERE REFERENCE TO THE DRAWING POWER REGISTER WAS NO T SUFFICIENT EVIDENCE. 6. THE REVENUE IN THE CASE OF M/S. BHALARIA CONSTR UCTIONS, BATHINDA, IN ITA NO.200(ASR)/2013 FOR THE ASSESSMENT YEAR 20 09-10 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN NO T APPRECIATING THAT ON THE FACE OF THE FACT THAT THE ASSESSEE HAD HIMSELF SUPPLIED A FIGURE OF RS.1,28,69,000/- AS IT S CLOSING STOCK AS AT 31.03.2010 TO ITS BANK, THE ONUS OF PRO VING TO THE DEPARTMENT THAT THE CLOSING STOCK AS DISCLOSED IN I TS I.T. RETURN AT RS.19,89,130/- WAS THE CORRECT FIGURES, HAD SQ UARELY SHIFTED ON IT, WHICH IT HAS FAILED TO DISCHARGE. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN OPINIONED THA T THE AO HAS FAILED TO BRING ANY EVIDENCE ON RECORD TO JUSTIFY T HE ADDITION BECAUSE IT WAS NOT POSSIBLE BY THE BANK STAFF TO C OUNT OR WEIGH THE STOCK WORTH CRORES OF RUPEES LYING IN OPEN AT V ARIOUS PLACES. HE HAS HELD THAT THE AO HAS FAILED TO BRING MATERIA L ON RECORD TO SHOW THAT THE APPELLANT IN FACT POSSESSED LARGER QUANTITY OF STOCK THAN THE STOCK RECORDED IN THE BOOKS OF ACCOU NT AND THAT A MERE REFERENCE TO THE DRAWING POWER REGISTER WAS NO T SUFFICIENT EVIDENCE. 7. THE REVENUE IN THE CASE OF RAM KUMAR BANSAL I N ITA NO.457(ASR)/2013 FOR THE ASSESSMENT YEAR 2009-10 H AS RAISED THE FOLLOWING GROUNDS OF APPEAL: 7 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN NOT AP PRECIATING THAT ON THE FACE OF THE FACT THAT THE ASSESSEE HAD HIMSELF SUPPLIED A FIGURE OF RS.2,99,50,000/- AS ITS CLOSIN G STOCK AS AT 31.03.2010 TO ITS BANK, THE ONUS OF PROVING TO THE DEPARTMENT THAT THE CLOSING STOCK AS DISCLOSED IN ITS I.T. RET URN AT RS.12,13,814/- WAS THE CORRECT FIGURES, HAD SQUAR ELY SHIFTED ON IT, WHICH IT HAS FAILED TO DISCHARGE. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN OPINIONED THA T THE AO HAS FAILED TO BRING ANY EVIDENCE ON RECORD TO JUSTIFY T HE ADDITION BECAUSE IT WAS NOT POSSIBLE BY THE BANK STAFF TO C OUNT OR WEIGH THE STOCK WORTH CRORES OF RUPEES LYING IN OPEN AT V ARIOUS PLACES. HE HAS HELD THAT THE AO HAS FAILED TO BRING MATERIA L ON RECORD TO SHOW THAT THE APPELLANT IN FACT POSSESSED LARGER QUANTITY OF STOCK THAN THE STOCK RECORDED IN THE BOOKS OF ACCOU NT AND THAT A MERE REFERENCE TO THE DRAWING POWER REGISTER WAS NO T SUFFICIENT EVIDENCE. 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS IN DELETING THE ADDITION MADE BY THE AO ON THE BASIS OF DIFFERENCE IN THE VALUE O F BOOK DEBT AS PER DRAWING POWER REGISTER OF THE BANK VIS--VIS VALUE OF BOOK DEBTS AS PER BALANCE SHEET FILED BEFORE THE DE PARTMENT. 8. THE REVENUE IN THE CASE OF EURO INFRASTRUCTURE & POWER LTD. IN ITA NO.571(ASR)/2013 FOR THE ASSESSMENT YEAR 2010-11. H AS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF : I) RS.2,69,86,910/- ON ACCOUNT OF EXCESSIVE STOCK BEING DIFFERENCE IN STOCK STATEMENTS SUBMITTED TO THE BAN K AND BALANCE SHEET SUBMITTED TO THE DEPARTMENT.. II) RS. 6,60,000/- ON ACCOUNT OF NON CHARGING OF I NTEREST ON DEBIT BALANCE FROM DEBTORS. 8 2. THAT IT IS PRAYED THAT THE ORDER OF THE LD. CIT (A) BE SET ASIDE AND THAT OF THE AO BE RESTORED. 9. IN C.O. BEARING NO. 16(ASR)/2013, THE ASSESSEE H AS RAISED THE FOLLOWING GROUNDS : 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED NOT ADJUDICATING GROUNDS NO. 5 AND 11 ON THE PLEA THAT AS THE MAIN GROUND OF APPEAL HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. THE 5 TH AND 11 TH GROUNDS OF APPEAL ARE AS UNDER: GROUND NO.5: WITHOUT PREJUDICE TO THE ABOV, THE LD . AO HAS ERRED IN LAW AND ON FACTS IN RECASTING THE TRADING ACCOUNT BY ONLY TAKING THE INFLATED FIGURE OF CLOSING STOCK AS PER BANK STATEMENT AND TAKING THE OPENING STOCK AS PER BOOKS OF ACCOUNT. I F BOTH THE FIGURES ARE TAKEN AS PER BANK ACCOUNT INSTEAD OF BOOKS OF ACCOUNTS, THERE REMAIN NO DIFFERENCE. AS SUCH, ADDITION MADE OF RS. 39155957/- ON THIS ACCOUNT IS UNCALLED FOR. THE SAME IS DELETED. GROUND NO.11:THAT THE LD. AO HAS ERRED IN LAW AND ON FACTS IN MAKING ADDITION OF RS.41415652/- IN THE RETURNED IN COME OF THE ASSESSEE WITHOUT POINTING OUT ANY DEFECT IN THE BO OKS OF ACCOUNT MAINTAINED IN THE REGULAR COURSE OF BUSINESS AS MAI NTAINED IN THE PAST, DULY AUDITED BY THE CHARTERED ACCOUNTANT. AS SUCH, ADDITION MADE WITHOUT REJECTING THE BOOKS OF ACCOUNTS IS UNCALLED FOR. THE SAME BE DELETED. 10. THE LD. DR, MR. TARSEM LAL, AT THE OUTSET, ARGU ED THAT THE ISSUE IN ALL THE APPEALS IS IDENTICAL AND WAS ACCEPTED BY THE LD . COUNSEL FOR THE ASSESSES APPEARING IN ALL THE APPEALS, SH. P.N.ARORA, ADVOCA TE THAT THE ISSUE IS IDENTICAL IN ALL THE APPEALS RAISED BY THE REVENUE. THE MINOR DIFFERENCES ARE 9 THERE IN FEW OF APPEALS WHICH WILL BE DISCUSSED I N THE COURSE OF ARGUMENTS BY BOTH THE PARTIES. 11. SINCE THE ISSUE IN ALL THE APPEALS IS SIMILAR, AS ARGUED BY BOTH THE PARTIES, ACCORDINGLY, WITH THE CONSENT OF BOTH THE PARTIES, THE ARGUMENTS WERE MADE BY BOTH THE PARTIES IN THE CASE OF ISHAR INFRA STRUCTURE DEVELOPERS PVT. LTD. IN ITA NO.198(ASR)/2013 FOR THE ASSESSMENT YEA R 2009-10. THEREFORE, WE PROCEED TO DECIDE THE APPEAL IN THE CASE OF DCI T VS. ISHAR INFRASTRUCTURE DEVELOPERS PVT. LTD. BATHINDA IN ITA NO.198(ASR)/2 013 FOR THE AY 2009- 10 AND OUR DECISION HEREINBELOW SHALL BE IDENTICALL Y APPLICABLE IN ALL THE APPEALS MENTIONED HEREINABOVE, AS THE ISSUE IN ALL THE APPEALS IS SIMILAR AS DISCUSSED HEREINABOVE. 12. ITA NO.198(ASR)/2013 FOR THE AY 2009-10 - DCIT VS. ISHAR INFRASTRUCTURE DEVELOPERS PVT. LTD; BATHINDA. THE BRIEF FACTS OF THE CASE AS ARISING OUT OF AOS ORDER ARE REPRODUCED HEREINBELOW: THE ASSESSEE CONTINUED TO PURSUE HIS BUSINESS OF C ONTRACTORSHIP DURING THE YEAR. THE CASE WAS SELECTED UNDER SCRUTINY THRO UGH CASS. NOTICE U/S 143(2) DATED 01.09.2010 WAS ISSUED AND SERVED UPON THE ASS ESSEE BY ACIT, CIRCLE-1, BATHINDA. THEREFORE, NOTICE U/S 142(1) ALONGWITH DE TAILED QUESTIONNAIRE WAS ISSUED ON 29.11.2010 WAS ISSUED BY HER. NOTICE U/S 142(1)/143(2) WAS ISSUED ON 13.12.2010 FIXING THE CASE FOR 21.12.2010. AFTER TH E CHANGE OF INCUMBENT, FRESH NOTICE U/S 143(2) DATED 07.06.2011 WAS ISSUED BY TH E UNDERSIGNED FIXING THE CASE FOR 16.06.2011. IN RESPONSE TO THESE NOTICES, S/SH. CHANDER RAHEJA, CHARTERED ACCOUNTANT AND TARSEM KAPPOR, ITP, COUNSEL FOR THE ASSESSEE ATTENDED THE ASSESSMENT PROCEEDINGS FROM TIME TO TIME AND FURNIS HED INFORMATION AS REQUISITIONED. DURING THE COURSE OF ASSESSMENT PROC EEDINGS, BOOKS OF ACCOUNTS, 10 BILLS AND VOUCHERS WERE PRODUCED WHICH WERE TEST CH ECKED. THE CASE DISCUSSED WITH HIM. DURING THE COURSE OF SCRUTINY IT WAS NOTICED THAT A S PER BOOKS OF ACCOUNT (DULY AUDITED BY SH. SUNIL BANSAL, CA, THE CLOSING STOCK OF THE FIRM AS ON 31.03.2009 STANDS AT RS.6,19,75,800/- WHILE AS PER PHYSICAL IN VENTORY PREPARED BY THE ASSESSEE AND SUBMITTED BEFORE THE BANK AUTHORITIES I.E., PUNJAB NATIONAL BANK, ARYA SAMAJ BRANCH, BATHINDA TO OBTAIN LOAN/LIMIT FA CILITY FROM BANK IN A/C NO.870002192 AS ON 31.03.2009, THE VALUE OF CLOSING STOCK WAS SHOWN AT RS.12,59,06,092/-. THE BANK AUTHORITIES HAVE SUBMIT TED CERTIFIED COPY OF DRAWING POWER REGISTER SHOWING STOCK POSITION OF THE ASSESS EE FROM JULY 2007 TO 31.01.2010 WHICH IS SIGNED BY THE OFFICER WHO PHYSI CALLY VERIFIED THE STOCK, STOCK STATEMENT AND FURTHER SIGNED BY THE INCHARGE INCUMB ENT MANGER WHICH HAS BEEN PLACED ON RECORD. THE BANK AUTHORITIES ALSO INTIMAT ED QUARTERLY STOCK POSITION OF THE ASSESSEE AS UNDER:- DATE OF STOCK STATEMENT AMOUNT OF STOCK (RS.) 31.03.2008 61,569,440 30.06. 2008 68,507,860 30.09. 2008 72,915,600 31.12.2008 74,605,500 31.03.2009 125,906,092 IT REVEALS THE DIFFERENCE OF RS.6,39,30,292/- (RS.1 2,59,06,092/- MINUS RS.6,19,75,800/-) ON ACCOUNT OF STOCK AS SHOWN IN B ALANCE SHEET SUBMITTED TO I.T. DEPARTMENT. AN OPPORTUNITY OF BEING HEARD WAS AFFORDED TO THE A SSESSEE VIDE THIS OFFICE LETTER DATED 04.11.2010 TO STATE AS TO WHY AN ADDITION OF RS.6,39,30,292/- BE NOT MADE ON ACCOUNT OF DIFFERENCE IN PHYSICAL STOCK AS SHOWN IN REGULAR BOOKS OF ACCOUNT AND AS TO WHY PENALTY PROCEEDINGS U/S 271(1) FOR F URNISHING OF INACCURATE PARTICULARS BE NOT INITIATED. THE CERTIFIED COPIES OF THE ALL DOCUMENTS AND LETTERS AS RECEIVED FROM BANK WERE ALSO SUPPLIED TO THE ASS ESSEE. IN RESPONSE TO THE QUERY, THE ASSESSEE SUBMITTED HIS WRITTEN SUBMISSIO NS DULY SIGNED BY THE COUNSEL OF THE ASSESSEE WHICH IS REPRODUCED AS UNDER:- DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A SSESSEE HAS BEEN COFRONTED WITH THE STOCK STATEMENT FURNISHED TO THE BANK FOR AVAILING THE OVERDRAFT FACILITY. AS PER THE STOCK STATEMENT AS ON 31.03.2009, SUBMIT TED TO THE BANK, THE ASSESSEE HAD A STOCK OF RS.12,59,06,092/- WHILE AS PER BALAN CE-SHEET, THE SAME STOOD AT RS.6,19,75,800/-. 2. FOR THIS DIFFERENCE IN STOCK, IT IS RESPECTFULL Y SUBMITTED THAT THE STATEMENT FILED WITH THE BANK WAS IN THE NATURE OF STOCK HYPO THECATED AND NOT PLEDGED. THE STOCK REMAINED IN THE POSSESSION AND UNDER THE CONT ROL OF THE ASSESSEE AT DIFFERENT LOCATIONS IN DIFFERENT STATES E.G.J&K, MADHYA PRADE SH, PUNJAB & CHANDIGARH WHERE CONTRACT WORKS WERE BEING EXECUTED. THE STOCK HYPOTHECATED WITH BANK WAS NEVER PHYSICALLY VERIFIED AT DIFFERENT SITES BY THE BANK AUTHORITIES. IT IS A MATTER OF COMMON KNOWLEDGE THAT IN THE CASE OF CONTRACTORS, T HE STOCK REMAIN SCATTERED AT DIFFERENT LOCATIONS IN THE OPEN AREA. IN OUR CASE, THESE LOCATIONS WERE IN DIFFERENT 11 STATES MENTIONED ABOVE. FURTHER, IN THE STATE OF M. P., THE WORKS WERE BEING EXECUTED OVER A RADIUS OF MORE THAN 50 KM. IN VIEW OF THE NATURE OF BUSINESS OF ASSESSEE, IT IS ALSO DIFFICULT TO TAKE EXACT MEASUR EMENTS OF MATERIAL/STOCK ACTUALLY AVAILABLE AND CONSUMED ON DAY TO DAY BASIS. THUS TH E VALUE OF THE STOCK IS SHOWN TO THE BANK ON SIMPLY ESTIMATED BASIS. 3. FURTHER, IT IS PERTINENT TO BRING IT TO YOUR KIN D NOTICE THAT THE ASSESSEE HAD SUBMITTED PERFORMANCE BANK GUARANTEES TO VARIOUS DEPARTMENTS AND THE WORKS WERE TO BE COMPLETED WITHIN STIPULATED FRAME OF TIM E. AS THE PAYMENTS RECEIVABLE BY THE ASSESSEE WERE HELD UP BY THE DEPARTMENTS, TH E ASSESSEE WAS RUNNING SHORT OF FUNDS. IN ORDER TO COMPLETE THE ON-GOING WORKS W ITHIN STIPULATED TIME AND TO AVOID REVOKING OF BANK GUARANTEES BY THE DEPARTME NTS, THE ASSESSEE SUBMITTED INFLATED STOCK STATEMENT TO THE BANK TO GET LOANS F OR RUNNING/CONTINUING THE ON- GOING WORKS BY MAKING AVAILABLE OPTIMUM AMOUNT OF F UNDS NEEDED FOR BUSINESS PURPOSES. RAISING OF SUCH LOANS FROM THE BANK DOES NOT AFFECT THE INCOME OF THE ASSESSEE IN ANY MANNER. HOWEVER, IT IS A FACT THAT WHATEVER AMOUNT WAS RECEIVED FROM THE BANK, THE SAME WAS PUT TO USE WHOLLY, EXCL USIVELY AND NECESSARILY FOR BUSINESS PURPOSES AND BY VIRTUE OF IT, THE ASSESSEE IN A WAY, MADE AN EFFORT TO INCREASE ITS INCOME/GAINS. THE ASSESSEE HAS BEEN MA INTAINING BOOKS OF ACCOUNT ON REGULAR BASIS AND KEEPING COMPLETE RECORDS OF RECIP TS AND EXPENSES UNDER DIFFERENT HEADS. IT IS ALSO SUBMITTED THAT THE OBJE CT OF ASSESSMENT IS TO TAX THE REAL INCOME OF THE ASSESSEE, FOR WHICH BOOKS OF ACCOUNT HAVE BEEN MAINTAINED ON DAY TO DAY BASIS. 4. NEEDLESS TO MENTION HERE THAT THIS HAS COME UP F OR ADJUDICATION IN A NUMBER OF CASES BEFORE VARIOUS HONBLE COURTS WHERE IN THEY HAVE GIVEN THEIR VERDICT THAT NO ADVERSE VIEW IN SUCH CIRCUMSTANCES NEED BE TAKEN AGAINST THE ASSESSEE. FOR FAVOUR OF YOUR KIND CONSIDERATION, TH E FOLLOWING JUDGMENTS ARE RELIED UPON: I) THE HONBLE PUNJAB & HARYANA HIGH COURT IN A REC ENT CASE OF COMMISSIONER OF INCOME TAX, LUDHIANA V. M/S SANTOSH BOX FACTORY (P) LTD. REPORTED AT (2011) 44 REPS 473 (P&H) HAS HELD AS UNDER. : INCOME TAX ACT, 1961-SECTION143(1)-ASSESSMENT-THE ASSESSING OFFICER MADE ADDITION TO THE DECLARED INCOME OF THE ASSESSEE ON THE GROUND THAT IN THE STATEMENT WITH REGARD TO VALUE OF HYPOTHECATED STOC K FURNISHED TO THE BANK, THE ASSESSEE HAD GIVEN HIGHER FIGURE OF VALUE OF STOCK THAN THE VALUE REFLECTED IN THE BOOKS OF ACCOUNT. THE FINDING WAS SET-ASIDE ON THE GROUND THAT FIGURE FURNISHED TO THE BANK WAS ON ESTIMATE BASIS AND CANNOT BE TREATE D AS VALUE OF STOCK FOR COMPUTATION OF INCOME- WHETHER CORRECT-HELD, YES- T HE STOCK STATEMENT FURNISHED TO THE BANK MANY BE MATERIAL WHICH MAY BE REQUIRED TO BE GONE INTO DURING ASSESSMENT BUT CANNOT BE TREATED AS CONCLUSIVE. WHE THER IN GIVEN CASE THE STOCK STATEMENT COULD BE ACCEPTED AS BASIS FOR COMPUTING THE VALUE OF THE STOCK DEPENDS UPON THE CIRCUMSTANCES OF EACH CASE. IF THE ASSESSE E IS ABLE TO SHOW THAT THE STATEMENT WAS GIVEN ONLY ON ESTIMATE BASIS AND VALU E REFLECTED IN THE BOOKS OF ACCOUNT ARE CORRECT, THERE IS NO ABSOLUTE BAR TO SU CH EXPLANATION BEING ACCEPTED. IN THE PRESENT CASE, THE CIT(A) AND THE TRIBUNAL HA VE RECORDED A CONCURRENT 12 FINDING OF FACT WHICH IS NOT SHOWN TO BE PERVERSE. NO SUBSTANTIAL QUESTION OF LAW ARISES. A COPY OF THE AFORESAID JUDGMENT IS ALSO ENCLOSED F OR FAVOUR OF YOUR KIND PERUSAL AND CONSIDERATION. IT DOES NOT REQUIRE ANY MENTION THAT THE ORDERS OF THE JURISDICTIONAL HIGH COURT HAVE BINDING EFFECT ON TH E SUBORDINATE OFFICES FALLING UNDER THE AREA OF THE SAID HIGH COURT. II) IN THE CASE OF ASHOK KUMAR VS. INCOME-TAX OFFIC ER, REPORTED AT (2006)201 CTR(J&K)178 2005) 149 TAXMAN 479, THE HONBLE COURT OF JAMMU & KASHMIR HAS CONCLUDE AS UNDER:- ADDITION COULD NOT BE MADE ON THE BASIS OF DIFFER ENCE BETWEEN CLOSING STOCK DECLARED IN THE TRADING ACCOUNT AND THE STOCK SHOWN IN THE STATEMENT SUBMITTED BY THE ASSESSEE TO THE BANK AS THE STOCK POSITION SHOWN TO THE BANK WAS ON ESTIMATE BASIS AND INFLATED VALUE WAS S HOWN TO AVAIL MORE CREDIT FROM BANK. COPY OF THE AFORESAID JUDGMENT IS ENCLOSED FOR FAVO UR OF KIND PERUSAL AND CONSIDERATION. III) IN THE CASE OF COMMISSIONER OF INCOME-TAX VS. KHAN & SIROHI STEEL ROLLING MILLS REPORTED AT (2006) 200 CTR (ALL.) 595 , THE HONBLE COURT HAS CONCLUDED AS UNDER: TRIBUNAL WAS JUSTIFIED IN ACCEPTING THE EXPLANATIO N OF THE ASSESSEE THAT IN VIEW OF THE PREVAILING PRACTICE, THE VALUE OF STOCK HYPOTHECATED TO BANK WAS INFLATED TO AVAIL OF MORE OVERDRAFT FACILITIES AND DELETING THE ADDITION ON ACCOUNT OF DIFFERENCE BETWEEN STOCK SHOWN TO BAN K AND THE STOCK SHOWN IN THE BOOKS OF THE ASSESSEE. A COPY OF THIS JUDGMENT IS ALSO ENCLOSED HEREWITH. IV) IN THE CASE OF COMMISSIONER OF INCOME TAX VS. N SWAMY REPORTED AT (2000)241 ITR 363 (MAD.), THE HONBLE HIGH COURT HA S HELD AS UNDER:- THE ASSESSEES INCOME IS TO BE ASSESSED BY THE IT O ON THE BASIS OF THE MATERIAL WHICH IS REQUIRED TO BE CONSIDERED FOR THE PURPOSE OF ASSESSMENT AND ORDINARILY NOT ON THE BASIS OF THE STATEMENT WHICH THE ASSESSE E MAY HAVE GIVEN TO A THIRD PARTY UNLESS THERE IS MATERIAL TO CORROBORATE THAT STATEMENT OF THE ASSESSEE GIVE TO A THIRD PARTY, EVEN IF IT BE A BANK. THE MERE FACT THAT THE ASSESSEE HAD MADE SUCH A STATEMENT BY ITSELF CANNOT BE TREATED AS HAVING RESULTED IN AN IRREFU TABLE PRESUMPTION AGAINST THE ASSESSEE. THE BURDEN OF SHO WING THAT THE ASSESSEE HAD UNDISCLOSED INCOME IS ON THE REVENUE. THAT BURDEN C ANNOT BE SAID TO BE DISCHARGED BY MERELY REFERRING TO THE STATEMENT GIV EN BY THE ASSESSEE TO A THIRD PARTY IN CONNECTION WITH A TRANSACTION WHICH WAS NO T DIRECTLY RELATED TO THE ASSESSMENT AND MAKING THAT SOLE FOUNDATION FOR A FI NDING THAT THE ASSESSEE HAD DELIBERATELY SUPPRESSED HIS INCOME. THAT THE BURDEN IS ON THE REVENUE TO PROVE THAT THE INCOME SOUGHT TO BE TAXED WITHIN THE TAXIN G PROVISIONS AND THERE WAS IN FACT INCOME, ARE PROPOSITIONS WHICH ARE WELL SETTLE D. THE REJECTION OF THE EXPLANATION WAS A MATTER FOR THE TRIBUNAL. THE TRIB UNAL HAS EXERCISED ITS JURISDICTION AND THE QUESTION DECIDED BY IT IS A QU ESTION OF FACT. THEREFORE, THERE IS NO SCOPE FOR INTERFERENCE WITH THE ORDER OF THE TRI BUNAL COIMBATORE SPINNING & 13 WEAVING CO. LTD. VS. CIT (1974) 95 ITR 375(MAD.): T C 1R, 607 AND PARIMISETTI SEETHARAMMA VS. CIT(1965) ITR 532(SC): TC 58R.371 A PPLIED V) SIMILARLY, IN THE CASE OF CIT V. RELAXO FOOTWEAR (2002)123 TAXMAN 322 (RAJ.), IT HAS BEEN HELD THAT WHERE THE TRIBUNAL ACCEPTED T HE ASSESSEES EXPLANATION THAT THE STOCK STATEMENT SUBMITTED TO THE BANK WAS TO MA KE IT EASIER FOR THE ASSESSEE TO HAVE AVAILED HIGHER CREDIT FACILITY BY INFLATING TH E STOCK POSITION TO THE BANK, IT WAS JUSTIFIED IN DELETING ADDITION ON ACCOUNT OF TH E DISCREPANCY BETWEEN THE STOCK SHOWN IN THE BOOKS OF ACCOUNT AND THE STOCK SHOWN I N THE STATEMENT OF THE BANK. IN VIEW OF THE AFORESAID SUBMISSIONS, IT IS REQUEST ED THAT NO ADVERSE INFERENCE IN THIS REGARD MAY KINDLY BE DRAWN. THE REPLY OF THE ASSESSEE HAS DULY BEEN CONSIDERED, THE CASES REFERRED BY THE COUNSEL OF THE ASSESSEE IN HIS WRITTEN SUBMISSIONS ARE DISTINGUISHABLE ON THE GROUND OF FACTS AND CIRCUMSTANCES OF THE CASE AS TH EY ARE ENTIRELY DIFFERENT. IT WAS NOTICED THAT AS PER BOOKS OF ACCOUNT AS REPORTED BY THE CHARTERED ACCOUNTANT IN THE BALANCE SHEET WHICH IS PART OF THE AUDIT REPORT FORM NO.3CB AUDITED BY SH. SUNIL BANSAL, CA THE CLOSING STOCK OF THE FIRM AS O N 31.03.2009 IS AT RS.6,19,75,800/- WHILE AS PER PHYSICAL INVENTORY PR EPARED BY THE ASSESSEE AND SUBMITTED BEFORE THE BANK AUTHORITIES I.E., PUNJAB NATIONAL BANK, ARYA SAMAJ BRANCH, BATHINDA IN LIEU OF BANK LOAN/LIMIT FACILIT Y OBTAINED BY VIDE A/C NO. 870002192 AS ON 31.03.2009 HAS BEEN SHOWN AT RS12,5 9,06,092/-. THE BANK AUTHORITIES HAVE FORWARDED STOCK STATEMENTS FOR THE PERIOD ENDING ON 31.03.2009. THE AMOUNT OF STOCK MENTIONED IN THE DRAWING POWER REGISTER IS ON THE BASIS OF QUANTIFIED DETAILS OF STOCK OF THE ASSESSEE AS PROV IDED BY THEM WHICH HAS BEEN VERIFIED BY THE BANK MANAGER AND AGAIN SIGNED BY IN CHARGE INCUMBENT MANGER OF THE BRANCH OF THE BANK. CERTIFIED COPY OF THE PA GE NO.36 OF THE REGISTER SHOWING PERIODICAL POSITION OF STOCK OF THE ASSESSE E AS AVAILABLE WITH THE BANK FOR THIS PERIOD IS SUBMITTED TO THE DEPARTMENT. THE VALUE OF QUANTIFIED STOCK MENTIONED IN DRAWING POWER REGISTER AS OBTAINED FROM THE BANK IS REPRODUCED AS UNDER:- SR. NO. DATE VALUE OF STOCK AS SUBMITTED BY THE ASSESSEE VALUE OF DRAWING POWER CALCULATED BY THE BANK 1 31.03.2008/ 01.04.2008 61,569,440 350 LACS 2 20.04.2008 64,064,710 350LACS 3 31.05.2008 67,629,580 350LACS 4 30.06.2008 68,507,866 420 LACS 5 31.07.2008 68,507,860 420 LACS 6 31.08.2008 72,915,600 420 LACS 7 31,10.2008 60,857,320 450 LACS 8 04.12.2008 70,992,150 450 LACS 9 31.12.2008 74,605,500 450 LACS 10 31.01.2009 90,518,375 450 LACS 14 11 28.02.2009 77,747,685 450 LACS 12 31.03.2009 125,906,092 900 LACS AS IS EVIDENT FROM THE ABOVE TABLE, THE ASSESSEE CO NTINUED TO HAVE HIGHER STOCK IN HIS POSSESSION TILL THE END OF FINANCIAL YEAR 2008- 09 WHEREAS HE DECLARED LESSER AMOUNT OF STOCK IN HIS RETURN OF INCOME WHICH REVEA LS A DIFFERENCE OF RS.6,39,30,297/- (RS.12,59,06,092/-) MINUS RS.6,19, 75,800/-) ON ACCOUNT OF STOCK. IT MAY ALSO BE NOTED HERE THAT THE FIGURES ARE EXAC T TO THE LAST DIGIT AS IS PRIMA FACIE VISIBLE. CAN THESE BE ESTIMATES ONY? IN THIS CONTEXT, I AM INCLINED TO RELY ON THE JUDGM ENT OF PUNJAB AND HARYANA HIGH COURT IN THE CASE OF M/S DEVGON RICE AND GENERAL MI LLS VS. CIT(2003) 263 ITR 391), WHERE A CASE WITH SIMILAR FACTS BUT DIFFERING IN TRADE WAS DISCUSSED AND ADJUDGED IN FAVOUR OF REVENUE. I WISH TO HIGHLIGHT THE DEFINING PARTS OF THEJUDGMENT IN INFLUENCING MY FACILITIES IN ADJUDIC ATING THIS CASE. HONBLE JUDGE G S SINGHVI HAS MADE THE FOLLOWING OBSERVATIONS WHI LE ALLOWING REOPENING OF A CASE TO INCLUDE THE DIFFERENCE OF VALUE OF STOCK FU RNISHED TO THE BANK TO OBTAIN OVERDRAFT FACILITY AND THE VALUE APPEARING IN THE R ETURN OF INCOME I.E. REGULAR BOOKS OF ACCOUNT. THE OBSERVATIONS: 1. FROM A PERUSAL OF THE BANK STATEMENT NOT ONLY CONT ENTION OF THE ASSESSEE WITH REGARD TO THE OVER-VALUATION OF STOCKS HAS BEE N FOUND TO BE MISLEADING, EVEN THERE IS A LARGE VARIATION IN THE QUANTITY OF STOCKS HYPOTHECATED WITH THE BANK VIS--VIS THOSE DISCLOSE D TO THE DEPARTMENT. 2. NOT TO SPEAK OF THE OVER VALUATION OF STOCK HYPOTH ECATED WITH THE BANK AS CLAIMED BY THE ASSESSEE IN RESPECT OF CERTAIN ITEMS OF STOCKS, THE ASSESSEE HAS CLEARLY MADE UNDER VALUATION OF THE CLOSING STO CK AND THIS IS QUITE EVIDENT FROM THE DETAILS AS GIVEN ABOVE. THE VALUAT ION OF THE CLOSING STOCK AS PER STATEMENT FILED WITH THE RETURN IS THE ADMIT TED VALUE OF CLOSING STOCK AS ON MARCH 31 ST 1977 WHICH THE ASSESSEE CAN UNDER NO CIRCUMSTANCES DISPUTE NOW AND IF THE VALUATION OF THE STOCK HYPOT HECATED WITH THE BANK IS MADE AT THE SAME RATE THE TOTAL VALUATION OF STOCK AVAILABLE WITH THE ASSESSEE AS ON MARCH 31 ST 1977 WOULD WORK OUT TO RS.9,06,000/-. 3. FROM THE INFORMATION NOW COLLECTED BY THE DEPARTME NT, IT IS EVIDENT THAT DURING THE COURSE OF REGULAR ASSESSMENT PROCEEDINGS , THE ASSESSEE HAD SUPPRESSED THE PARTICULARS OF THE CLOSING STOCK BOT H IN TERMS OF ITS QUANTITY AND VALUATION AS ON MARCH 31 ST , 1977 AND, THEREFORE, INCOME CHARGEABLE TO TAX AMOUNTING TO RS.3,18,108/- HAD ESCAPED ASSES SMENT AT THE TIME OF ORIGINAL ASSESSMENT. 15 4. IN MY OPINION, THE CASE SET UP BY THE ASSESSEE AT THE TIME OF INITIATION OF ASSESSMENT THAT THE VALUE OF THE STOCKS WAS INFLATE D FOR AVAILING OF HIGHER OVERDRAFT FACILITY AND THERE WAS DEFICIENCY IN QUAN TIFY OF THE STOCKS LYING WITH IT AND DISCLOSED IN THE RETURN ON THE ONE HAND AND THAT FURNISHED TO THE BANK IS PRIME FACIE PROVED TO BE FALSE BY THE C ONTENTS OF THE LETTER ANNEXURE R 2/2. THEREFORE, RESPONDENT NO.2 HAD SUFF ICIENT REASON TO BELIEVE THAT THE PETITIONER HAD NOT MADE FULL, COMP LETE AND TRUTHFUL DISCLOSURE OF THE MATERIAL FACTS AND ITS INCOME HAD ESCAPED ASSESSMENT. THIS BEING THE JUDGMENT OF JURISDICTIONAL HIGH COUR T, THE CONTENTS ARE ALL THE MORE VALUABLE, DIRECTIONAL AND BINDING. THE BASIC INTENT OF COURTS BEHIND THEIR ADJUDICATIO N IS THAT WHERE THE FIGURES OF QUANTITATIVE VALUATIONS ARRIVED AT BY AP PLYING RATES, MAY THESE BE INFLATED RATES, TO SECURE HIGHER OVERDRAFT, ARE AVA ILABLE, THE NEED TO BE RELIED UPON FOR THE SIMPLE REASON THAT THE ASSESSEE IS HAVING C OMPLETE KNOWLEDGE OF THE ACTION, HE HAS COMPLETED. HE CAN NOT APPLY TOW DIFF ERENT RATES OF SAME COMMODITY ACCORDING TO HIS CONVENIENCE KNOWING WELL THAT BOTH THE DEPARTMENT I.E., BANKS & I.T. DEPARTMENT, ARE GOVT. FUNCTIONARIES AND JUDG E AN ASSESSEE OR A CUSTOMER ACCORDING TO THE BOOKS OF A/C PREPARED ACCORDING TO THE SET PRINCIPLES OF ACCOUNTING. IF EVERYBODY STARTS PREPARING MULTIPLE SETS OF INFORMATION FOR WHATEVER REASONS AND FOR WHATEVER USE, WHERE WILL T HE LAW OF ACCOUNTING STAND. NOWHERE IN THE WORLD MULTIPLE SETS OF INFORMATION C AN BE SUPPLIED OF THE SAME COMMODITY AND IF IT HAPPENS, IT WILL BE DEFINED IN ONE WORD I.E., ILLEGAL. THE PLEASE OF THE ASSESSEE HAS NO WEIGHTAGE AND IS STANDING ON WEAK FOOTING. THE ASSESSEE WAS JUGGLING WITH ACCOUNT BOO KS AT WILL AND HAD SCANT RESPECT FOR ACCOUNTING PRACTICES. HE SUPPLIED INFOR MATION AS PER HIS SUITABILITY AND CONVENIENCE TO TWO VERY IMPORTANT REVENUE EARNI NG DEPARTMENTS VIZ. BANK AND INCOME TAX DEPARTMENT, BOTH OF WHICH FALL UNDER THE SAME MINISTRY. BUT HIS APPROACH TO BOTH THESE DEPARTMENTS WAS CALCULATIVE. FROM ONE OF THEM HE WAS TO TAKE LOAN AND TO OTHER HE WAS TO SHOW HIS INCOME. T HUS, HE DECIDED TO FUDGE THE ACCOUNT BOOKS AND PREPARE DIFFERENT VERSIONS OF STO CK. THE STATEMENTS GIVEN TO BANK HAD QUANTITATIVE VALUATIONS OF STOCK AND THE S AME WAS DULY AUTHENTICATED BY THE BANKS VALUATION OFFICER WHEREAS THE VALUATION SHOWN IN THE BALANCE SHEET SUBMITTED BEFORE INCOME TAX DEPARTMENT HAD NO SUCH AUTHENTICATION FROM ANY PERSON EXCEPT THE AUDITING CHARTERED ACCOUNTANT BEF ORE WHOM VALUATION STATEMENTS ARE NOT PRODUCED OR IF PRODUCED, NOT TAK EN CARE OF. THE GENERAL PLEA OF ASSESSEES IN SUCH CASES (WHERE THE DEPARTMENT DETEC TS THE DIFFERENCE) IS THAT THE STOCK STATEMENTS WERE INFLATED SO THAT HE COULD GET HIGHER OVERDRAFT FACILITY. THIS HAS OCCURRED A NUMBER OF TIMES IN THE PAST AND MANY COURTS HAD THE OPPORTUNITY TO DEAL WITH THE SUCH SITUATIONS. THE JURISDICTION AL HIGH COURT HAS CATEGORICALLY PRONOUNCED THAT WHERE THE QUANTITATIVE DETAILS OF S TOCK ARE AVAILABLE AND THE VALUATION OF STOCK HAS BEEN MADE THE BASIS OF THE R ATE AND QUANTITY AVAILABLE, THE ASSESSEE CANNOT DENY HIS POSSESSION OF SUCH STOCK, MORE SO WHEN SUCH A VALUATION IS MADE EVERY MONTH AND BOTH ASSESSEE AND THE BANK ARE AN AUTHENTICATING IT. IN 16 THIS CONNECTION, IT IS EMPHASIZED THAT IT DOES NOT MAKE ANY DIFFERENCE WHETHER THE PHYSICAL POSSESSION REMAINS WITH THIS BANK OR THE A SSESSEE. THE CERTIFICATION OF VALUATION OF AN ASSET BY A) ASSESSEE B) VALUATION OFFICER OF BANK WHO PHYSICALLY VERIFIED T HE STOCK AND C) BANK MANAGER BEING INCHARGE SIMULTANEOUSLY, SPEAK OF AUTHENTICATION OF FIGURES. IS IT A MANDATORY CIRCUMSTANCES THAT ONLY FIGURES OR VALUATIONS OF ST OCK ARE TO BE ACCEPTED WHICH ARE IN POSSESSION OF BANK AND NO COGNIZANCE SHOULD BE TAKEN OF SUCH VALUATION WHERE THE PHYSICAL POSSESSION IS NOT WITH BANK? MIL LIONS OF ASSESSEE ALL OVER THE COUNTRY FILE STATEMENTS OF STOCK IN THEIR RETURNS A ND THEIR VALUATIONS ARE ACCEPTED BY INCOME TAX DEPARTMENT. THE DEPARTMENT ACCEPTS TH E VALUATION OF STOCK ON THE BASIS OF THE PAPERS FILED WITHOUT TAKING POSSESSION OF STOCK . ARE ALL OF THEM ERRONEOUS? NO, THEY ARE FULLY RELIABLE. ONLY DUPLIC ATE SETS OF FIGURES ARE QUESTIONED AND PENALIZED. THEREFORE, THERE IS NO FO RCE IN THE ARGUMENT OF THE ASSESSEE THAT THE STOCK WHICH IS NOT IN POSSESSION OF A GOVERNMENT AGENCY, LIKE BANK, HAS NO AUTHENTICITY VALUE WISE. THE ASSESSEE TOOK THE PLEA THAT STOCK STATEMENTS ARE FILED ON ESTIMATED BASIS WITH THE BA NK BUT SUCH AN ESTIMATE CANNOT BE IMAGINARY OR ERRONEOUS SO AS TO CREATE A DIFFERE NCE OF MAMMOTH RS.6,39,30,292/- IN VALUATION OF STOCK. THE ESTIMAT ION HAS TO BE LOGICAL, RATIONAL AND NOT BLATANTLY UNIMAGINABLE. IN THE INSTANT CASE THE FIGURES REPORTED IN STOCK S TATEMENTS ARE THOROUGHLY QUANTIFIED AFTER GIVING VALUATION OF ARTICLES LIKE CEMENT, STEELS, BRICKS ETC. AND THAT TOO SEVERAL TIMES IN A YEAR DULY CERTIFIED AND ACCE PTED BY ASSESSEE AND BANK. IF THE ASSESSEE AND BANK ARE PLAYING WITH FIGURES TO I NFLATE VALUE OF STOCK TO GET HIGHER O/D LIMITS THEN IT SHOULD BEAR SOME SEMBLANC E TO THE FIGURES RETURNED IN THE INCOME TAX RETURN. IN OTHER WORDS, THESE FIGURE S SHOULD BE FORGOTTEN THAT LOAN IS GIVEN OUT OF PUBLIC MONEY WITH WHICH THE ASSESSE E FOOLS AROUND WITH A MISCHIEVOUS MIND INFLUENCED BY CRIMINAL INTENT. IF THE BANKS RELY ON THE CUSTOMERS FOR THEIR DECLARATION, IT SHOWS THAT THERE IS A STR ONG ELEMENT OF TRUST EXHIBITED BY THE BANK TOWARDS THE CUSTOMERS. IT IS A CASE OF BRE ACH OF TRUST BY THE CUSTOMER WHERE IT IS FOUND THAT THE ACTUAL VALUE OF STOCK IN HIS POSSESSION WAS FAR LESS THAN ACTUAL. THERE IS NO COMPULSION ON THE BANKS TO GO F OR VERIFICATION OF EVERY ITEM. THAT IS WHY, BOOKS OF A/C AND DOCUMENTS, DULY CERTI FIED TO BE TRUE BY A CHARTERED ACCOUNTANT, ARE PREPARED AND RELIED UPON. EVERYTHIN G CAN NOT BE VERIFIED PHYSICALLY IN THIS WORLD AND TO BE PRACTICAL, THE B LACK AND WHITE VERSION IS STRONGLY RELIED UPON IMPOSING A SENSE OF TRUST ON T HE SUPPLIER OR THE DOCUMENTS. IF THESE ARE PREPARED WITH A MALICIOUS INTENT TO DEFRA UD THE PERSON OR THE SYSTEM BEFORE WHOM THESE ARE PRESENTED THEN THE CONSEQUENC ES HAVE ALSO TO BE BORNE BY THE ONE WHO FURNISHES THEM. 17 THE ASSESSEE HAS TRIED TO PROJECT PLEDGE AS A STRONGER MEANS OF BINDING THE LOAN TAKEN BECAUSE OF THE FACTS THAT THE PHYSICAL POSSES SION OF THE ARTICLE IS UNDER CONTROL OF THE BANK. HE HAS TRIED TO SHOW THAT THE HYPOTHECATED ASSET IS LOOSELY BOUND TO THE BANK BEING NOT UNDER ITS CONTROL PHYSI CALLY. DOES IT MEAN THAT ALL MOBILE ASSETS LIKE SPACE CRAFTS, SATELLITES, AEROPL ANES, SHIPS, MULTIWHEEL TANKERS, TRUCKS, BUSES ETC. ARE LOOSELY UNDER CONTROL OF THE BANK WHICH FINANCE THEM SO HUGELY, SOMETIMES INTO TRILLION OF DOLLARS/RUPEES. IN OTHER WORDS DOES ONLY LEDGE HAS THE STRENGTH OF RECOVERY OF LOAN DUES A ND NOT THE HYPOTHECATEDD ASSET? THIS ARGUMENT HAS NO FORCE. IT IS FOR THE BA NK TO DECIDE HOW TO SECURE ITS LOAN AND WHAT TERMS TO IMPOSE. I AM QUITE SURE THAT DIFFERENT BANKS MUST BE USING DIFFERENT TERMINOLOGY TO SECURE THE LOAN I.E., SOME BANKS MIGHT BE USING PLEDGE FOR A PARTICULAR ITEM WHEREAS AT THE SAME TIME THE OTHE R BANKS MAY BE USING THE TERM HYPOTHECATED. THEREFORE, IT IS SIMPLY A TACTIC OF ASSESSEE TO DIVERT ATTENTION FROM THE CORE ISSUE I.E. DIFFERENCE IN FIGURES OF S TOCK IN THE BANK BOOKS AND IN THE ASSESSEES BOOKS. IT IS THE ASSESSEE TO PROVE THAT DISCREPANCY IN HIS BOOKS OF A/C, ON THE BASIS OF WHICH THE RETURN OF INCOME FOR A.Y. 09-10 WAS PREPARED, VERIFIED, SIGNED AND SUBMITTED BEFORE THE INCOME TA X DETT, WAS NOT EXISTING. IT IS WORTH TO MENTION HERE THAT THE STATEMENT OF S H. TEJINDER SHARDA, SR. BANK MANAGER, PUNJAB NATIONAL BANK, ARYA SAMAJ CHOWK BRA NCH, BATHINDA WAS RECORDED ON OATH ON 22.11.2011 IN CONNECTION WITH A SSESSMENT PROCEEDINGS OF ONE M/S MUNIS KUMAR BANSAL CONTRACTOR FOR ASSESSMEN T YEAR 2009-10 WHERE A SIMILAR ISSUE WAS DISCUSSED TO KNOW THE MODUS OPERA NDI OF MAINTAINING OF RECORD BY THE BANKS WITH REGARD TO BANK LIMITS/LOANS FACIL ITIES GRANTED TO THE PARTIES (ASSESSEES). DURING THE RECORDING OF STATEMENT, SH. TEJINDER SHARDA, SR. BANK MANAGER CATEGORICALLY STATED THAT THE ENTRY IS MADE ON DRAWING POWER REGISTER ON THE BASIS OF STOCK STATEMENTS SUBMITTED BY THE ASSE SSEE 9SO CALLED CLIENT OF BANK) WHICH IS PHYSICALLY VERIFIED AND SIGNED BY THE CONC ERNED OFFICER/MANAGER IN THE STATEMENT AND THEN ENTRY IS MADE IN THE DRAWING POW ER REGISTER. THEREAFTER, DRAWING POWER REGISTER AUTHENTICATING THE VALUE OF THE STOCK LYING AT THE SITE IS FINALLY SIGNED BY THE CHIEF MANAGER/ INCHARGE INCUM BENT OFFICER OF THE BRANCH. THE EXTRACT OF STATEMENT RECORDED IN THE CASE OF MU NISH KUMAR BANSAL, CONTRACTOR IS ALSO REPRODUCED AS UNDER:- QUESTION:- PLEASE STATE YOU HAVE PRODUCED COPY F D RAWING POWER REGISTER PAGE NO.76 WHICH IS ATTESTED BY YOUR OFFICER, THE VALUE OF CLOSING STOCK AS ON 30.03.2009/31.03.2009 HAS BEEN SHOWN AT RS.1,69,17, 000/-. WHAT ARE THE BASIS OF THIS VALUATION. ANSWER:- THE PARTY SUBMIT STOCK INVENTORY STATEMENT AT THE END OF MONTH AND THEREAFTER OFFICIALS OF BANK PHYSICALLY VERIFY THIS STOCK IN POSSESSION OF THE PARTY. AFTER PHYSICAL VERIFICATION OF STOCK, THE DRAWING P OWER IS ALLOWED TO THE PARTY. ONE OFFICER PHYSICALLY CHECKS THE STOCK AND INCUMBE NT INCHARGE OFFICER, SING THE DRAWING POWER REGISTER. THE SAME PROCEDURE HAS BEEN ADOPTED BY THE BANK IN THE PRESENT CASE. ON THE BASIS OF VALUATION OF I NVENTORY OF STOCK AFTER PHYSICALLY VERIFICATION THE DRAWING POWER OF THE PA RTY HAS BEEN CALCULATED AND ALLOWED AT RS.100 LACS AS ON 30.03.2009 ON THE BASI S OF INVENTORY. 18 THUS, IT IS LOUD AND CLEAR THAT DRAWING POWER REGIS TER FIGURES OF THE BANK HAS A FORMIDABLE BASIS AND IS FULLY AUTHENTICATED. THE INFORMATION WAS WELL CONCEALED BY ASSESSEE IN TERMS OF VALUATION OF STOC K AND I AM CONVINCED T HAT UNACCOUNTED PURCHASES (PURCHASE OF BUILDING MATERIA L) HAVE BEEN MADE FROM THE SOURCES NOT KNOWN TO DEPARTMENT I.E. UNDISCLOSED SO URCE AND THEREFORE, THE SAME NEEDS TO BE TREATED AS THE ASSESEES UUEXPLAINED IN VESTMENT TO BE ADDED TO HIS INCOME UP 69 OF THE INCOME TAX ACT, 1961. THE COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THROU GH THE WRITTEN SUBMISSION ON 23.12.2011 IN WHICH HAS STATED THAT S OME OF THE PAYMENTS AMOUNTING TO RS.5.42,81,001/- WERE RECEIVED ON 30 TH AND 31 ST MARCH,2009 I.E., ON THE LAST TWO DAYS OF THE FINANCIAL YEAR. THEY WERE RECEIVED IN LIEU OF RAISING OF THE BILLS TOWARDS THE CONTRACTS EXECUTED DURING THE F.Y .2008-09. SUCH PAYMENTS WERE RECEIVED ON ACCOUNT OF ACTUAL WORK IN PROGRESS AND NOT ON ACCOUNT OF COMPLETION OF WORK. ACTUALLY, THE ASSESSEE HAD SUBMITTED STOCK STATEMENTS TO THE BANK ON LAST WORKING DAY OF THE FINANCIAL YEAR I.E. ON 31.03.200 9. AT THE TIME, WORK IN PROGRESS WAS ALSO TREATED AS VALUE OF CLOSING STOCK BUT AFTE R RECEIPT OF PAYMENT OR CONFIRMATION OF WORK, IT WAS CONVERTED INTO WORK DO NE INSTEAD OF WORK IN PROGRESS OR CLOSING STOCK. THIS AMOUNT WAS DULY REFLECTED IN CONTRACT RECEIPTS FOR FY 2008- 09. THE REPLY OF THE ASSESSEE IS REPRODUCED AS UNDE R:- RESPECTFULLY IT IS SUBMITTED THAT DURING THE COURS E OF ASSESSMENT PROCEEDINGS, INTER ALIA, THE ASSESSEE WAS REQUIRED TO EXPLAIN THE REASONS AND CIRCUMSTANCES FOR DIFFERENCE IN THE VALUE OF STOCKS AVAILABLE AS PER BOOKS OF ACCOUNT AND THE VALUE OF STOCKS SUBMITTED TO THE BA NK AT THE CLOSE OF THE YEAR. 2. THE REPLY AS PER LEGAL ASPECT TO THE ABOVE QUERY HAS ALREADY BEEN SUBMITTED KEEPING IN VIEW OF THE JUDGMENTS PRONOUNC ED BY VARIOUS HONBLE COURTS ON THIS ISSUE. THE PRESENT REPLY EXPLAINS TH E FACTUAL POSITION IN THIS REGARD WHICH IS AS UNDER:- IN ORDER TO MAINTAIN DP THE STOCK STATEMENT WAS SUB MITTED TO THE BANK AS ON 31.3.2009. BEFORE GIVING ANY FURTHER DETAILS, CLARI FICATIONS AND JUSTIFICATION REGARDING DIFFERENCE IN STOCK POSITION SUBMITTED TO THE BANK ON 31/3/2009 & THE FIGURE AVAILABLE IN BOOKS OF ACCOUNT, IT WOULD BE A PPROPRIATE TO NARRATE HERE THE VARIOUS STAGE THAT TAKE PLACE BEFORE THE FINALIZATI ON OF THE BILL SO THAT A CLEAR PICTURE REGARDING STOCK DIFFERENCE MAY EMERGE. HERE IT IS-FIRST OF ALL MEASUREMENTS ARE TAKEN BY A N INDEPENDENT CONSULTANCY DEPLOYED BY THE RESPECTIVE DEPARTMENTS. THESE MEASU REMENTS ARE THEN RECORDED IN THE MEASUREMENT BOOKS BY CONSULTANCY PEOPLE AND RECOMMENDED FOR CROSS- VERIFICATION TO THE DEPARTMENT. IT DOES NOT REQUIRE ANY MENTION TO SUBMIT HERE THAT MEASUREMENT BOOK IS INTERNAL RECORD OF THE DEPARTME NT AND REMAINS IN THE SAFE CUSTODY OF THE CONCERNED OFFICER. THE MEASUREMENTS ARE CROSS VERIFICATION BY THE DEPARTMENT OFFICIAL & FURTHER SUBMITTED TO ACCOUNTS SECTION FOR VETTING. ONCE IT GETS VETTED BY THE ACCOUNTS SECTION, IT IS FURTHER SUBMITTED TO THE CONCERNED EXECUTIVE ENGINEER FOR FINAL APPROVAL. ONCE IT GETS APPROVED BY THE EXECUTIVE ENGINEER, THE BILL GETS FINALIZED & PASS ORDER IS E XECUTED & VARIOUS DEDUCTIONS 19 E.G. INCOME TAX, SALES TAX ETC. ARE MADE FROM THE G ROSS BILL. HOWEVER, THE PAYMENT TO THE CONTRACTOR IS MADE ON AVAILABILITY O F LOC FROM THE GOVERNMENT. ALL ABOVE MENTIONED PROCEDURE TAKES PLACE AT THE BA CK END OFFICE OF THE DEPARTMENT. THIS PROCESS TAKES AVERAGE 10TO15 DAYS BUT THE WORKING IS MADE FOR A SPECIFIED DATE. IN THE CASE OF THE ASSESSEE, WHILE SUBMITTING THE S TOCK STATEMENT TO THE BANK ON 31/3/09, THE ASSESSEE BY NO STRETCH OF IMAG INATION COULD ANTICIPATE THAT SOME OF THE DEPARTMENTS WOULD BE CLEARING THE COMPL ETION OF CERTAIN WORKS UP TO 31-3-2009 AND DEDUCTING THE TAX AT SOURCE THEREON. THE VARIOUS DEPARTMENTS CERTIFIED BILLS OF ALREADY COMPLETED WORKS TO THE T UNE OF RS.5,42,81,001/- HAD BEEN INCLUDED AS STOCK SUBMITTED TO THE BANK BY THE ASS ESSEE ON 31/3/2009 BEING UNAWARE OF THE FACTS REGARDING FINALIZATION OF BILL S AND DEDUCTION OF TAX AT SOURCE . THIS FACT CAME TO THE NOTICE OF THE ASSESSEE AFTER SUBMISSION OF STOCK STATEMENT TO THE BANK, AT THE TIME OF RECONCILIATION OF ACCOUNTS , CONTRACT RECEIPTS AND THE TAX DEDUCTIONS AT SOURCE AT LATER STAGE. ON PASSING OF THESE ENTRIES IN BOOKS OF ACCOUNT REGARDING FINALIZATION OF BILLS AMOUNTING T O RS,5,42,81,001/- ON 30-3- 2009 & 31/3/2009. THE STOCK GIVEN IN BANK STATEMENT ON 31/3/09 GOT REDUCED BY RS.5,42,81,001/- IN BOOKS OF ACCOUNTS. THIS AMOUNT OF RS.5,42,81,001/- WAS TAKEN INTO ACCOUNT AS CONTRACT RECEIPTS ON 31/3/09 BY T HE ASSESSEE AS TAX ON THESE AMOUNTS HAD ALSO BEEN DEDUCTED AT SOURCE. IT MAY BE FURTHER CLARIFIED AGAIN THAT IN ORDER TO MAINTAIN THE DP, THE ASSESSEE HAS TO SU BMIT THE STOCK STATEMENT TO THE BANK ON LAST WORKING DAY OF EVERY MONTH. IN THIS CA SE THE STOCK STATEMENT WAS SUBMITTED TO THE BANK ON 31/3/09 AND ALSO DEDUCTED TAX AT SOURCE AS ON 31/3/2009 AND CONSEQUENTLY ISSUED FORM-16A AFTERWARDS. AS THE AFORESAID DEVELOPMENTS OF DEDUCTING TAX AT SOURCE BY VARIOUS DEPARTMENTS ON T OTAL AMOUNT BILL OF RS.5,42,81,001/- TOOK PLACE ON THE LAST DAY OF THE ACCOUNTING YEAR I.E.30-3-2009 AND 31-3-2009, AND THAT TOO WITHOUT THE KNOWLEDGE O F THE ASSESSEE, THE SAME COULD NOT BE TAKEN INTO ACCOUNT IN THE STOCK STATEM ENT ALREADY SUBMITTED TO THE BANK ON 31/3/2009 IS GIVEN BELOW FOR YOUR READY REF ERENCE AND KIND CONSIDERATION:- S. NO. NAME OF DEPARTMENT BILL DATE GROSS AMOUNT TAX AMOUNT TAX DEPOSITED DATE 1 MPRRDA JHABUA 30/03/2009 1,941,997 44,006 13/04/2 009 1A MPRRDA JHABUA 30/03/2009 1,937,511 19,884 13/04/ 2009 1B MPRRDA JHABUA 30/03/2009 296,471 4,991 13/04/200 9 TOTAL AMOUT(1+1A+1B) 4,175,979 68,881 2 PAN INDIA (ROB RATLAM) 31/03/2009 14,283,959 161,838 31/03/2009 TOTAL AMOUNT 14,283,959 161,838 3 B&R FATEHABAD 31/03/2009 7,607,240 172,380 11/05/ 2009 3A B&R FATEHABAD 31/03/2009 8,600,963 194,898 11/05 /2009 3B B&R FATEHABAD 31/03/2009 9,323,581 211,272 11/05/2009 20 TOTAL AMOUNT 25,531,784 578,550 4 EMAAR MGF 31/03/2009 3,396,150 77,093 29/05/2009 4A EMAAR MGF 31/03/2009 6,893,129 156,474 29/05/200 9 TOTAL AMOUNT(4+4A) 10,289,279 233,567 G.TOTAL 54,281,001 1,042,836 THE ABOVE MENTIONED ENTRIES HAVE ALREADY BEEN GOT V ERIFIED BY YOUR GOOD OFFICE FROM THE RECORDS & BOOKS PRODUCED BY THE ASSESSEE. HENCE, THE DIFFERENCE IN STOCK SUBMITTED TO THE BANK AS ON 31/3/09 & TAKEN INTO BO OKS OF ACCOUNTS AS ON 31/3/2009 MAY KINDLY BE CONSIDERED AS JUSTIFIED. IN THE CIRCUMSTANCES OF THE CASE, IT IS REQUESTED THAT NO ADVERSE VIEW IN THIS REGARD MAY KINDLY BE DRAWN. AT THIS STAGE IT IS FURTHER SUBMITTED THAT THE REMA INING DIFFERENCE IS STOCKS AS PER BOOKS VS. STOCK STATEMENT FURNISHED TO THE BANK IS ON ACCOUNT OF ESTIMATION OF STOCK LYING AT VARIOUS SITES IN OPEN, WITHOUT MEASU REMENT AND TAKING ACTUAL PHYSICAL STOCKS VERIFICATIONS ETC. THIS DIFFERENCE IS WITH IN MARGIN OF TOLERANCE AND EVEN VARIOUS HONBLE COURTS HAVE HELD THAT NO A DVERSE VIEW IN THIS REGARD/DIFFERENCE MAY BE TAKEN. COPIES OF SUCH JUDG MENTS HAS ALREADY SUBMITTED FOR YOUR KIND PERUSAL. THE REPLY OF THE ASSESSEE HAS BEEN CONSIDERED. ON A CAREFUL SCRUTINY OF THE REPLY OF THE ASSESSEE IN WHICH HE HAS SUBMITTED THE DETAI LS OF RECEIPTS ON 30 TH /31 ST MARCH,2009, IT HAS BEEN OBSERVED THAT CONTENTION OF THE ASSESSEE IS PARTLY CORRECT FOR THE REASON THAT OUT OF THE TOTAL AMOUNT OF CONT RACT RECEIPTS OF RS.2,55,31,784/- AS RECEIVED FROM P B&R FATEHABAD ON31.03.2009, 26AS STATEMENT REVEALS THAT THE ASSESSEE RECEIVED RS.86,00,963/- ON 04.03.2009 & RS.93,23,581/- ON 26.03.2009 RESPECTIVELY WHEREAS RS.76,O7,240/- WAS RECEIVED ON 22.01.2009. THUS THE CONTRACT RECEIPT OF RS.76.07,240/- HAS ALR EADY FOUND PLACE IN THE STOCK STATEMENT OF JANUARY, 2009 AND CANNOT BE REDUCED FR OM THE CLOSING STOCK AMOUNTS AS SHOWN BY THE BANK AS ON 31.03.09. HOWEVER, A BEN EFIT OF RS.1,79,24,544/- (RS.86,00,963/- +RS.93,23,581/-) AS CLAIMED BY THE ASSESSEE AND DISCUSSED ABOVE IS ALLOWED IN RESPECT OF CONTRACT RECEIPTS RECEIVED FROM P B&R FATEHABAD OUT OF THE SUM TOTAL OF RS.2,55,31,784/- AS CLAIMED AND SH OWN IN THE STATEMENT ABOVE. THEREFORE, A TOTAL AMOUNT OF STOCK WHICH STANDS EXP LAINED AS PER THE REPLY OF THE ASSESSEE IS RS.4,66,13,761/- (RS.5,42,81,001/- MINU S RS.76,07,240/-) AND THE REMAINING DIFFERENCE OF STOCK BETWEEN BANK AND ASSE SSEE OF RS1,73,16,531/- (RS.6,39,30,292/- MINUS RS.4,66,761/-) IS REFLECTED IN THE RECASTED TRADING AND PROFIT & LOSS ACCOUNT. NOW THE IMPORTANT QUESTION IS--- WHEN DID AND WHERE FROM THE ASSESSEE MADE PURCHASES OF THIS STOCK OVER THE YEAR? THE SUM TOTA L OF PURCHASE VOUCHERS SUBMITTED BEFORE THE DEPARTMENT IS DIFFERENT FROM T HE QUANTITY OF MATERIAL SHOWN TO THE BANK. IT MEANS THE PURCHASE ACCOUNT OF THE A SSESSEE SHOWN TO ME IS UNRELIABLE AND MISLEADING AND CAN IN NO WAY INFLUEN CE MY MIND TO DEDUCE THE PROFITABILITY OF THE ASSESSEE IN THE JUSTIFIED WAY, THOUGH THE OTHER ACCOUNT HEADS ARE APPARENTLY RELIABLE. IN SUCH A SITUATION I AM N OT INCLINED TO REJECT ALL THE ACCOUNT HEADS EXCEPT PURCHASE ACCOUNT WHICH DOES NO T LEAD ME TO PROPER 21 ASSESSMENT OF ASSESSEES PROFITS. I, THEREFORE, REJ ECT ASSESSEES PURCHASE ACCOUNT AND RELY ON THE FIGURES AS CALCULATED ABOVE TO ARRI VE AT THE CLOSING STOCK SO THAT THE PURCHASE ACCOUNT IS ALSO APPROPRIATED AUTOMATIC ALLY. THE RECASTED TRADING ACCOUNT IS REPRODUCED AS UNDER:- DESCRIPTION SCHEDULE AMOUNT AS AT 31.03.2009 SR. NO. INCOME 1 CONTRACT RECEIPTS RS.27,96,36,043/- 2 MISCELLANEOUS INCOME J RS.10,88,156/- 3 INCREASE IN STOCK K RS.3,88,06,532/- (RS.2,14,90,000/- +RS.6,39,30,293/-MINUS RS.4,66,13,761/-) 4 PROFIT ON SALE OF ASSETS RS.1,53,898/- TOTAL RS.31,96,84,629/- RS.30,23,68,097/- +RS.1,73,16,532/-) SR. NO. EXPENDITURE 1 MATERIAL CONSUMED L RS.10,88,41,059/- 2 WORKS EXPENSES M RS.14,74,18,714/- 3 ADMINISTRATION EXPENSES N RS.47,12,197/- 4 FINANCIAL EXPENSES O RS.1,86,73,072/- LOSS ON SALE ASSETS 0 TOTAL RS.27,96,45,043/- 1 PROFIT BEFORE DEPRECIATION RS.4,00,39,585/- (RS.2,27,23,053/- +RS.1,73,16,532/-) 2 DEPRECIATION F RS.1,12,46,852/- PROFIT BEFORE TAX RS.2,87,92,733/- (RS.1,14,76,201/- +RS.1,73,16,532/-) 1 LESS PROVISION FOR INCOME TAX RS.29,39,925/- 2 LESS-PROVISION FOR FRINGE BENEFIT TAX RS.29,140/- 3 LESS-PROVISION FOR DEFERRED TAX RS.9,14,652/- 22 LIABILITY 4 ADD- PROVISION FOR DEFERRED TAX ASSETS 0 NET PROFIT RS.2,49,09,061/- (RS.75,92,484/- + RS.1,73,16,532) THE DIFFERENCE ON ACCOUNT OF EXCESSIVE STOCK HELD B Y THE ASSESSEE AT RS.1,73,16,531/- HAS NO OTHER TREATMENT EXCEPT TO B E ADDED TO HIS INCOME OF THIS YEAR BEING UNDISCLOSED INVESTMENT UNDER SECTION 69. 13. THE LD. CIT(A) DELETED THE ADDITION VIDE ITS OR DER DATED 30.05.2013 CONSIDERING THE SUBMISSIONS OF THE ASSESSEE. 14. THE LD. DR, MR. TARSEM LAL, ARGUED THE CASE AT LENGTH AND THEREAFTER SUBMITTED THE WRITTEN SUBMISSIONS DATED 02.02.2015 AS TO WHAT HAS BEEN ARGUED BY HIM AND THE SAID WRITTEN SUBMISSIONS HAVE BEEN PLACED ON RECORD. IN THE WRITTEN SUBMISSIONS SUBMITTED BY THE LD. DR AT PAGES 1 & 2, HE HAS STATED ABOUT THE FINDINGS OF THE AO AND THEREAFTER HAS STATED THAT THE LD. CIT(A) HAS ALLOWED THE RELIEF BY MAKING PERVERSE AP PRECIATION OF FACTS OF THE CASE, WHICH WERE DISCUSSED IN THE SAID WRITTEN SUBMISSIONS. 15. THE PARAWISE FINDINGS BY THE LD. CIT(A), IN THE CASE OF THE ASSESSEE, M/S. ISHAR INFRASTRUCTURE DEVELOPERS PVT. LTD. FO R THE ASSESSMENT YEAR 2009-10 HAVE BEEN DISCUSSED IN THE WRITTEN SUBMISSI ONS BY THE LD. DR, AS UNDER: PARA 5(I) THIS CONCLUSION IS PERVERSE ON THE FACE OF IT ONLY. THE IMPUTATION THAT THE BANK AUTHORITIES ARE NOT CO NCERNED WITH THE AVAILABILITY OF ADEQUATE STOCK AS THEIR INTERES TS ARE COVERED BY THE COLLATERAL SECURITY PROVIDED BY THE ASSESSEE TO BANK, IS 23 SELF ASSUMED AND IF THE BANK AUTHORITIES FEEL THAT THEIR INTERESTS ARE SECURED BY COLLATERAL SECURITIES THEN WHY THEY SHOULD IN THE FIRST PLACE ASK FOR HYPOTHECATION OF THE STOCK AND ENTER INTO HYPOTHECATION AGREEMENTS. FURTHER, DRAWING POWER IS DETERMINED ON THE BASIS OF THE STOCK AND NOT ON THE BASIS OF COLLATERAL SECURITIES AND THE LIMIT SANCTIONED IS S UBJECT TO VARIATION DEPENDING UPON THE AVAILABILITY OF STOCK WITH THE ASSESSEE. THEREFORE, THIS FINDING IS PATENTLY PERVE RSE AND NEEDS NOT TO BE GIVEN ANY COGNIZANCE. PARA 5(II) THE LD. CIT(A) HAS IGNORED THE STATEMENT OF THE SR. BRANCH MANAGER OF THE SAME VERY BRANCH FROM WHICH T HE ASSESSEE HAD RAISED LIMIT WHO HAD DEPOSED THAT THE AUTHENTICATION OF DP REGISTER BY THE BANK MANAGER C ARRIES IN ITS SWEEP THE FACT THAT THE STOCK HAS BEEN PHYSICAL LY VERIFIED BY THE OFFICER/MANAGER WHO HAS AUTHENTICATED THE DP RE GISTER. THE LD. CIT(A) HAS NO WHERE DOUBTED THE CORRECTNESS OF THE STATEMENT OF THE SR. BRANCH MANAGER SH. TEJINDER SH ARDA AND THE SAME COULD NOT BE TRASHED BY THE LD. CIT(A) WIT HOUT GIVING SOME COGENT REASONS. HIS STATEMENT HAD SUBSTANTIAL EVIDENTIARY VALUE. WITHOUT PREJUDICE TO THE ABOVE, IT MAY BE SUBMITTED THAT GIVEN THE CATEGORICAL STATEMENT OF SH.TEJINDER SHARDA THA T THE PARTY SUBMITS STOCK INVENTORY STATEMENT AT THE END OF MON TH AND THEREAFTER OFFICIALS OF BANK PHYSICALLY VERIFY THIS STOCK IN POSSESSION OF THE PARTY AND AFTER PHYSICAL VERIFICA TION OF STOCK, THE DRAWING POWER IS ALLOWED TO THE PARTY. ONE OFFI CER PHYSICALLY CHECKS THE STOCK AND INCUMBENT INCHARGE OFFICER SIGN THE DRAWING POWER REGISTER. THE SAME PROCEDURE HAS BEEN ADOPTED BY THE BANK, HE MEANT TO SAY, IN ALL CASES AND IT IS ON THE BASIS OF VALUATION OF INVENTORY OF STOCK AFTER PHYSICAL VERIFICATION, THE DRAWING POWER OF THE PARTY IS CAL CULATED AND ALLOWED, IF THE LD. CIT(A) STILL WAS OF THE OPINIO N THAT THE AO OUGHT NOT TO HAVE DEPENDED UPON THE STATEMENT OF TH E SR. BRANCH MANAGER BUT OUGHT TO HAVE RECORDED THE STATE MENT OF THE BANK OFFICER WHO HAD ACTUALLY VERIFIED THE STOC K AND AUTHENTICATED THE DRAWING POWER REGISTER, HE COULD DO SO HIMSELF BY INVOKING HIS CO-TERMINUS POWERS WITH TH E AO OR ELSE REMANDED THE CASE TO THE AO TO RECORD THE STATEMENT OF THE BANK MANAGER WHO HAD AUTHENTICATE THE DP REGISTER. BUT THIS 24 CHOOSING TO IGNORE THE STATEMENT OF SENIOR AUTHORIT Y OF THE BANK WHO EXERCISES ADMINISTRATIVE CONTROL OVER THE OFFIC ER WHO HAD PHYSICALLY INSPECTED THE STOCK, IS REALLY ILL-MERIT ED AND THUS PERVERSE. PARA 59III) THE FINDING IN THIS PARA CONSTITUTE HAS TY CONCLUSION AND THAT TOO WITHOUT ANY BASIS. THE LD. CIT(A) IS D RAWING A CONCLUSION WITHOUT THE SUPPORT OF MATERIAL FACTS. H E COULD HOLD SO ONLY AND ONLY IF THE BANK MANAGER WHO HAD SIGNED THE DRAWING POWER REGISTER AND DETERMINED THE LIMIT HAD STATED THAT HE HAD NOT MADE PHYSICAL VERIFICATION. UNLESS EITHER THE SAID BANK MANAGER DENIES OR HE IS PROVIDED FALSE, T HE LD. CIT(A) HAD NO JURISDICTION TO DRAW THE CONCLUSION THAT NO INSPECTION/PHYSICAL VERIFICATION OF THE STOCK WAS C ARRIED OUT. THUS, HIS FINDINGS ARE PATENTLY PERVERSE AND DESER VE TO BE DISLODGED. HIS FINDINGS THAT THE STOCK WAS SCATTERE D AT DIFFERENT PLACES AND IT WAS NOT POSSIBLE TO COUNT/WEIGH THE S TOCK IS OF LITTLE SIGNIFICANCE GIVEN THE FACT THAT THE SR. BRA NCH MANAGER HAS DEPOSED THAT SIGNATURE ON THE DP REGISTER IS AN ASSERTION OF THE FACT THAT THE STOCK HAS BEEN PHYSICALLY VERI FIED. THE LD. CIT(A)S FINDINGS HAVE GOT NO FOOTING WHEREAS THE A OS FINDINGS HAVE THE SUPPORT OF THE AUTHENTICATED DP R EGISTER AND FURTHER CORROBORATED BY THE STATEMENT OF THE SR. BR ANCH MANAGER. IN VIEW OF ABOVE, IT IS CLEAR THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A) BE VACATED AND THAT OF THE AO BE RES TORED. WITHOUT PREJUDICE TO THE ABOVE, IT IS PRAYED THAT IT IS CLEAR THAT IF THE LD. CIT(A) WAS OF THE OPINION THA T THE AO OUGHT NOT TO HAVE RELIED SOLELY ON THE STATEMENT OF THE S R. BRANCH MANAGER AND OUGHT TO HAVE EXAMINED ON OATH THE BANK MANAGER WHO HAD ACTUALLY AUTHENTICATED THE DP REGIS TER IN TOKEN OF HIS HAVING PHYSICALLY VERIFIED THE STOCK, HE OUGHT TO HAVE INVOKED HIS CO-TERMINUS POWER TO RECORD HIS ST ATEMENT OR ELSE REMANDED THE CASE BACK TO THE AO FOR THIS PURP OSE. IT IS, THEREFORE, PRAYED THAT THE MATTER BE RESTORED TO TH E FILE OF THE AO WITH THE DIRECTION TO RECORD TO THE STATEMENT OF THE BANK MANAGER WHO HAD AUTHENTICATED THE DP REGISTER IN TO KEN OF HIS HAVING PHYSICALLY VERIFIED THE STOCK AND DECIDE THE ISSUE ON THE 25 BASIS OF THE FACTS AS DEPOSED BY THE MANAGER BEFORE THE AO. THE LD. CIT(A)S APPROACH IS CLEARLY PREJUDICIAL TO TH E INTERESTS OF THE REVENUE AND IT IS, THEREFORE, PRAYED HIS ORDER BE VACATED. THE LD. CIT(A) APPRECIATION OF THE JUDICIAL PRONOUNCEMENTS IS ALSO NOT RELEVANT WHICH IS DISCUS SED HEREUNDER JUDGMENT WISE AS MENTIONED AT PAGES 13 TO 15 OF HIS ORDER. PARA (I) NOTHING HAS BEEN SHOWN AS TO HOW THIS JUDG MENT IS NOT RELEVANT TO THE FACTS OF THE CASE. THE UPHOLDIN G OF THE INITIATION OF PROCEEDINGS U/S 148 ON THE GROUND OF DIFFERENCE IN QUANTITY AND VALUATION, HAD CLEAR RELEVANCE TO THE MAKING OF ASSESSMENT AS WELL AND NOT ONLY TO INITIATION OF PR OCEEDINGS U/S 148. PARA (II) THIS IS JUDGMENT OF THE HONBLE HIGH COUR T IS NOT RELEVANT TO THE CASES AS THE AO HAD BROUGHT ON RECO RD THE AUTHENTICATED DP REGISTER AND ALSO THE STATEMENT OF THE SR. BRANCH MANAGER WHO HAD EXERCISED CONTROL OVER THE MANAGER WHO AUTHENTICATED THE DP REGISTER IN TOKEN OF HIS H AVING PHYSICALLY VERIFIED THE STOCK. PARA (III), (IV), (VI), (VII) & (VIII): THESE JUDGM ENTS ARE NOT RELEVANT IN VIEW OF THE FINDINGS OF THE AO AS DISCU SSED ABOVE AND AT PARA (II) ABOVE. PARA (V), THE LD. CIT(A) HAS ERRED IN DRAWING SUPPO RT FROM THE FACT OF DISMISSAL OF THE DEPARTMENTS APPEAL IN THE CASE OF THE JUDGMENT CITED AT PARA (IV), ABOVE AS THE DISMISSAL OF AN APPEAL ONLY TENTAMOUNTS TO THE HONBLE SUPREME COURTS RE FUSAL TO EXERCISE ITS POWER TO ALLOW SPECIAL LEAVE TO, PETIT ION AND IT DOES NOT CLOTHE THE JUDGMENT OF THE HIGH COURT WITH ITS APPROVAL. IT IS FURTHER SUBMITTED THAT THE LD. CIT(A)S ORDE R IS PERVERSE ON MULTIPLE COUNTS WHICH ARE DISCUSSED HER EWITH. (A) FIRSTLY, THE CONCERNED BANK MANAGER HAS GIVEN A STATEMENT THAT THE STOCK HAS BEEN PHYSICALLY VERIFI ED WHEN OD FACILITY IS ALLOWED TO SUCH ASSESSEES IN THESE CIR CUMSTANCE, THE 26 STATEMENT OF THE MANAGER WHO IS INCHARGE OF THE BRA NCH REPRESENTS THE TRUE AFFAIRS AND BUSINESS PRACTICE O F THE CONCERNED BANK AND THEREFORE, IT CARRIES HIGH EVIDE NTIARY VALUE. (B) FURTHER MORE THE BRANCH MANAGER HAS GIVEN THE STATEMENT IN THE CAPACITY OF RESPONSIBLE HEAD OF TH E BRANCH AND IT CERTAINLY COVERS THE POINT OF VIEW OF HIS JUNIOR S WHO MUST HAVE PHYSICALLY VERIFIED THE STOCK AND REPORTED TO HIM IN THIS REGARD. (C) WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) SHOULD HAVE RAISED THE ISSUE BEFORE TAKING ANY DECISION IN THIS MATTER. HE HAS NOT DOUBTED THE AUTHENTICITY AND EVIDENTIARY VALUE OF THE STATEMENT OF THE CONCERNED BANK MANAGER. ON THE CON TRARY, THE LD. CIT(A) HAS MERELY APPLIED THE CASE LAW IN FAVOU R OF THE ASSESSEE WITHOUT APPRECIATING THE DIFFERENCE OF FAC TS IN THE PRESENT CASE. IT IS FURTHER SUBMITTED THAT THE ISSUE IS WHOLLY CO VERED BY A RECENT JUDGMENT OF THE HONBLE P & H HIGH COURT IN THE CASE OF SMT. SHAKUNTALA THUKRAL VS. CIT REPORTED IN 366 ITR 644. THE FACTUAL MATRIX OF BOTH THE CASE IS ALMOST IDENT ICAL. IN THE CASE BEFORE THE HONBLE P & H HIGH COURT, THE ASSES SEE HAD CLAIMED THAT SHE HAD SHOWN INFLATED THE QUANTITY A S WELL AS THE VALUE OF THE STOCK WITH A VIEW TO AVAILING HIGHER L OAN FACILITY AND IN THE CASE OF THE ASSESSEE ALSO,, THE ASSESSEE HAD CLAIMED THAT IT HAD SHOWN INFLATED VALUE OF THE STOCK WITH THE SIMILAR OBJECTIVE AS DISCUSSED IN PARA 3 OF THE ASSESSMENT ORDER. THEREFORE, THIS JUDGMENT OF THE HONBLE HIGH COURT HAS DOVETAILING SUITABILITY TO THE FACTS OF THE CASE AN D THE APPEAL OF THE DEPARTMENT EMINENTLY DESERVES TO BE ALLOWED AND IT IS PRAYED ACCORDINGLY. 16. THE LD. COUNSEL FOR THE ASSESSEE, MR. P.N.AROR A, ADVOCATE, ON THE OTHER HAND, RELIED UPON THE SUBMISSIONS MADE B EFORE THE AO AND THE ORDER OF THE LD. CIT(A). THE LD. COUNSEL MR, P.N. A RORA, ADVOCATE FURTHER ARGUED THAT AS TO THE WRITTEN SUBMISSIONS AND ARGU MENTS MADE BY THE LD. 27 DR THE DEPARTMENT WHILE FILING THE APPEAL BEFORE TH E HONBEL BENCH HAS STATED IN THE STATEMENT OF FACTS THAT AN ADDITION O F RS.1,73,16,531/- WAS MADE ON ACCOUNT OF DIFFERENCE IN THE CLOSING FIGURES, AS SHOWN IN THE RE-CASTED TRADING & PROIT AND LOSS ACCOUNT FILE DURING TH COU RSE OF ASSESSMENT PROCEEDINGS AT RS.4,66,13,761/- AND THE FIGURES AS AVAILABLE IN THE DRAWING POWER REGISTER OF THE ASSESSEES BANK, PNB, BATHIND A AT RS.6,39,30,292/-. HENCE, IT HAS BEEN ADMITTED BY THE DEPARTMENT THAT THE ADDITION HAS BEEN MADE BY RELYING UPON THE DRAWING POWER REGISTER. TH E LD. DR HAS MADE PRESUMPTION THAT SH. TEJINDER SHARDA MEANT TO SAY T HAT IN ALL CASES THE STOCK STATEMENT AT THE END OF THE MONTH WAS SUBMITTED BY ALL THE PARTIES WHO AVAILED CASH CREDIT LIMIT ON THE BASIS OF HYPOTHECA TION OF STOCK WHICH WAS PHYSICALLY VERIFIED. THUS, IT IS A PRESUMPTION OF T HE DR THAT THE STATEMENT RECORDED IN ONE CASE IS APPLICABLE TO ALL THE CASES . 16.1. THE LD. COUNSEL, MR. P.N.ARORA, ADVOCATE, FUR THER ARGUED THAT THE FINDINGS OF THE LD. CIT(A) IN PARA 5(III) ON PAGE 1 2 OF THE APPELLATE ORDER ARE THAT IT IS NOT POSSIBLE FOR THE BANK STAFF TO COUNT /WEIGH THE STOCK WORTH CRORES OF RUPEES LYING IN OPEN IN DIFFERENT STATES ARE BAS ED ON THE CONTENTION OF THE ASSESSEE RAISED BEFORE THE AO AND WHICH HAS BEEN RE PRODUCED IN PARA 3 OF THE APPELLATE ORDER. IT WAS ALSO STATED BEFORE THE AO THAT THE STOCK REMAINED IN POSSESSION AND CONTROL OF THE ASSESSEE IN J & K, MP, PUNJAB AND 28 CHANDIGARH WHERE CONTRACT WORKS WERE BEING EXECUTED AND FURTHER THAT IN THE STATE OF MP THE STOCKS WERE SCATTERED AT EVERY WORK LOCATION IN A RADIUS OF 50 KM. IN VIEW OF THE CONSTRUCTION OF ROADS. THI S CATEGORICAL STATEMENT OF THE ASSESSEE HAS NOT BEEN REBUTTED BY THE DEPARTMEN T AT ANY STAGE. HE FURTHER SUBMITTED THAT THE LD. CIT(A) HAS NEVER RECORDED A FINDING IN A.Y. 2009-10 THAT THE AO SHOULD HAVE EXAMINED THE BANK OFFICER W HO HAD ACTUALLY VERIFIED THE STOCK, THE FINDING IS LIMITED TO EXTE NT AS RECORDED IN PARA 5(II) THAT AO HAS TRIED TO PROVE IN THE PRESENT CASE THAT THE STOCK WAS PHYSICALLY VERIFIED BY BANK MANAGER BY RELYING ON THE STATEMEN T OF BANK MANAGER IN THE CASE OF MANISH KUMAR BANSAL CONTRACTOR BUT IN THE O PINION OF THE LD. CIT(A) UNLESS THE AO PROVED THAT THE STOCK WAS PHY SICALLY VERIFIED, NO ADDITION CAN BE UPHELD. SINCE THE DEPARTMENT FAILED TO PROVE THAT ANY PHYSICAL VERIFICATION OF THE STOCK WAS CARRIED OUT BY THE BANK THE ADDITION WAS DELETED BY THE CIT(A) AS FINALLY HELD IN THE CO NCLUDING PARAGRAPH ON PAGE 13. 16.2. THE LD. COUNSEL, MR. P.N.ARORA, ADVOCATE FURT HER STATED THAT THE STOCK STATEMENT FILED BY THE ASSESSEE HAS BEEN FOUND TO B E UNSIGNED (PAGE 12 & 13 OF THE PAPER BOOK FOR AY 2009-10 FILED ON 02.02.201 5). AS REGARDS THE DRAWING POWER REGISTER ON WHICH HEAVY RELIANCE HAS BEEN PLACED BY THE LD. DR, THE COPY OF THE SAME HAS BEEN ENCLOSED ALONGWIT H THE PAPER BOOK ( 29 FILED ON 2.2.2015 FOR AY 2009-10 IN WHICH THE PHOTO COPY IS ON PAGE 12 AND TYPED COPY IS ON PAGE 15 & 16 FOR PERIOD FROM JAN, 2007 TO 31.12.2009.). 16.3. HE FURTHER STATED THAT THERE ARE FOLLOWING DE FICIENCIES IN THE REGISTER AND VITAL INFORMATION RELATING TO PHYSICAL VERIFICA TION OF THE STOCK HAS NOT BEEN RECORDED: I) THERE IS NO COLUMN IN THIS REGISTER FOR KEEPING THE RECORD THAT ON WHICH DATE STOCK STATEMENT HAS BEEN RECEIVED. II) THE COLUMN FOR ACCOUNTANT INITIALS IS BLANK. III) THE COLUMN FOR INSPECTION IS MOSTLY BLANK EXCE PT INITIALS IN SOME OF THE COLUMNS AND DATE OF 19.01.2010 AGAINST THE STOCK STATEMENT OF 31.08.2009, 30.09.2009 AND 31.10.2009 WHICH SHOWS THE REALITY OF PHYSICAL VERIFICATION OF STOCK AS ON DIFFERENT DATES OF THREE MONTHS. IV) THE COLUMN FOR FULL SIGNATURE OF INCUMBENT INCHARGE IS ALSO BLANK EXCEPT STARTING FROM ENTRIES FOR THE MONTH OF MARCH, 2009 TO DEC. 2009 BUT NO NAME OF THE PERSON WHO DID THE INITIALS CAN BE MADE OUT. THUS, APPLYING THE RATIO OF ORDER OF ITAT, AMRITSAR IN THE CASE OF JAI SHARDA RICE MILLS, THE SENIOR BANK MANAGER SH. TEJI NDER SHARDA GUESSED THAT HIS PREDECESSOR MUST HAVE GONE THROUGH THE MO DUS OPERANDI OF MAINTAINING THE RECORDS BY THE BANK AS HE WAS NOT I N THE BRANCH OF THE BANK DURING THE RELEVANT PERIOD I.E. THE ALLEGED PHYSICA L VERIFICATION OF STOCK AS PER STOCK STATEMENT DATED 31.03.2009. THE LD. COUNS EL STATED THAT THE ABOVE SAID FACTS PROVES THAT THE BANK HAS NO RECORDS FOR PHYSICAL VERIFICATION OF THE 30 STOCK AS ON 31.03.2009 AND THE DRAWING POWER REGIST ER CANNOT BE RELIED UPON. MOREOVER, THERE ARE NO SIGNATURE OF SH.TEJIN DER SHARDA IN THIS REGISTER EITHER AS INSPECTING OFFICER OR THE INCUMBENT INCHA RGE WHICH PROVES THAT WHATEVER HE STATED BEFORE THE AO IS ONLY A PROCEDUR E AND IT IS FOR THE DEPARTMENT TO PROVE THAT WHETHER THE PRESCRIBED PR OCEDURE FOR PHYSICAL VERIFICATION OF STOCK WAS ADHERED TO BY THE BANK. T HUS, THE ARGUMENT OF THE LD. DR THAT THE STATEMENT OF THE MANAGER WHO IS IN CHARGE OF THE BRANCH REPRESENTS THE TRUE AFFAIRS AND BUSINESS PRACTICE O F THE CONCERNED BANK AND THEREFORE, IT CARRIES HIGH EVIDENTIARY VALUE AND SH OULD HAVE BEEN ACCEPTED BY THE CIT(A) IS A GOSPEL TRUTH AND DRAWING POWER REGI STER AS A SACROSANCT DOCUMENT TO THE EXTENT THAT THE DRAWING POWER IS CA LCULATED ON THE BASIS OF ENTRIES OF ENTRIES IN THIS REGISTER, STANDS REBUTT ED KEEPING IN VIEW THE FACTS AS DISCUSSED SUPRA. 16.4. AS REGARDS THE JUDGMENT OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF DEVGAN RICE & GEN. MILLS RELIED UPON BY THE AO , THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE BEFORE TH E HONBLE HIGH COURT WAS THAT WHERE THE BANK PROVIDED THE DETAILS OF THE STO CK HYPOTHECATED TO THE BANK AFTER THE COMPLETION OF THE ASSESSMENT PROCEED INGS BY THE AO, THE REOPENING OF THE ASSESSMENT ON ACCOUNT OF ESCAPEMEN T OF INCOME WAS VALID OR NOT. THE HONBLE COURT HELD THAT THE REASSESSME NT PROCEEDINGS INITIATED 31 WERE VALID. THE CIT(A) HAS GIVEN A CLEAR CUT FINDIN G IN PARA 3.1 ON PAGE 16 OF THE APPELLATE ORDER THAT THE JUDGMENTS RELIED UP ON BY THE AO ARE DISTINGUISHABLE ON FACTS. 16.5. HE FURTHER SUBMITTED THAT THE JUDGMENTS OF HO NBLE PUNJAB & HARYANA HIGH COURT, RELIED UPON BY THE LD. CIT(A) IN THE CA SES OF SANTOSH BOX FACTORY, SIDHU RICE MILLS AND IN THE CASE OF DEVI DAYAL RICE MILLS ARE SQUARELY APPLICABLE TO THE FACTS OF THE CASE AS THE DEPARTMENT FAILED TO PROVE THE PHYSICAL VERIFICATION OF STOCK AND NEITHER THE STOCK STATEMENT NOR THE DRAWING POWER REGISTER CAN BE RELIED UPON. 16.6. HE FURTHER STATED THAT THE RELIANCE OF THE LD . CIT(A) ON THE DISMISSAL OF SLP BY THE DEPARTMENT IN THE CASE OF VEERDIP ROL LER (P) LTD., IS ONLY ONE OF THE CASES BUT THE CIT(A) HAS PLACED RELIANCE ON ALL THE JUDGMENTS AS A WHOLE. 16.7. THE LD. COUNSEL FOR THE ASSESSEE HAS INVITE D OUR ATTENTION TO THE DISTINGUISHABLE FACTS OF THE CASE, AS FACTS OF THE CASE HAVE BEEN DISCUSSED IN DETAIL BY THE LD. CIT(A) IN THE CASE OF SMT. SHAKU NTLA THUKRAL VS CIT (2014) 366 ITR 644 (P&H) VIDE ORDER DATED 24.02.201 0, AS UNDER: I) THE CONTENTION OF THE ASSESSEE IN THE CASE OF SH AKUNTAL THUKRAL IS THAT THE STOCK AS ON 31.03.2005 WAS INFLATED TO MAKE PAYMENT OF IMPORT OF MACHINERY BY GIVING HIGHER STOCK HAS B EEN REJECTED BECAUSE ACCORDING TO THE CIT(A) THE PAYMENT OF MAC HINERY WAS RELEASED IN THE MONTH OF FEB, 2005 AND ACCORDIN G TO THE LD. CIT(A) THE HIGHER STOCK STATEMENT WAS SUBMITTED FO R IMPORT OF 32 MACHINE IS NOT SUPPORTED BY ANY EVIDENCE ( PARA 2. 12 (PAGE 24 & 25 OF THE ORDER). BUT IN THE CASE OF THE ASSESSEE, IT HAS BEEN THE C ONTENTION OF THE ASSESSEE DURING THE COURSE OF ASSESSMENT AS WELL AS APPELLATE PROCEEDINGS THAT THE STOCK STATEMENT WAS INFLATED T O GET HIGHER CASH CREDIT LIMIT. NO SUCH FINDING HAS BEEN GIVEN B Y THE LD. CIT(A) IN THE CASE OF THE ASSESSEE. II) THE ASSESSEE HAS NOT DISPUTED THAT STOCK OF THE VALUE WHICH WAS SUBMITTED TO THE BANK WAS ACTUALLY IN THE BUSINESS PREMISES (OPENING LINE PARA 2.12.2 PAGE 25). BUT IN THE CASE OF THE ASSESSEE IT HAS ALWAYS BEE N THE CONTENTION OF THE ASSESSEE THAT THE STOCK WAS INFL ATED AND THE ASSESSEE WAS NEVER IN POSSESSION OF SUCH STOCK. III) THE LD. CIT(A) HAS RECORDED A CATEGORICAL FINDING T HAT THE STOCK WAS VERIFIED BY THE BANK THROUGH PHYSICAL INSPECTIO N AND BY EXAMINATION OF RELEVANT RECORDS. ACCORDING TO LD. C IT(A) THE INSPECTION AND AUDITS ARE CARRIED OUT ON TEST CHEC K BASIS AND WITH REFERENCE TO RELEVANT REGISTER (PARA 2.12.1 PA GE 25). BUT IN THE CASE OF THE ASSESSEE THE FINDING OF THE CIT(A) IS THAT FIRSTLY IT WAS NOT POSSIBLE FOR THE BANK TO PHYSICALLY VERIFYTHE STOCK BECAUSE OF THE NATURE OF STOCK AND IT WAS LYING IN DIFFERENT STATES AND SECONDLY BECAUSE THE AO DID NOT MAKE ANY EFFORT TO BRING ANY MATERIAL ON RECORD TO PROVE THE PHYSICAL VERIFICATION OF STOCK EXCEPT RECORDING THE STATEME NT OF THE BANK MANAGER (PARA 5(II), 5(III) PAGE 12 & 13 OF TH E APPELLATE ORDER). IV) THE AO CONCLUDED IN THIS CASE THAT THE ASSESSEES BOOKS WERE NOT ACCURATE ( PARA 2.3.1 PAGE 4). BUT IN THE CASE OF THE ASSESSEE, THE AO HAS ACCEPTE D THE FACT THAT THE BOOKS OF ACCOUNT WERE PRODUCED ALONGW ITH BILLS AND VOUCHERS AND THESE WERE TEST CHECKED (PARA 2 PA GE 1 OF THE ASSESSMENT ORDER BUT NO FINDING REGARDING ANY DEFEC T WHATSOEVER). 33 V) THE VALUATION OF CLOSING STOCK WAS FOUND DEFECTIVE BY THE AO (PARA 2.8 PAGE 6). BUT NO SUCH FINDING OF THE AO WAS THERE IN THE CASE OF THE ASSESSEE IN THE ASSESSMENT ORDER. 16.8. THE LD. COUNSEL FOR THE ASSESSEE FURTHER STA TED THAT IT IS RELEVANT TO POINT OUT THAT THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SHEENA EXPORTS IN ITA NO.382(ASR)/2011, VIDE ORDER DATED 13.03.2012, REPORTED IN 20 TAXMAN .COM PAGE 644, HAS ONCE AGAIN DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE. THIS ORDER IS AVAILABLE AT PAGE NOS. 70 TO 72 OF THE PAPER BOOK. THE HONBLE HIGH COURT IN THE SAID CAS E HAS HELD THAT THE ADDITION COULD BE MADE ONLY IF QUANTITY OF STOCK SU BMITTED TO THE BANK WAS HIGHER THAN THE QUANTITY AS PER BOOKS, WHICH WERE P LEDGED, COUNTED OR VERIFIED BY THE BANK OFFICIAL AND SINCE THE STOCK S TATEMENT WAS NOT VERIFIED BY ANY BANK OFFICIAL, THE STOCK STATEMENT GIVEN TO THE BANK COULD NOT BE RELIED UPON. FURTHER, THE DETAILS COMMENTS OF THE A SSESSEE ON THE JUDGMENT OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SMT. SHAKUNTLA THUKRAL VS. CIT (2014) 366 ITR 644 RELIED UPON BY T HE AO HAS BEEN GIVEN IN THE BRIEF SYNOPSIS BY LD. DR FOR AY 2010-11 AND THIS CASE IS NOT AT ALL APPLICABLE TO THE ASSESSEES CASE. 16.9. THE LD. COUNSEL FOR THE ASSESSEE, MR. P.N. AR ORA, IN FURTHERANCE TO HIS ARGUMENTS SUBMITTED THE COMMENTS ON THE DECISION OF THE HONBLE PUNJAB & 34 HARYANA HIGH COURT IN THE CASE OF SMT. SHAKUNTLA THUKRAL VS. CIT (SUPRA) THAT: A BARE PERUSAL OF THE ORDER OF THE LD. CIT(A) MAKE S IT CLEAR THAT THE AO HAD GIVEN CATEGORICAL FINDINGS IN THE ASSESSMENT ORDER THAT : I) AS GIVEN IN PARA 2.3.1 PAGE 4 OF LD. CIT(A)S ORDER WHICH IS REPRODUCED IN THE RELEVANT COLUMN THAT THE ASSESSEE S BOOKS WERE NOT QUITE ACCURATE BECAUSE OF SPECIFIC DEFECT OF NON RECORDING OF SALES TO THE BOOKS OF ACCOUNT. II) IN PARA 2.8 PAGE 6 OF CIT(A)S ORDER THAT STOCK STA TEMENT FILED ON 04.07.2007 HAS BEEN REPLACED BY OTHER STOCK STAT EMENT WHICH ESTABLISHES THAT NO STOCK INVENTORY WAS PREPA RED AT THE CLOSE OF THE FINANCIAL YEAR. THERE IS NO SUCH FINDING BY THE AO IN THE CASE OF T HE ASSESSEE. FURTHER, THE LD. CIT(A) HAS RECORDED CATEGORICAL FI NDING: I) IN PARA 2.11 PAGE 24 OF THE ORDER OF LD. CIT(A) THA T THE CONTENTION OF THE ASSESSEE THAT THE HIGHER STOCK AS ON 31.03.2005 WAS GIVEN FOR THE PURPOSE OF MAKING PAYM ENTS FOR IMPORT OF MACHINERY CANNOT BE ACCEPTED AS THE PAYME NT FOR PURCHASE OF MACHINERY HAD ALREADY BEEN RELEASE IN F EB, 2005. II) IN PARA 2.12.1 PAGE 25 OF THE ORDER OF LD. CIT(A) I T HAS BEEN STATED THAT THERE ARE REPORTS OF PHYSICAL INSPECTIO N CARRIED OUT BY THE BANK AUTHORITIES IN RESPECT OF ASSESSEES STOCK AT QUARTERLY INTERVALS IS AVAILABLE AND SUCH FINDINGS HAS NOT BE EN REBUTTED BY THE ASSESSEE BEFORE THE HONBLE ITAT OR THE HONBLE HIGH COURT. BUT IN THE PRESENT CASE WE HAVE ESTABLISHED THAT NO PHYSICAL INSPECTION OF THE STOCK HAS BEEN CARRIED O UT, AS STATED BY THE BANK MANAGER. III) IN PARA 2.12.2 PAGE 25 OF LD. CIT(A)S ORDER, IT HA S BEEN STATED THAT THE ASSESSEE HAS NOT DISPUTED THE STOCK OF THE VALUE WHICH WAS SUBMITTED TO THE BANK WAS ACTUALLY LYING IN BUS INESS PREMISES AS ON 31.03.2005. 35 BUT IN THE PRESENT CASE WE HAVE ALL ALONG STATED BE FORE THE AO AND BEFORE THE LD. CIT(A) THAT THE STOCK W AS INFLATED TO GET THE CASH CREDIT LIMIT FROM THE BANK . 16.10. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SU BMITTED THAT THE AO IN THE CASE OF SHAKUNTAL THUKRAL AFTER POINTING OUT DEFECTS IN BOOKS OF ACCOUNT OF THE ASSESSEE RECORDED A CATEGORICAL FIND ING IN THE ASSESSMENT ORDER THAT THE BOOKS OF ACCOUNT WERE NOT ACCURATE M EANING THEREBY THAT THE BOOKS OF ACCOUNT WERE REJECTED. BUT IN THE PRESENT CASE THERE ARE NO SUCH FINDING BY THE AO AND THE BOOKS OF ACCOUNT HAS NOT BEEN REJECTED BY THE AO RATHER NO DEFECT HAS BEEN POINTED OUT IN THE BOOKS OF ACCOUNT. 16.11. THE LD. COUNSEL FURTHER STATED THAT THE LD. CIT(A) IN THE CASE OF SHAKUNTLA THUKRAL HAS RELIED ON THE REPORTS OF PHYS ICAL INSPECTION CARRIED OUT BY THE BANK AUTHORITIES IN RESPECT OF THE STOCK OF THE ASSESSEE AT QUARTERLY INTERVALS AND SUCH FINDINGS HAVE NEITHER BEEN REBUT TED BEFORE THE CIT(A) OR BEFORE THE ITAT OR BEFORE THE HONBLE HIGH COURT. BUT IN THE PRESENT CASE OF THE ASSESSEE, IT HAS BEEN ESTABLISHED THAT NO P HYSICAL INSPECTION OF THE STOCK HAS BEEN CARRIED OUT, AS STATED BY THE BANK M ANAGER. 16.12. THE LD. COUNSEL STATED THAT THE LD. CIT(A) IN THE CASE OF SHAKUNTLA THUKRAL HAS RECORDED A CATEGORICAL FINDIN G THAT ASSESSEE HAS ACCEPTED THE FACT THAT THE STOCK AS PER STOCK STATE MENT ON 31.03.2005 WAS 36 LYING IN THE PREMISES OF THE ASSESSEE. BUT IN THE PRESENT CASE OF THE ASSESSEE, IT HAS ALL ALONG STATED BEFORE THE AO AND BEFORE TH E LD. CIT(A) THAT THE STOCK WAS INFLATED TO GET THE CASH CREDIT LIMIT FROM BANK AND THE ONUS IS ON THE DEPARTMENT TO PROVE THAT THE ASSESSEE OWNED THE STO CK MORE THAN THE STOCK AS REFLECTED IN THE BALANCE SHEET AS ON 31.03.2005. 16.13. THE LD. COUNSEL FOR THE ASSESSEE FURTHE R ARGUED THAT THE AO HAS NOT REJECTED THE BOOKS OF ACCOUNT AND HAS NOT INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT AND THE AO IS NOT EMPOWERED TO MA KE ANY VARIATION IN THE TRADING ACCOUNT WHICH INCLUDES THE CLOSING STOCK. A CCORDINGLY, THE LD. COUNSEL FOR THE ASSESSEE RELYING ON THE SUBMISSIONS MADE BEFORE THE AO AND THE LD. CIT(A) AND THE ORDER OF THE LD. CIT(A) AND ARGUMENTS MADE HEREINABOVE CONTRADICTED THE ARGUMENTS MADE BY THE LD. DR AND PRAYED TO CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 17. THE LD. DR, MR. TARSEM LAL, IN THE REJOINDER MA DE THE ARGUMENTS AND THEREAFTER SUBMITTED THE COUNTER WRITTEN SUBMISSION S AS TO WHAT HAS BEEN ARGUED IN THE REJOINDER, WHICH FOR THE SAKE OF CONV ENIENCE ARE REPRODUCED HEREUNDER: BEFORE THE HONBLE INCOME TAX APPELLATE TRIBUNAL: AMRITAR BENCH: AMRITSAR 37 A. M/S.ISHAR INFRASTUCTURE DEVELOPER (P)LTD, BATHINDA ITA NO.198/ASR/2013 AY 2009-10 M/S.ISHAR INFRASTRUCTURE DEVELOPER (P) LTD. BATHIND A ITA NO.536/ASR/2013 A.Y. 2010-11 B. M/S.EURO INFRASTURE & POWERS LIMITED. ITA NO. 571 /ASR/2013 ASSESSMENT YEAR 2009-10 C. M/S.ROYAL DEEP CONSTRUCTION CO.BATHINDA ITA NO.199 /ASR/2013 ASSESSMENT YEAR 2009-10 D. M/S.BHOLARIA CONSTRUCTIONS BATHINDA ITA NO.200/ASR/ 2013 ASSESSMENT YEAR 2009-10 E. M/S.RAM KUMAR BANSAL BATHINDA ITA NO.457/ASR/2013 ASSESSMENT YEAR 2009-10 COUNTER WRITTEN SUBMISSIONS: BEFORE COUNTER WRITTEN SUBMISSIONS ARE MADE, IT NEE DS TO BE SUBMITTED THAT THE ASSESSEES COUNSEL HAS FILED PAPER BOOKS, WRITTEN SUBMISSIONS, JUDGEMENTS IN PIECEMEAL SO MANY TIMES, IT IS DIFFIC ULT TO KEEP A TRACK OF WHAT DOCUMENTS HAVE BEEN FILED AND IN WHICH CASE . THERE MAY BE SOME PAPERS WHICH THE ASSESSEE HAS FILED DURING THE COURSE OF HEARING OR OTHERWISE AND WHICH MAY HAVE NOT BEEN PROVIDED B Y THE ASSESSEE TO THE UNDERSIGNED. THEREFORE, I AM GIVING BELOW A DET AIL OF THE VARIOUS DOCUMENTS FILED BY THE ASSESSEE ON DIFFERENT DATES: 1. LIST OF COMPILATION OF JUDGEMENTS ON 9.4.2014 IN TH E CASE OF C ABOVE. 2. LIST OF COMPILATION OF JUDGEMENTS ON 9.4.2014 IN TH E CASE OF A ABOVE. 3. LIST OF COMPILATION OF JUDGEMENTS ON 9.4.2014 IN TH E CASE OF B ABOVE. 4. LIST OF COMPILATION OF JUDGEMENTS ON 9.4.2014 IN TH E CASE OF E ABOVE. 38 5. PAPER BOOK IN THE CASE OF C ABOVE ON 28.04.2014 6. PAPER BOOK IN THE CASE OF A ABOVE ON 28.04.2014 7. PAPER BOOK IN THE CASE OF B ABOVE ON 28.04.2014 8. WRITTEN SUBMISSION IN THE CASE OF B ABOVE ON 1.5.20 14 9. WRITTEN SUBMISSIONS IN THE CASE OF D ABOVE ON 1.5.2 014 10. WRITTEN SUBMISSIONS IN THE CASE OF D ABOVE ON 19.08 .2014 11. WRITTEN SUBMISSIONS IN THE CASE OF B ABOVE ON 25.08 .2014 12. WRITTEN SUBMISSIONS IN THE CASE OF E ABOVE ON 25.08 .2014 13. WRITTEN SUBMISSIONS IN THE CASE OF A ABOVE ON 25.08 .2014 14. LIST OF COMPILATION OF JUDGEMENTS ON 10.9.2014 IN D ABOVE 15. LIST OF COMPILATION OF JUDGEMENTS ON 10.9.2014 IN C ABOVE.. 16. LIST OF COMPILATION OF JUDGEMENTS ON 9.9.2014 IN E ABOVE. 17. PAPER BOOK IN THE CASE OF D ABOVE ON 10.9.2014 18. COMPILATION OF JUDGEMENTS IN THE CASE OF A ABOVE ON 10.9.2014 19. COMPILATION OF JUDGEMENTS IN THE CASE OF B ABOVE ON 10.9.2014. 20. COMPILATION OF JUDGEMENTS IN THE CASE OF E ABOVE ON 10.9.2014. 21. AUDIT REPORT IN THE CASE OF D ABOVE ON 15.09.2014 22. PAPER BOOK IN THE CASE OF C ABOVE ON 15.9.2014 39 23. AUDIT REPORT IN THE CASE OF A ABOVE ON 16.09.2014 24. PAPER BOOK IN THE CASE OF B ABOVE ON 16.09.2014 25. PAPER BOK IN THE CASE OF E ABOVE FOR HEARING FIXED ON 22.09.2014 26. PAPER BOOK ON 28.04.2014 IN THE CASE OF A ABOVE. 27. PAPER BOOK ON 28.04.2014 IN D ABOVE. 28. LIST OF COMPILATION IN B ABOVE FOR HEARING ON 30.12 .2014 29. LIST OF COMPILATION FOR HEARING ON 30.12.2014 IN A ABOVE. 30. PAPER BOOK ON 2.2.2015 IN THE CASE OF C, D & A ABOV E. 31. COUNTER WRITTEN SUBMISSIONS IN A & B ABOVE ON 2.2.2 015 32. COMPILATION OF JUDGEMENTS FOR HEARING ON 2.2.2015 I N A & B ABOVE. 33. COUNTER COMMENTS ON WRITTEN SUBMISSIONS FILED ON 6. 2.2015 IN THE CASE OF A, C & D ABOVE. 34. PAPER BOOK IN THE CASE OF A, C & D ABOVE ON 16.02.2 015 35. WRITTEN SUBMISSIONS FOR DATE OF HEARING ON 18.2.201 5 IN A ABOVE. 36. CHART SHOWING DETAILS OF DISPUTED ADDITIONS ON 18.2 .2015 IN A ABOVE. 37. COPIES OF TWO JUDGEMENTS IN THE CASE OF A ABOVE ON 19.2.2015 38. DETAILS OF APPEALS FILED .DATE NOT MENTIONED. 39. COMMENTS ON THE JUDGEMENT OF SHAKUNTLA THUKRAL FOR DATE OF HEARING ON 25.2.2015. 40 IT MAY BE SUBMITTED THAT I HAVE NO OTHER PA PER, PAPER BOOK, COMPILATION IF ANY THE ASSESSEE HAS FILED IN ANY OF THE ABOVE CASES. IT MAY BE SUBMITTED THAT FILING OF PAPERS IN THE AB OVE MANNER IS IN TOTAL DISREGARD OF THE OF SECTION 18(5)OF THE INCO ME TAX APPELLATE TRIBUNAL RULES, 1963 WHICH ENVISAGE FILING OF PAPER BOOK ONLY ONCE AND NOT RAINING DOCUMENTS IN THE MANNER AS HAS BEEN DEL INEATED ABOVE. THIS PUTS THE DEPARTMENTAL REPRESENTATIVE TO GREAT HARDS HIP AND DISADVANTAGE. NONETHELESS, THE COUNTER-WRITTEN SUBMISSIONS AS DIR ECTED BY THE HONBLE BENCH TO BE FILED ON 9.3.2015 ARE SUBMITTED HEREUND ER:- HERE EACH CASE IS DISCUSSED SEPARATELY HEREUNDER: M/S.ISHAR INFRASTRUCTURE (P)LTD. ASSESSMENT YEAR 20 09-10 FIRST ISSUE: IT MAY BE MENTIONED THAT THE BANK SEEKS MARGIN MON EY TO THE EXTENT OF 25% AND ALLOWS CREDIT FOR THE REMAINING 75%. A PERUSAL OF THE DRAWING POWER REGISTER OF PNB WHOLLY DISAPPR OVES THE ASSESEEES CLAIM THAT IT HAD SUBMITTED INFLATED STO CK STATEMENT TO THE BANK. IT REVEALS THAT THE ASSESSEE HAD BEEN REGULAR LY SUBMITTING STOCK STATEMENT OF VALUES MUCH HIGHER THAN 75%. (A COPY O F DP REGISTER IS ENCLOSED FOR READY REFERENCE AS ANNEXURE 1). IT REV EALS THAT THE ASSESSEE HAD SUBMITTED NO INFLATED STOCK STATEMENT WHEN IT HAD SOUGHT HIGHER CREDIT ON 31.10.2008 WHEN IT HAD BEEN SANCTI ONED HIGHER LIMIT OF RS.4.5 CRORE AGAINST STOCK STATEMENT OF RS.6,08, 57,320/-AS AGAINST LIMIT OF RS.4.2 CRORE THE VALUE OF STOCK SUBMITTED WAS RS.7,29,15,600/- ON 30.09.2008 AND RS.9,05,18,375/- ON 31.01.2009 WHEN HIGHER LIMIT OF JUST RS.4.5 CR HAD ALREADY BEE N SANCTIONED TO IT ON 31.10.2008. NOW WHEN THE ASSESEE SUBMITTED STOCK STATEMENT OF RS.9,05,18,375/-, IT CANNOT CLAIM THAT IT HAD SUBMI TTED INFLATED STOCK STATEMENT TO AVAIL HIGHER CREDIT LIMIT AS THE SAME CREDIT LIMIT OF RS.4.5 41 CRORE HAD ALREADY BEEN ALLOWED TO IT. IT MAY FURTHE R BE NOTED THAT THE ASSESSEE HAD CREDIT LIMIT OF RS.8 CRORE ON 31.05.2010 AS AGAINST LIMIT OF RS.6 CRORE AT THE ALMOST SAME VALUE OF STOCK WHI CH WAS AT RS.11,85,81,990/- WHEN LIMIT SANCTIONED WAS RS.6 CR ORE AND AT RS.11,91,47,712/- WHEN LIMIT SANCTIONED INCREASED B Y RS.2 CRORE WITH INCREASE IN STOCK OF MERE RS.5.6 LACS. IT NEEDS TO BE APPRECIATED THAT THE STOCK STATEMENT S FURNISHED BY THE ASSESSEE EACH MONTH DURING THE ACCOUNTING PERIOD RE LEVANT TO THE ASSESSMENT YEAR 2009-10 AND 2010-11, WAS MUCH HIGHE R THAN THE THRESHOLD LIMIT AFTER INCLUDING 25% MARGIN. THUS, I T IS PROVED THAT THE STOCK REFLECTED IN THE MONTHLY STOCK STATEMENT WAS REAL AND NOT INFLATED. IT ALSO NEEDS TO BE APPRECIATED THAT THE STOCK WAS BEING INSPECTED BY THE BANK AND SIGNATURE OF THE BANK MAN AGER WERE PUT ON THE DP REGISTER IN TOKEN OF HAVING PHYSICALLY INSPE CTED THE STOCK. IT IS ALSO PERTINENT TO NOTE THAT WHEN THE MANAGER DID NO T INSPECT THE RECORD, IT HAD NOT PUT ANY SIGNATURE ON THE DP REGI STER. THEREFORE, IT CANNOT BE DISPUTED THAT THE BANK MANAGER HAD PUT HI S SIGNATURE ON THE DP REGISTER WITHOUT ACTUALLY INSPECTING THE SAME WH ICH SHRI KAMLESH GUPTA, CHIEF MANAGER, PNB HAD CONFIRMED IN HIS STAT EMENT AND ALSO CROSS-EXAMINATION THAT PHYSICAL INSPECTION HAD BEEN CARRIED OUT BY THE BANK. IT IS FURTHER PERTINENT TO MENTION HERE THAT WHEREA S IN THE ASSESSMENT YEAR 2009-10 THE ASSESSEE CALIMED THAT IT HAD FURN ISHED INFLATED STOCK STATEMENT FOR AVAILING HIFHER CREDIT FACILITY BUT W HEN IT CAME TO AY 2010-11 WHEN NO HIGHER CREDIT LIMIT WAS AVAILED, IT DID NOT CLAIM THAT INFLATED STOCK STATEMENT WAS SUBMITTED ON 20.03.201 0 BUT CLAIMED THAT LOAN WAS COVERED BY COLLATERAL SECURITY OF RS.16 C ORRE. IF THE LOAN 42 WAS SANCTIONED AGAINST COLLATERAL SECURITY, THE AS SESSEE HAD NO REASON TO CONTEST THE PHYSICAL VERIFICATION OF STOC K BY THE BANK MANAGER.IT OUGHT TO HAVE PERSISTED IN THAT BUT IT DID NOT AS IT KNEW THAT THE BANKING AUTHOLRITIES WOULD NOT SUPPORT HIS CASE THAT THE STOCK HYPOTHECATION HAD NOTHING TO DO WITH THE SANCTIONIN G OF THE CREDIT LIMIT. IT IS HIGHLY PERTINENT TO POINT OUT THAT THE ASSESS EES CLAIM THAT IT HAD FURNISHED INFLATED STOCK STATEMENTS TO THE B ANK TO AVAIL HIGHER CREDIT LIMIT HAS CLEARLY BEEN FOUND TO BE FALSE ON THE SCRUTINY OF THE DP REGISTER AND THE ONLY LOGICAL CONCLUSION OF THE THIS CRITICAL STUDY IS THAT THE STOCK STATEMENTS SUBMITTED BY THE ASSESSEE TO THE BANK WERE REAL. THE ISSUE OF PHYSICAL VERIFICATION IS A SEPAR ATE ISSUE WHICH THOUGH ALSO EMPHATICALLY GOES AGAINST THE ASSESSEE IN VIEW OF THE EXAMINATION AND CROSS-EXAMINATION OF SHRI KAMLESH G UPTA. SHRI GUPTA HAS CATEGORICALLY AFFIRMED IN HIS REPLY QUEST ION NO.4 OF THE STATEMENT THAT: AS PER RECORD, STOCKS STATEMENT AS ON 20.3.2010 DH GKS MIYC/K GS GEKJS RECORD DS FGLKC LS BOOKS DEBT STATEMENT O STOCK STATEMENT 20/3/2010 DKS GH NH GS BLDS CKN UGH NH ;}FI STOCK STATEMENT 20.3.2010 DKS BANK }KJK PHYSICALLY VERIFY FD;K X;K GS O INCUMBET OFFICER }KJK SIGN HKH FD;K X;K GS A THUS, IT IS CLEAR THAT SH. KAMLESH GUPTA HAD EMPHAT ICALLY CONFIRMED THE PHYSICAL VERIFICATION OF THE STOCK AS PER RECOR D OF THE BANK. HE HAD FURTHER CONFIRMED THIS FACT IN HIS CROSS-EXAMINATI ON IN AN ANSWER TO 43 THE ASSESSEES COUNSELS QUESTION ABOUT PHYSICAL VE RIFICATION OF STOCK. HE HAD ANSWERED: THE STOCK IS PHYSICALLY VERIFIED BY THE BANK OFFICE R AND STOCK AUDIT IS ALSO CONDUCTED BY AN INDEPENDENT AUDITOR. I AM SUBMITTING A PHOTOCOPY OF THE SAID AUDIT REPORT DAT ED 4.2.2010. IT IS FURTHER PERTINENT TO NOTE THAT IT HAS BEEN MA DE CLEAR IN THE CROSS EXAMINATION THAT THE STOCK AUDIT WAS DONE IN RESPECT OF THE STOCK STATEMENT SUBMITTED BY THE ASSESSEE TO THE BANK AS ON 31.01.2010 WHICH WAS DECLARED AT RS.10,75,10,500/- WHEREAS THE STOCK DECLARED TO THE BANK ON 20.3.2010 WAS RS.10,82,22,030/-. THU S, IT IS CLEAR THAT WHEN THE ASSESSEE WAS CLEARLY CAUGHT ON A WRONG FO OT VIZ A VIZ STOCK AUDIT TAKEN BY THE AUDITORST ON 4.2.2010 OF THE QUA NTUM RS.10,75,10,500/-, IT CHOSE TO NOT TO RAISE ANY QUE STION ON THE AUDITORS STOCK AUDIT ON 4.2.2010 AND HAD KEPT STUD IED SILENCE FOR OBVIOUS REASON I.E. IT KNEW THAT THE STOCK STATEMEN TS SUBMITTED ARE REAL AND IT WAS DELIBERATELY QUESTION THE SAME AS R EGARDS THE INSPECTION BY THE BANK IN THE FUTILE HOPE THAT THE BANK MAY NOT BE ABLE TO COME FORWARD WITH THE HOLD RECORD. THE ASSESSEE DID NOT CHOOSE TO ASK FOR THE AUDITORS STOCK AUDIT REPORT ON 04.02.2 010 AS IT KNEW THAT IT WOULD BE CORNERED WITH THE SAID REPORT. IT IS HI GHLY PERTINENT TO NOTE THAT STOCK STATEMENT SUBMITTED TO THE BANK ON 20.3. 2010 WAS RS.10,82,22,030/- I.E. JUST MORE BY A MEAGRE SUM OF RS.7,11,530/- AND THAT TOO WHEN NO INCREASE IN THE CREDIT LIMIT HAD B EEN SOUGHT BY THE ASSESSEE. ALL THESE FACTS CLEARLY PROVE THAT THE ST OCK WAS PHYSICALLY CHECKED BY THE BANK MANAGER ON 15.3.2010 IN RESPEC T OF THE STOCK 44 STATEMENT SUBMITTED TO THE BANK ON 28.02.2010 AND E ARLIER ALSO BY THE AUDITORS ON 4.2.2010. IT IS FURTHER HIGHLY PERTINE NT TO MENTION HERE THAT IN THIS YEAR, IT WAS NEVER THE CASE OF THE ASS ESSEE THAT IT HAD SUBMITTED INFLATED STOCK STATEMENTS TO THE BANK FOR SECURING HIGHER CREDIT LIMIT. IT NEEDS TO BE APPRECIATED THAT WHEN THE ASSESSEE HAD DEMANDED CROSS EXAMINATION OF SH. KAMLESH GUPTA, TH E ASSESSEE DID NOT TURN UP FOR CROSS EXAMINATION AND CAUSED DELAY IN CROSS EXAMINATION AND WHEN ON 5.3.2010, CROSS EXAMINATIO N HAD TAKEN PLACE, IT CHOSE TO DEMAND FURTHER EXAMINATION OF TH E BANK OFFICER AT THE FAG END OF THE YEAR WHO HAD PHYSICALLY INSPECTE D THE STOCK DESPITE HIS CLAIM THAT THE CREDIT LIMIT HAD BEEN SANCTIONED AGAINST COLLATERAL SECURITY AND NOT AGAINST INFLATED STOCK. IT NEEDS T O BE APPRECIATED THAT WHEN IN THIS YEAR, THE ASSESSEE HAD NOT CONTENDED T HAT IT HAD SUBMITTED INFLATED STOCK STATEMENT, THERE WAS RELEV ANCE FOR HIS ASKING FOR CROSS-EXAMINATION OF THE BANKING AUTHORITIES. IT IS PERTINENT TO MENTION HERE THAT WHEN THE ASSESSEES CLAIM FOR THE AY 2010-11 WAS NOT THAT IT HAD SUBMITTED INFLATED STOCK TO SECURE HIGHER LIMIT, HOW COULD IT ASK FOR CROSS-EXAMINATION OF THE BANK MANA GER WHO HAD INSPECTED HIS RECORD AND HOW COULD BE CHOOSE TO IG NORE THE AUDIT STATEMENT. IT IS PERTINENT TO MENTION HERE THAT SH. KAMLESH GUPTAS STATEMENT HAS GREAT EVIDENTIARY VALUE AS WHAT HE HA D STATED WAS AS PER THE RECORD OF THE BANK AND NOT HIS PERSONAL OPI NION. SECOND ISSUE: THE OTHER ISSUE WHICH THE ASSESSEE HAS RAKED IN THI S CASE IS THE THAT STOCK STATEMENT FILED FOR THE ASSE SSMENT YEAR 2009-10 WAS UNSIGNED. IN THIS REGARD, IT MAY BE POINTED OUT THAT THE ASSESSEE HAS ONLY CLAIMED THAT THE STATEMENT WAS UNSIGNED. I T HAS NOT DISPUTED THAT THE STOCK STATEMENT SUBMITTED ON 31.3.2009 WAS NOT OF THE VALUE 45 OF RS.12,59,06,092/-. IT IS HIGHLY PERTINENT TO TAK E NOTE OF THE FACT THAT PERUSAL OF ANNEXURE -1 ( DP REGISTER) CLEARLY SHOWS THAT THE BANK MANAGER HAD MADE INSPECTION OF THE STOCK ON 03.04.2 009 I.E. JUST AFTER THREE DAYS OF THE SUBMISSION OF THE STATEMENT AS HIS DATED SIGNATURE ARE APPEARING ON DP REGISTER . THE DATED SIGNATURE TAKES WHOLE OF THE WIND FROM THE SAILS OF THE ASSESSEE TH AT THE STOCK WAS NEVER PHYSICALLY CHECKED BY THE BANK. IT ONLY REMAI NS AN ALLEGATION WITHOUT CORROBORATION AND CANNOT BE TAKEN ANY COGNI ZANCE OF. THIRD ISSUE: THE THIRD ISSUE WHICH THE ASSESSEE HAS CONTESTED IN THIS CASE IS USING THE INFORMATION AS GIVEN BY SHRI TEJI NDER SHARDA, SR.BRANCH MANAGER IN THE CASE OF M/S.MUNISH KUMAR B ANSAL, CONTRACTORS. IN THIS REGARD, IT MAY BE MENTIONED TH AT THE ASSESSEE HAS RELIED UPON THE TRIBUNALS ORDER IN THE CASE OF M/S .MUNISH KUMAR BANSAL WHICH IS DISTINGUISHABLE DECISION AS WOULD B E SHOWN HEREINAFTER BUT THE STATEMENT OF THE SR.BRANCH MANA GER TOUCHING THE PROCEDURE ADOPTED IN THE BANK AND ALSO HIS STATEMEN T THAT IN ALL SUCH CASES WHERE SIGNATURES ARE PUT BY THE INSPECTING MA NAGER, THE SAID SIGNATURE ARE IN TOKEN OF HAVING INSPECTED THE STOC K. SO SUCH A STATEMENT CANNOT BE TRIVIALIZED AS IS BEING ATTEMPT ED BY THE ASSESSEE. NONETHELESS, THE ONLY POINT WHICH THE ASSESSEE IS C ONTESTING SO STUDIOUSLY HAS BEEN FOUND TO BE FALSE THAT IT HAD F URNISHED INFLATED STOCK STATEMENT TO THE BANK WITH A VIEW TO SECURING HIGHER CREDIT LIMIT. THIS CLAIM OF THE ASSESSEE HAS BEEN DEMOLISHED WITH A SLEDGE HAMMER AND THE SLEDGE HAMMER IS THE DP REGISTER WHICH CLEA RLY SHOWS THAT THE ASSESSEE HAD BEEN SHOWING STOCK IN THE STATEMEN TS TO THE BANK AS WAS ACTUALLY IN ITS POSSESSION AND NOT AT THE TIMES WHEN HIGHER LIMITS WERE REQUIRED AS CLAIMED BY THE COUNSEL. IT IS PERT INENT TO MENTION 46 HERE THAT THE STATEMENT OF SH.TEJINDER SHARDA AND S TATEMENT OF SH. KAMLESH GUPTA, BOTH CHIEF MANAGER OF THE SAME VERY BANK BRANCH WHEREFROM THE LIMIT HAD BEEN GOT SANCTIONED, CONVER GE ON FACTS AS REGARDS INSPECTION OF THE STOCK BY THE BANK MANAGER AND HIS SIGNING THE DP REGISTER IN TOKEN OF HAVING PHYSICALLY VERIF IED THE STOCK AND FURTHER COUNTERSIGNED BY THE CHIEF MANAGER AT THAT TIME. THE WHOLE CASE OF THE ASSESSEE, THEREFORE, STANDS DEMOLISHED. FOURTH ISSUE: THE ISSUE OF ASSESSEES RELYING UPON THE DECISION OF THE BENCH IN THE CASE OF M/S.MUNISH KUMAR BANSAL (I TA NO.391/ASR/2012 DATED 12.03.2013) IN SUCH A SITUAT ION IS CLEARLY NOT APPLICABLE TO THE FACTS OF THE CASE AS DISCUSSED AB OVE. NONETHELESS, IT MAY BE MENTIONED THAT IN THE SAID CASE, THE TRIBUNA L HAD FOUND THAT THE ASSESEEE HAD CLAIMED THAT THERE WAS NO DIFFEREN CE IN THE BANK STOCK STATEMENT AND THE STOCK SHOWN TO THE DEPARTME NT AS ON 31.3.2008 AS THE ALLEGED DIFFERENCE IN STOCK OF A S UM OF RS.1,69,17,000/-HAD ALREADY BEEN CLEARED BY THE ASS ESSEE BY SALES AS ON 31.3.2009 AND IT WAS IN APPRECIATION OF THIS FAC T THAT THE TRIBUNAL HAD DELETED THE ADDITION. IN THE CASE OF THE ASSESS EE, THE AO HAS ALREADY CONSIDERED THIS ISSUE AND TAKEN THE DIFFERE NCE IN THE STOCK AS RECONCILED TO THE EXTENT OF RS.4,66,13,761/- AND MA DE ADDITION OF RS.1,73,16,531/-ONLY. THE ASSESEE DID NOT CONTEST THIS ISSUE BEFORE THE FIRST APPELLATE AUTHORITY THAT THE AO HAD ERRED IN NOT TAKING THE WHOLE OF DIFFERENCE AS RECONCILED. THUS, CLEARLY TH ERE IS ADMISSION ON THE PART OF THE ASSESSEE THAT DIFFERENCE OF RS.1,73 ,16,531/- COULD NOT BE RECONCILED. IT IS HIGHLY PERTINENT TO POINT OUT THAT WHEN THE ASSESSEE CLAIMED THAT ITS STOCK WORTH RS.5,42,81,001/- WAS TO BE REDUCED FROM THE TOTAL STOCK STATEMENT 47 SUBMITTED TO THE BANK AS THE STOCK OF THIS VALUE HA D BEEN CONSUMED AND PAYMENTS RECEIVED AND WHICH THE AO ACCEPTED TO THE EXTENT OF RS.4,66,13,761/-, THEN IT BECOMES EMINENTLY CLEAR T HAT THE ASSESSEE OWNS UP THE TOTAL STOCK AT RS.11,62,56,801/- STOCK SHOWN TO THE DEPARTMENT AS PER AUDITED ACCOUNTS. =RS.6,19,75,800 STOCK CLAIMED BY THE ASSESSEE AS HAVING BEEN CONSUMED ON 30.3.3009 AND 31.3.2009 RS.5,42,8 1,001 RS.11,62,56,801/- THIS FIGURE OF RS.11,62,56,801/- IS THE FIGURE WHIC H THE ASSESSEE HIMSELF ADMITS AS AGAINST THE ACTUAL STOCK STATEMEN T FURNISHED TO THE BANK AT RS.12,59,06,092/- AND THUS ACCORDING TO THE ASSESSEE IT HAD INFLATED THE STOCK BY ONLY A SUM OF RS.86,49,191/- (12,59,06,092/- MINUS RS.11,62,56,801/- TO AVAIL HIGHER CREDIT LIMI T ON 31.3.2009 FOR WHICH HE ONLY NEEDED TO SHOW STOCK AT RS.12 CRORE O NLY AND NOT EXCESS BY RS.59,06,092/- OR AT RS.13,46,44,500 FOR JUNE, 2 009 AND RS.13,26,44,125 FOR JULY, 2009. THUS, IT BECOMES TH AT THE STOCK STATEMENTS SUBMITTED TO THE BANK WERE REAL. THE ASS ESSEE IS BLOWING HOT AND COLD IN THE SAME BREATH. ON THE ONE HAND, I T IS CLAIMING THAT IT HAD INFLATED THE STOCK FOR AVAILING HIGHER CREDIT L IMIT AND ON THE OTHER HAND IT IS CLAIMED THAT IT HAD CONSUMED THE STOCK A S ON 30.03.2009 AND 31.3.2009. THE FALSITY IN THE ASSESSEES CONTEN TION IS TOO OBVIOUS TO BE MISSED OUT. NONETHELESS, IN THIS REGARD, IT MAY BE MENTIONED TH AT A PERUSAL OF THE DP REGISTER CLEARLY REVEALS THAT THE BRANCH MAN AGER HAD PUT HIS SIGNATURE ON THE DATE OF INSPECTION I.E. 3.4.2009. A PERUSAL FURTHER 48 REVEALS THAT THE BRANCH MANAGER HAD PUT HIS SIGNATU RES ON MANY OTHER OCCASIONS ALSO WHEN HE HAD INSPECTED THE STOCK. THU S, THE DP REGISTER IS COMPLETELY RELIABLE AND THE ASSESSEE CANNOT IMPU TE MOTIVES TO THE FACTUM OF SIGNATURES HAVING BEEN PUT IN TOKEN OF HA VING INSPECTED THE STOCK. THIS IS WITHOUT PREJUDICE TO THE BASIC FACT THAT THE ASSESSEE HAD BEEN SUBMITTING STOCK STATEMENT OF FAR HIGHER VALUE EVEN WHEN IT HAD NOT TO SEEK ANY RAISE IN THE CREDIT LIMIT. IF THE A SSESSEE HAD BEEN REGULARLY SUBMITTING STOCK STATEMENT FAR MORE THAN 25% MARGIN AND ALSO ON SEVERAL OCCASIONS WHEN IT HAD NOT TO SEEK A NY RAISE IN CREDIT LIMIT THEN IT CAN SURELY BE CONCLUDED THAT IT HAD B EEN SHOWING ACTUAL STOCK IN THE STATEMENT TO THE BANK. AS REGARDS, THE ASSESEES CONTENTION THAT THE BANK HAS NOT PROVED THAT THE BA NK MANAGER HAD ACTUALLY INSPECTED THE STOCK LYING AT DIFFERENT PLA CES IN MP AND OTHER PLACES, SUCH AN ARGUMENT IS EMERGING OUT OF ASSESSE ES FRUSTRATION. IT IS PERTINENT TO MENTION HERE THAT THE BANK MANAGER HAS PUT HIS SIGNATURE IN THE COLUMN INSPECTED BY IN THE DP RE GISTER, THE ASSESSEE HAS NOT BROUGHT ANYTHING ON RECORD THAT IT HAD ASKED THE BANK MANAGER AS TO HOW HE HAS BEEN REPORTING IN TH E DP REGISTER THAT HE HAS INSPECTED THE STOCK WHEN HE HAS ACTUALL Y NOT 2DONE. THIS CLEARLY IS AN ATTEMPT MADE OUT OF FRUSTRATION AND F ITS WELL IN THE PHRASE DROWNING MAN CATCHES AT A STRAW. THIS IS N OT WITHSTANDING THE FACT THAT THE ASSESSEES VERSION OF SUBMITTING INFLATED STOCK STATEMENT HAS BEEN PROVED TO BE FALSE AS DISCUSSED IN DETAIL ABOVE. FIFTH ISSUE THE ASSESSEE HAS FURTHER MENTIONED THAT THE DEPART MENT HAD TAKEN COPIES OF P & L ACCOUNT AND BALANCE SHEET FROM THE BANK WHICH IS OF NO CONSEQUENCE AS THE SAME HAD BEEN OBT AINED DURING THE 49 ASSESSMENT PROCEEDINGS AND WHICH THE ASSESSEE HAD S UBMITTED AFTER GETTING ITS ACCOUNTS AUDITED. IT MAY FURTHER BE MEN TIONED THAT THE BANK AUTHORITIES AFTER HAVING INSPECTED THE STOCK PHYSIC ALLY HAD LITTLE INTEREST AS TO WHAT AMOUNT OF STOCK THE ASSESSEE DI SCLOSES TO THE DEPARTMENT. THE BANK AUTHORITIES WOULD HAVE IMMEDIA TELY LAUNCHED PROSECUTION PROCEEDINGS AGAINST THE ASSESSEE ON ITS SUBMISSION OF BALANCE SHEET WITH LESSER STOCK IF THE BANK AUTHORI TIES HAD NOT PHYSICALLY CHECKED THE CORRECTNESS OF THE STOCK DEC LARED IN THE BANK STATEMENT. IN SUCH A SITUATION, THE ASSESSEE WOULD HAVE TAKEN THE STAND THAT ITS STOCK HAD BEEN PHYSICALLY CHECKED BY THE B ANK AUTHORITIES AND FOUND THE SAME AS CORRECT AND THEN HOW CAN THE BANK LAUNCH PROSECUTION PROCEEDINGS WHEN IT HAD ITSELF PHYSICAL LY CHECKED THE RECORD. SIXTH ISSUE: THE ASSESSEE HAS CLAIMED THAT ITS STOCK WAS HYPOTHECATED AND REMAINED UNDER ITS CONTROL. THIS C LAIM IS OF NO CONSEQUENCE AS THE STOCK UNDER HYPOTHECATION THOUGH REMAINS IN THE POSSESSION OF THE ASSESSEE BUT THE BANK CARRIES THE RIGHT TO INSPECT THE SAME. IF ON AN INSPECTION, IT IS DISCOVERED BY THE BANK THAT THE STOCK IS NOT IN THE POSSESSION OF THE ASSESSEE OR STOCK IS S HORT THEN THE BANK CAN IMMEDIATELY WITHDRAW THE LIMIT AND SERVE A NOTI CE FOR THE RECOVERY OF THE AMOUNT ALREADY WITHDRAWN FROM THE C C LIMIT ACCOUNT. ALL THAT THE ASSESSEE SEEMS TO SUGGEST BY POINTING OUT THE FACT THAT THE STOCK REMAINED UNDER ITS CONTROL IS THAT THE BANKIN G AUTHORITIES HAVE NOTHING TO DO WITH THE STOCK WHICH IS NEVER THE CAS E. NO BANK SANCTIONS LIMIT IN ANY CASE WHERE STOCK IS HYPOTHEC ATED WITHOUT THE ACTUAL EXISTENCE OF THE STOCK WHICH THE ASSESSEE SE EMS TO SUGGEST. 50 ASSESSMNT YEAR 2010-11: IN THIS ASSESSMENT YEAR, THE ONLY POINT WHICH THE ASSESSEE HAS RAKED IS THAT IT HAD SUBMITTED STO CK STATEMENT ON 20.3.2010 AND THE DIFFERENCE OF STOCK AS ON 31.3.20 10 CANNOT BE TREATED AS UNEXPLAINED. IN THIS REGARD, IT MAY BE S UBMITTED THAT THE AO HAD CONSIDERED THIS FACT AND AFTER TAKING INTO CONS IDERATION THE CONSUMPTION OF STOCK BETWEEN 21.3.2010 TO 31.3.2011 , WORKED THE DIFFERENCE UNEXPLAINED AT RS. 3,29,71,480/-. THE CO NSUMPTION OF STOCK HAD BEEN TAKEN AT RS.7,52,50,550/- . THE ASSESSEE H AD BEEN MAKING A BLANKET CLAIM THAT IT HAD SHOWN INFLATED STOCK FOR AVAILING HIGHER CREDIT. IT IS PERTINENT TO MENTION WHEN STOCK STATE MENT OF RS.10,82,22,030/- WAS SUBMITTED B Y THE ASSESSEE TO THE BANK ON 20.3.2010, IT HAD NOT SOUGHT ANY RAISE IN ITS CREDI T LIMIT WHICH IN FACT HAD BEEN INSTEAD REDUCED FROM RS.9 CRORE TO RS.6 CR ORE ON 31.1.2010. THUS, FALSITY IN THE ASSESSEES CLAIM IS COMING TO THE SURFACE IN EACH OF ITS CLAIM. IN THIS YEAR, THE ASSEESSEES COUNSEL HAD CROSSED E XAMINED THE SENIOR CHIEF MANAGER, SHRI KAMLESH GUPTA, PNB ARYA SAMAJ BANK, BATHINDA AND WHO HAD MAINTAINED THAT THE STOCK OF T HE ASSESSEE WAS PHYSICALLY VERIFIED. IN THE CROSS EXAMINATION MADE BY SHRI ASHWANI JUNEJA, ITP, COUNSEL FOR THE ASSESSE, SHRI KAMLESH GUPTA HAD CONFIRMED THAT STOCK WAS WAS PHYSICALLY CHECKED BY THE BANK OFFICERS AND ON BEING ASKED WHETHER ANY RECORD OF MOVEMENT O F BANK OFFICER HAS BEEN MAINTAINED BY THE BANK, SHRI KAMLESH GUPTA HAD STATED THAT NO RECORDS HAVE BEEN BROUGHT. IF ANY R ECORD IS AVAILABLE, THE SAME WILL BE MADE AVAILABLE TO THE DEPARTMENT. FURTHER WHEN ASKED WHETHER ANY RECORD FOR PHYSICAL VERIFICATION OF STO CK STATEMENT ON 26.3.2010 WAS AVAILABLE, SHRI KAMLESH GUPTA HAD STA TED THAT THE 51 STOCK WAS BEING CHECKED AS PER THE STOCK STATEMENT. IT MAY BE FURTHER MENTIONED HERE THAT THE BANK GETS ANNUAL STOCK AUDI T OF THE PARTIES AVAILING HIGHER LIMIT FROM HIGHER OUTSIDE AGENCIES I.E. CHARTERED ACCOUNTANTS AND IN THE CASE OF THE M/S.EURO INFRAST RUCTURE, SHRI KAMLESH GUPTA HAD ADMITTED THAT REPORT OF SUCH CHEC KS ARE AVAILABLE WHICH ARE DATED 09.04.2009 AND 24.11.2010 AND THUS IT IS CLEAR THAT THE ASSESSEE CANNOT SUBMIT INFLATED STOCK STATEMENT S WHICH ARE MONTHLY CHECKED BY THE BANK MANAGER AND ANNUALLY BY THE EXTERNAL AGENCIES. (REFER LAST QUESTION OF CROSS EXAMINATION IN EURO INFRASTRUCTURE WHICH IS ENCLOSED AS APPEXURE).. IN VIEW OF THESE FACTS, THE FACTUM OF PHYSICAL INSPECTION OF THE STOCK GETS WELL ESTABLISHED. M/S.EURO INFRASTRUCTURE AND POWERS LIMITED. ASSESSM ENT YEAR 2010- 11 IN THIS CASE ALSO, THE FACTUAL MATRIX IS ALMOST THE SAME AS IN THE ABOVE CASE. HERE ALSO, THE ASSESSEE HAD CONTENDED BEFORE THE AO THAT INFLATED STOCK STATEMENT WAS SUBMITTED TO THE BANK. THE VERACITY OF THIS STATEMENT WHEN EXAMINED BRINGS TO THE FORE THE SAME RESULTS AS HAVE COME OUT IN THE AFOREMENTIONED CASE. HERE IN THIS C ASE, THE AO HAS REPRODUCED THE COPY OF THE BANK STATEMENT AT PAGE 2 OF THE ASSESSMENT ORDER WHERE STOCK RS.4,68,82,440/-HAS BEEN REPORTED . A COPY OF THE DRAWING POWER REGISTER HAS ALSO BEEN REPRODUCED BY THE AO IN HIS ASSESSMENT ORDER AT PAGE 7. A PERUSAL OF THIS DP RE GISTER REVEALS THAT WHEN THE ASSESSEE AVAILED CREDIT LIMIT OF RS.3 CROR E, IT HAD SUBMITTED STOCK STATEMENT OF THE VALUE OF RS.6,29,18,775/- ON 30.4.2010 AND SUBMITTED STOCK STATEMENT OF THE VALUE OF RS.6,21,8 0,415/- WHEN LIMIT SANCTIONED WAS RS.5 CRORE WHICH IS OF LESSER VALUE. THIS CLEARLY SHOWS 52 THAT WHEN STATEMENT OF STOCK AT RS.6,29,18,775/- WA S SUBMITTED THERE WAS NO OCCASION FOR SEEKING RAISE IN THE CREDIT LIM IT YET STILL STOCK STATEMENT WAS SUBMITTED OF HIGHER VALUE WHEN CREDIT LIMIT OF RS.5 CRORE WAS SANCTIONED. THE ASSESSEE HAS POINTED OUT THAT STOCK STATEMENT W AS SUBMITTED ON 26.03.2010. IN THIS REGARD, IT IS SUBMITTED THAT TH E ASSESSEE HAD NEVER CLAIMED BEFORE THE AO THOUGH REPRESENTED BY THE SAM E LEARNED COUNSEL NAMELY SHRI ASHWANI JUNEJA THAT IT HAD CONS UMED THE STOCK DURING THE PERIOD 27.3.2010 TO 31.3.2010. THEREFORE , THERE IS NO MERIT IN THIS ASSERTION OF THE ASSESSEE AS IT ONLY REMAIN S ASSERTION WHICH HAS NOT BEEN CONTESTED BEFORE THE LEARNED CIT(A) AS WAS CONTESTED IN THE CASE OF M/S.ISHAR INFRASTRUCTURE DEVELOPER(P)LTD.FO R THE ASSESSMENT YEAR 2010-11 AND THE AO TAKEN AS RECONCILED THE DIF FERENCE AFTER CONSIDERING THE CONSUMPTION OF MATERIAL IN BETWEEN 21.3.2010 TO 31.3.2010. IT MAY BE MENTIONED HERE THAT THE ASESSEEE HAS CLAI MED THAT CROSS EXAMINATION OF THE BANK MANAGER WAS NOT ALLOWED IN THIS CASE. IT IS INCORRECT. THE ASSESSEE HAD BEEN ALLOWED CROSS EXAM INATION ON 31.05.2013 WHICH HAS ENTIRELY GONE AGAINST IT. THER EFORE, THE ASSESSEE STILL CANNOT THRIVE ON THE CHARGE THAT THE AO HAD N OT ALLOWED HIM CROSS-EXAMINATION OF SHRI KAMLESH GUPTA, CHIEF MANA GER, PNB, ARYA SAMAJ BRANCH, BATHINDA. M/S.ROYAL DEEP CONSTRUCTION CO.,BATHINDA ASSESSMENT YEAR 2009-10 SIMILAR STORY IS EMANATING IN THIS CASE ALSO. HERE ALSO, THE ASSESSEE HAD SUBMITTED STOCK STATEMENT TO THE BANK AT RS.186 .08 LACS TO SECURE CREDIT LIMIT OF RS.1 CRORE WHEN THERE WAS NO NECESS ITY FOR THE SAME AS 53 ON 30.06.2008, THE STOCK STATEMENT SUBMITTED WAS OF THE VALUE OF RS.159.82 CRORES WHICH COVERED MORE THAN 25% MARGIN REQUIRED AND AS SUCH HIGHER CREDIT LIMIT OF RS.1 CRORE COULD BE SANCTIONED WITHOUT SUBMITTING INFLATED STOCK STATEMENT AS CLAIMED. FUR THER IT IS PERTINENT TO MENTION HERE THAT THE ASSESSEE HAD SUBMITTED STO CK STATEMENT OF MUCH HIGHER VALUE OF RS.235.61 LAC FOR SEPTEMBER, 2 009 AGAINST LIMIT OF THE SAME RS.1 CRORE WHICH WAS NOT AT REQUIRED. I T REPRESENTED THE ACTUAL STOCK LYING WITH THE ASSESSEE AND THE ASSSES SEE CANNOT CLAIM THAT THIS HIGHER VALUE STOCK STATEMENT WAS SUBMITTE D FOR SECURING HIGHER CREDIT LIMIT. THE DETAIL OF VARIOUS STOCK ST ATEMENTS SUBMITTED TO THE BANK BY THE ASSESSEE HAVE BEEN INCORPORATED IN HIS ORDER BY THE AO AT PAGE 3 OF HIS ORDER. THUS, IN THIS CASE ALSO, THE ASSESSEES STORY THAT IT HAD SUBMITTED HIGHER STOCK STATEMENT TO THE BANK TO SECURE HIGHER LIMIT IS FOUND TO BE FALSE. TTHE AO HAD REPRODUCED COPY OF DP REGISTER I N HIS ORDER AT PAGE 2. M/S.RAM KUMAR BANSAL CONTRATOR, BATHINDA ASSESSMEN T YEAR 2009-10 SIMILAR STORY IS EMANATING IN THIS CASE ALSO. THE A O HAS REPRODUCED COPIES OF STOCK STATEMENTS SUBMITTED BY THE ASSESSE E TO THE BANK IN THE BODY OF HIS ASSESSMENT ORDER. THE STUDY OF THESE ST ATEMENTS CAN BE MADE FROM THE FOLLOWING TABULATION: S.NO. DATE OF SUBMISSION OF STOCK STATEMENT VALUE IN RS LIMIT SANCTIONED 1 30.08.2008 2,95,76,208 RS.2 CRORE 2 31.05.2008 2,93,00,000 RS.2.2 CRORE 54 3 30.06.2008 2,97,50,000 RS.2.2 CRORE 4 31.07.2008 3,09,00,000 RS.2.2 CRORE 5 31.10.2008 3,27,00,000 RS.2 CRORE 6 31.03.2008 2,81,00,000 RS.2 CRORE IT IS PERTINENT TO NOTE THAT WHEN THE ASSESEE HAD B EEN AVAILING LIMIT OF RS.2 CRORE ON STOCK STATEMENT AT RS.2,95,76,208/- A S ON 30.08.2008, IT HAD BEEN ALLOWED HIGHER CREDIT LIMIT OF RS.2.2 CROR ES ON SUBMITTING STOCK STATEMENT OF THE LOWER VALUE OF RS.2,81,00,00 0/-. THUS, IT WOULD BE SEEN THAT THERE IS NO RELATION OF SUBMISSION OF INFLATED STOCK STATEMENT WITH A VIEW TO SECURING HIGHER CREDIT LIM IT. THIS IS THE FALSE STORY OF THE ASSESSEE AND DESERVES TO BE REJECTED F ORTHWITH. M/S.BHALARIA CONSTRUCTIONS, BATHINDA ASSESSMENT YEA R 2009-10 SIMILAR STORY IS EMANATING IN THIS CASE ALSO. HERE ALSO, THE ASSESSEE HAD SUBMITTED STOCK STATEMENT TO THE BANK AT RS.1,2 8,69,000/- AND RS.1,23,50,00/- AT DIFFERENT DATES AGAINST LIMIT OF RS.1 CRORE. THE STATEMENTS CLEARLY SUGGEST THAT THE MARGIN LIMIT OF 25% IS INVARIABLY RETAINED AND THE ASSESSEE SUBMITS STOCK STATEMENT O F VALUE AS LYING IN HIS ACTUAL POSSESSION. AS REGARDS THE ASSESSEES CONTENTION THAT THE STOCK STATEMENT WAS NOT SIGNED BY THE ASSESSEE, IT IS PERTINENT TO MENTION HERE THAT THE ASSESSEE HAS NOT DENIED THE SUBMISSION OF THE STATEMENT THOU GH UNSIGNED INADVERTENTLY. IT HAS NOT DISPUTED THE STOCK DECLAR ED IN THIS STOCK STATEMENT TO THE BANK. THE BANK MANAGER HAD INSPECT ED THE STOCK AND PUT HIS SIGNATURE ON THE BACKSIDE OF THE STOCK STAT EMENT ON 30.09.2009 AND WHEN THE BANK MANAGER CHECKED THE STOCK STATEME NT SUBMITTED BY 55 THE ASSESSEE ON 31.3.2009 AFTER SIX MONTHS, HE MUST HAVE CHECKED THE STOCK WITH REFERENCE TO THE PRESENT POSITION OF THE STOCK AS ON 30.09.2009. THEREFORE, IT IS WRONG TO SAY THAT THE BANK AUTHORITIES ARE CONCERNED WITH THE STOCK HYPOTHECATED TO THE BANK. OF PARTICULAR IMPORTANCE IS THE STATEMENT OF SHRI KAMLESH GUPTA W HO HAD INFORMED THAT IF ANY CLIENT FAILS TO SUBMIT STOCK STATEMENT WITHIN TEN DAYS OF THE FOLLOWING MONTH, PENAL INTEREST IS CHARGED IN SUCH CASES. THUS, IT BECOMES CLEAR THAT THE STATEMENTS SUBMITTE D TO THE BANK REFLECT TRUE STATE OF AFFAIRS AND THE ASSESSEES CL AIM THAT INFLATED VALUED STOCK STATEMENTS WERE SUBMITTED TO PROCURE H IGHER LIMIT IS WHOLLY UNTRUE. THIS IS THE ONLY INESCAPABLE CONCLUS ION WHICH EMERGES OUT OF THE ABOVE DISCUSSION. THERE REMAINS NOT EVEN AN IOTA OF DOUBT THAT THE HIGHER STOCK STATEMENTS WERE NOT SUBMITTED FOR PROCURING HIGHER CREDIT LIMITS BUT WERE THE ACTUAL STOCK STAT EMENTS. THE ASSESSEES ASSERTION, THUS, DESERVES TO BE REJECTED BEING WITHOUT ANY MERIT WHATSOEVER AND ALSO BEING MISLEADING. IN ALL THE ABOVE APPEALS, THE ISSUE AT STAKE IS THE ADDITION MADE ON ACCOUNT OF DIFFERENCE IN THE VALUE OF STOCK SHOWN T O THE BANK BY THE ASSESSES IN THEIR STOCK STATEMENTS ISSUED TO THE BA NK AND AS DECLARED TO THE INCOME TAX DEPARTMENT IN THEIR RETURNS OF IN COME. IT IS SUBMITTED THAT THIS ISSUE STANDS RESOLVED BY THE RE CENT DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SMT. SHAKUNTLA THUKRAL VS CIT REPORTED AT 366 ITR 644. THE ASSESS EE HAS FILED DETAILED SUBMISSIONS AND ONLY SOUGHT TO SUGGEST THA T THE SAID DECISION MAY NOT BE FOLLOWED. IT HAS BEEN SUGGESTED BY QUOTI NG VARIOUS 56 DECISIONS INCLUDING OF HONBLE PUNJAB & HARYANA HIG H COURT WHICH HAD GONE IN FAVOUR OF THE ASSESSEE. IN THIS REGARD , IT IS SUBMITTED THAT THE JUDGEMENT OF THE HONBLE HONBLE PUNJAB & HIGH COURT IN THE CASE OF SMT. SHAKUNTLA THUKRAL (SUPRA) IS THE LATES T JUDGMENT AND WHILE RENDERING THIS JUDGMENT, THE HONBLE COURT DE EMS TO HAVE TAKEN INTO CONSIDERATION THE WHOLE GAMUT OF THE ISSUES IN VOLVED AND HAS RIGHTLY OBSERVED THAT NO ILLEGALITY OR PERVERSITY I N THE FINDINGS RECORDED BY THE TRIBUNAL HAS BEEN POINTED OUT AND F URTHER THAT NO SUBSTANTIAL QUESTION OF LAW ARISES IN THE APPEAL. I N VIEW OF THIS CATEGORICAL FINDING OF THE HONBLE HIGH COURT, THE COUNSELS ASKING THE HONBLE BENCH TO DISREGARD THIS DECISION OF THE HONBLE HIGH COURT IS CLEARLY PREPOSTEROUS. IT MAY BE SUBMITTED THAT THE FACTUAL MATRIX OF THE ABOVE CASES AND THE CASE OF SMT.SHAKU NTLA THUKRA ARE ALMOST IDENTICAL AS IN THE CASE OF SMT.SHAKUNTLA TH UKRAL, THE ASSESSEE HAD SUBMITTED INFLATED STATEMENT OF STOCK WITH A VI EW TO SECURING HIGHER CREDIT LIMIT TO AVOID DEMURRAGE AND IN THE CASES OF THE ABOVE ASSESSES, IT IS ADMITTED THAT THE INFLATED STOCK ST ATEMENT HAD BEEN SUBMITTED TO THE BANK FOR PROCURING HIGHER CREDIT L IMIT AS THE PAYMENTS WERE NOT BEING RELEASED BY THE DEPARTMENTS THOUGH THIS CLAIM OF THE ASSESSEES COUNSEL THAT INFLATED STOCK WERE SUBMITTED TO PROCURE HIGHER CREDIT LIMIT IS FOUND TO BE FALSE AN D MISLEADING AS IS EMERGING FROM THE DISCUSSION MADE HEREINAFTER. IT MAY BE REITERATED THAT THE ASSESEES CONTENTION THAT THE STOCK STATEMENTS SUBMITTED TO THE BANK WERE INFLATED AND NOT TRUE AND THE SAME HAD BEEN SUBMITTED SQUARELY WITH A VIEW TO AVA ILING HIGHER CREDIT LIMIT, IS NOT FOUND TO BE TRUE IN AS MUCH AS THERE WAS ABSOLUTELY 57 NO NECESSITY FOR FURNISHING INFLATED STOCK STATEMEN T AS THE ASSESSES HAD ALREADY SUBMITTED STOCK STATEMENTS OF MUCH HIGHER VALUE TO THE BANK THAT IT COULD GET HIGHER CREDIT AGAINST THE STOCK S TATEMENT ALREADY SUBMITTED OR IT HAD BEEN SUBMITTING HIGHER STOCK ST ATEMENTS EVEN WHEN THE CREDIT LIMIT REMAINED THE SAME. IN VIEW OF THE ABOVE DISCUSSION, THE FOLLOWING FA CTS EMERGE: 1. THE STOCK STATEMENTS SUBMITTED TO THE BANK WERE REA L AND INFLATED AS INVARIABLY STOCK STATEMENTS ON DIFFERENT DATES WITH MUCH HIGHER VALUE WERE SUBMITTED WHEN NO INCREASE IN THE CREDIT LIMIT HAD BEEN SOUGHT. 2. THAT THE BANKING AUTHORITIES HAD PHYSICALLY INSPECT ED THE RECORD AND ALSO PUT THE DATES OF INSPECTION WHICH HAS BEEN COR ROBORATED BY THE CHIEF MANAGER WHO IS A SUPERIOR OFFICER AND WHOSE STATEMENT CARRIES GREAT EVIDENTIARY VALUE. 3. THAT THERE WAS UNDERTAKE STOCK AUDIT BY THE EXTERNA L AGENCIES ALSO I.E. CHARTERED ACCOUNTANT AND THIS FACT HAS BROUGHT ON RECORD BY NONE OTHER THAN THE CHIEF MANAGER, PNB, ARYA SAMAJ BRANC H, BATHINDA WHICH CLEARLY AFFIRM THAT THE STOCK STATEMENTS WERE REAL AND NOT INFLATED. 4. THAT THE CASE IS WHOLLY COVERED BY THE JUDGEMENT OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SMT. SHA KUNTLA THUKRAL (SUPRA) WHEREIN THE HONBLE HIGH COURT HELD THAT WH EN THE STOCK HAD BEEN INSPECTED, NO CREDENCE TO THE ASSESSEES ASSER TION THAT THE INFLATED STOCK STATEMENT WAS SUBMITTED SHOULD BE GI VEN THOUGH IN THE CASE OF THE ASSESSEE IT HAS BEEN PROVED BEYON D AN IOTA OF 58 DOUBT THAT THE ASSESSEE HAD BEEN SUBMITTI NG REAL STOCK STATEMENTS AS STOCK STATEMENTS OF HIGHER VALUE WERE SUBMITTED EVEN WHEN NO INCREASE IN CREDIT LIMIT HAD BEEN SOUGHT. 5. THE LEARNED CIT(A) HAS GROSSLY ERRED IN NOT APPRECI ATING THE WHOLE FACTUAL MATRIX OF THE CASE WHICH HE OUGHT TO BE DON E IN HIS COTERMINOUS JURISDICTION WITH AO AND HAD HE DONE SO HE WOULD HAVE FOUND THAT THERE WAS NO TRUTH IN THE CONTENTION OF THE ASSESSEES THAT THEY HAD FURNISHED INFLATED STOCK STATEMENTS WHICH LIE STANDS FULLY EXPOSED FROM THE STOCK STATEMENTS SUBMITTED INVARIA BLY AT MUCH HIGHER FIGURE THAN THE THRESHOLD LIMIT OF AVAILING THE CREDIT I.E. AMOUNT OF LIMIT SANCTIONED BY THE BANK PLUS 25% MAR GIN. THE LEARNED CIT(A) HAS ALSO NOT TAKEN INTO CONSIDERATION THE ST ATEMENT OF SHRI KAMLESH GUPTA IN ITS TOTALITY WHERE HE HAS NOT ONLY CONFIRMED THAT THE STOCK OF THE ASSESSEES WAS PHYSICALLY VERIFIED AND PRODUCED DP REGISTER AS THE BANK RECORD OF PHYSICAL VERIFICATIO N AND FURTHER STOCK AUDITS UNDERTAKEN BY THE EXTERNAL AGENCIES AS MENTI ONED IN THE STATEMENT OF SHRI KAMLESH GUPTA. 6. NONE OF THE JUDGEMENTS RELIED UPON BY THE ASSESSEE IS APPLICABLE TO THE FACTS OF THE CASE IN VIEW OF THE LATEST JUDGEME NTS OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SMT.SHAK UNTLA THUKRAL (SUPRA). IN VIEW OF ABOVE, IT IS PRAYED THAT THE APPEAL OF T HE DEPARTMENT MAY KINDLY BE ALLOWED IN THE ABOVE APPEALS. IF ANY CLARIFICATION OR SUBMISSIONS IS STILL REQUIRED, THE DR MAY KINDLY BE GIVEN AN OPPORTUNITY 59 AS THE DR COULD NOT KEEP A TRACK OF THE VARIOUS DOC UMENTS REFERRED TO BY THE COUNSEL DURING THE COURSE OF HEARING OF THE ABO VE APPEALS. COPIES OF RELEVANT PAGES OF THE DP REGISTERS AND CO PIES OF STATEMENTS AND CROSS EXAMINATIONS OF SHRI KAMLESH GUPTA, CHIEF MANAGER, PMB IN THE CASE OF M/S.ISHAR INFRASTRUCURE P LTD AND IN TH E CASE OF M/S.EURO INFRASTRUCTURE AND POWER LIMITED ARE ENCLOSED HEREW ITH FOR READY REFERENCE. SD/- ENCL: AS ABOVE ( TARSEM LAL ) JOINT CIT(ITAT), AMRITSAR 18. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE LD. DR WHILE STARTED THE ARGUMENTS INITIALLY TO OK UP THE MATTER IN THE CASE OF M/S. ISHAR INFRASTRUCTURE DEVELOPER (P) LTD . FOR THE ASSESSMENT YEAR 2009-10 BEING A LEAD CASE AND ARGUED THAT ALL OTHER MATTERS ARE IDENTICAL AND THEREFORE, THE DECISION IN THE CASE OF M/S. ISHAR I NFRASTRUCTURE DEVELOPER (P) LTD. FOR THE ASSESSMENT YEAR 2009-10 IS TO BE FOLL OWED IN OTHER APPEALS IDENTICALLY. HOWEVER, THE LD. COUNSEL FOR THE ASSES SEE WHILE ARGUING THE MATTER ARGUED FROM ALL THE APPEALS SEPARATELY AND ACCORDINGLY THE LD. DR SUBMITTED THAT COUNTER WRITTEN SUBMISSION DEALING WITH EACH AND EVERY APPEAL, WHICH HAS BEEN REPRODUCED HEREINABOVE. ACCO RDINGLY, WE DEAL WITH MATTER AS UNDER: 60 19. THE LD. DR AT PAGE 2 TO 6 OF HIS WRITTEN SUBMIS SIONS DATED 02.02.2015 REPRODUCED HEREINABOVE, AS STATED THAT T HE ORDER OF THE LD. CIT(A) IS PERVERSE BECAUSE THE FINDINGS GIVEN BY T HE LD. CIT(A) THAT THE BANK AUTHORIOTIES ARE NOT CONCERNED WITH THE AVAILA BILITY OF ADEQUATE STOCK AS THEIR INTERESTS ARE COVERED BY THE COLLATERAL SE CURITY PROVIDED BY THE ASSESSEE. IF IT IS SO WHY HYPOTHECATION OF THE STOC K IS MADE BY THE BANK WHEREAS THE DRAWING POWER IS DETERMINED ON THE BASI S OF THE STOCK AND NOT ON THE BASIS OF COLLATERAL SECURITIES. THE LD. CIT (A) IGNORED THE STATEMENT OF SENIOR BRANCH MANAGER OF THE SAME VERY BRANCH AND T HE LD. CIT(A) HAS NOT DOUBTED THE CORRECTNESS OF THE STATEMENT OF SENIOR BRANCH MANAGER, WHICH CANNOT BE TRASHED WITHOUT GIVING ANY COGENT REASONS . HOWEVER, THE LD. DR RELIED UPON THE STATEMENT OF SH.TEJINDER SHARDA AN D DP REGISTER WHICH WAS IGNORED BY THE LD. CIT(A). THE LD. COUNSEL FOR THE ASSESSEE HAS ALREADY GIVEN HIS SUBMISSIONS TO THE SAID ARGUMENTS MADE B Y THE LD. DR WHICH HAS BEEN CONSIDERED BY US AND WHICH HAS BEEN REPRODUCE D HEREINABOVE. 20. OUR FINDINGS ARE BASED ON THE SAID ARGUMENTS M ADE BY THE LD. DR AND THE LD. COUNSEL FOR THE ASSESSEE WITH REGARD TO THE SAID COLLATERAL SECURITIES AND DP REGISTER AND THE STATEMENT OF SENIOR BRANCH MANAGER SH.TEJINDER SHARDA AND THE STOCK STATEMENT FILED BY THE ASSESSE E FOR THE A.Y. 2009-10 ON 02.02.2015 AVAILABLE AT PB 12 & 13 WHICH ARE UNSIG NED . THE LD. COUNSEL 61 FOR THE ASSESSEE HAS POINTED OUT CERTAIN DEFICIENCI ES IN THE DP REGISTER ON WHICH THE LD. DR HAS PLACED HEAVY RELIANCE BUT HAS NOT BEEN REBUTTED BY THE LD. DR IN HIS COUNTER ARGUMENTS OR COUNTER WRITTEN SUBMISSIONS. THE SAID DEFICIENCIES EVEN THOUGH REPRODUCED HEREINABOVE BY THE LD. COUNSEL FOR THE ASSESSEE IN HIS WRITTEN SUBMISSIONS I.E. VITAL INF ORMATION RELATING TO PHYSICAL VERIFICATION OF THE STOCK HAS NOT BEEN RECORDED AND THERE IS NO COLUMN IN THE REGISTER FOR KEEPING THE RECORD THAT ON WHICH DATE STOCK STATEMENT HAS BEEN RECEIVED. THE COLUMN FOR ACCOUNTANT INITIALS IS BL ANK AND COLUMN FOR INSPECTION IS MOSTLY BLANK EXCEPT INITIALS IN SOME OF THE COLUMNS AND DATE OF 19.01.2010 AGAINST THE STOCK STATEMENT OF 31.08.20 09, 30.09.2009 AND 31.10.2009 WHICH SHOWS THE REALITY OF PHYSICAL VERI FICATION OF STOCK AS ON DIFFERENT DATES OF THREE MONTHS. THE LD. COUNSEL FU RTHER ARGUED THAT COLUMN FOR FULL SIGNATURE OF INCUMBENT INCHARGE IS ALSO BL ANK EXCEPT STARTING FROM ENTRIES FOR THE MONTH OF MARCH 2009 TO DEC., 2009 B UT NO NAME OF THE PERSON WHO DID THE INITIALS CAN BE MADE OUT. 21. AS REGARDS THE STATEMENT OF SENIOR BRANCH MANAG ER, SH. TEJINDER SHARDA, IT WAS ONLY A GUESS WORK THAT HIS PREDECESS OR MUST HAVE GONE THROUGH THE MODUS OPERANDI OF MAINTAINING THE RECO RDS BY THE BANK AS HE WAS NOT IN THE BRANCH OF THE BANK DURING THE RELEVA NT PERIOD. IN FACT, BANK DOES NOT HAVE ANY RECORD OF ANY PHYSICAL VERIFICATI ON OF THE STOCK AS ON 62 31.03.2009 AND THE DRAWING POWER REGISTER CANNOT BE RELIED UPON. THAT THE ASSESSEE HAD IN FACT MORE STOCK AS COMPARED TO THE STOCK DECLARED IN THE AUDITED PROFIT & LOSS ACCOUNT AND BOOKS OF ACCOUNT. IN FACT, A PROCEDURE HAS BEEN STATED BY SH.TEJINDER SHARDA OF MAINTAINING TH E DRAWING POWER REGISTER AND IN FACT, NOTHING HAS BEEN BROUGHT ON R ECORD TO JUSTIFY THAT THE PHYSICAL VERIFICATION HAS BEEN DONE. IN FACT, THE P RESENT INCHARGE OF THE BANK, WHO ALLEGEDLY AS MENTIONED BY THE AO AS VERIFIED T HE STOCK PHYSICALLY WAS NEVER CROSS-EXAMINED AND NOTHING HAS BEEN BROUGHT O N RECORD BY THE AO OR EVEN BY THE LD. DR, MR. TARSEM LAL THAT THE STOCK W HICH IN ALL THE CASES MENTIONED HEREINABOVE, WHICH IS LYING AT DIFFERENT SITES, NOT AT ONE PLACE IN ONE CITY BUT AT DIFFERENT CITIES IN DIFFERENT STATE S. NOT EVEN A SINGLE DOCUMENTARY EVIDENCE WAS PLACED ON RECORD TO ESTABL ISH THAT ANY BANK OFFICER HAS EVER VISITED DIFFERENT SITES AND DIFFER ENT CITIES IN DIFFERENT STATES AND THAT TOO ON ANY DATE AND THERE ARE NO DETAILS A VAILABLE WITH THE BANK AUTHORITIES WITH REGARD TO THE MATERIAL, SPECIFICAT IONS AND WEIGHMENT AND/OR NUMBERS OF MATERIAL AVAILABLE. HAD IT BEEN VERIFIE D PHYSICALLY, THE SAME SHOULD HAVE BEEN THERE. THE LD. DR TOTALLY RELIED UPON THE DP REGISTER, A COPY OF WHICH IS PART OF THE ASSESSMENT ORDER BUT THE SAME IS NOT BACKED BY ANY DOCUMENTARY EVIDENCE WHICH CAN PROVE THAT THE P HYSICAL VERIFICATION HAS 63 BEEN DONE BY ANY OF THE BANK AUTHORITIES AT ANY POI NT OF TIME DURING THE IMPUGNED YEAR IN ANY OF THE CASE MENTIONED HEREINA BOVE. 22. MUCH RELIANCE HAS BEEN PLACED ON THE STATEMENT OF BANK MANAGER, SH. TEJINDER SHARDA IN THE CASE OF MUNISH KUMAR BANSAL CONTRACTOR BUT THE AO HAS FAILED TO PROVE THAT ANY PHYSICAL VERIFICATION HAS BEEN MADE OF THE STOCK. HOWEVER, A STATEMENT RECORDED OF THE BRANCH MANAGER IN THE CASE OF SH. MUNISH KUMAR BANSAL CONTRACTOR, WHO HAS BEEN ASSESS ED BY THE AO, THE SAME CANNOT AFFECT THE ASSESSMENT OF THE PRESENT AP PEAL AND CANNOT BE BLINDLY APPLIED IN THE PRESENT APPEAL AUTOMATICALLY . HOWEVER, THE MATTER IN THE CASE OF SH. MUNISH KUMAR BANAL CONTRACTOR, TRAV ELLED UPTO THE ITAT, AMRITSAR BENCH AND THE ITAT, AMRITSAR BENCH IN ITS DECISION IN ITA NO.391(ASR)/2012 DATED 12.09.2013 DELETED THE ADDIT ION THOUGH THE FACTS IN THAT CASE WERE DIFFERENT.. 23. THE LD. DR HAS TRIED TO REBUT THE CONTENTION OF THE ASSESSEE THAT THE ACTUAL PHYSICAL VERIFICATION OF THE STOCK HAS BEEN DONE BY THE BANK AUTHORITIES BY RELYING ON DP REGISTER WHICH SHOWS T HAT THE PHYSICAL VERIFICATION OF THE STOCK STATEMENT DATED 31.03.200 9 WAS MADE ON 03.04.2009 (PAGE 45). IT WAS EXPLAINED BY THE LD. C OUNSEL FOR THE ASSESSEE THAT IT WAS IMPOSSIBLE FOR THE BANK AUTHORTIES TO P HYSICALLY VERIFY THE STOCK AS PER STOCK STATEMENT DATED 31.03.2009, AS THE STO CK WAS LYING AT DIFFERENT 64 SITES IN MADHYA PRADESH. THIS ARGUMENT OF THE LD. D R CANNOT BE ACCEPTED AT ALL IN VIEW OF THE ABOVE FACTS. HENCE, IT STANDS P ROVED THAT THE BANK MANAGER ONLY NARRATED THE PROCEDURE AND NOTHING HA S BEEN BROUGHT ON RECORD TO PROVE THAT THE STOCK HAS BEEN PHYSICALLY VERIFIED AT ANY POINT OF TIME AND NO DOCUMENTARY EVIDENCE HAS BEEN PLACED ON RECORD BY THE REVENUE. 23.1 AS REGARDS THE COUNTER COMMENTS/SUBMISSIONS BY THE LD. DR, OUR FINDINGS ARE : I) THAT THE STOCK STATEMENTS FOR THE ASSESSMENT YEA R 2009-10 AS CLAIMED BY THE ASSESSEE ARE NOT INFLATED BUT DEFLA TED. HE HAS COMPARED THE VALUE OF THE STOCK AS PER STOCK STATEM ENT WITH THE SANCTIONED LIMIT INSTEAD OF STOCK AS PER BALANCE SH EET AS ON 31.03.2009. HENCE, THE COUNTER COMMENT IS FACTUALLY WRONG. II) THE LD. DR STATED THAT DURING THE AY 2010-11, T HE ASSESSEE HAS NOT CLAIMED THAT HE FILED INFLATED STOCK STATEMENT. BUT ON PAGE 6 OF THE ORDER OF THE AO, THE AO HAS REPRODUCED IN PA RA 2.4 IN WRITTEN SUBMISSION OF THE ASSESSEE AND IT HAS BEEN CLAIMED BY THE ASSESSEE THAT THE INFLATED STOCK STATEMENTS WE RE SUBMITTED TO THE DEPARTMENT FOR GETTING LOANS. HENCE, THE COU NTER COMMENT OF THE LD. DR IS FACTUALLY WRONG. III) ON PAGE 4 OF THE COUNTER COMMENTS, THE LD. DR HAS D ISCUSSED REGARDING CROSS EXAMINATION OF SH. KAMLESH GUPTA BU T THIS CROSS EXAMINATION WAS MADE BY THE ASSESSEE DURING T HE A.Y. 2010-11. MOREOVER, THE LD. CIT(A) HAS GIVEN DETAILE D FINDING 65 REGARDING NON-PHYSICAL VERIFICATION OF THE STOCK AT PARA 12(III) OF THE APPELLATE ORDER FOR AY 2009-10 IV) THE LD. DR HAS DISCUSSED ON PAGE 5 OF THE WRITTEN S UBMISSION REGARDING STATEMENT OF THE BANK MANAGER REGARDING INDEPENDENT VERIFICATION OF THE STOCK DATED 4.2.201 0. BUT THE AO HAS NEVER TAKEN ANY COGNIZANCE OF THIS INDEPENDE NT STOCK AUDIT REPORT IN THE ASSESSMENT ORDER. MOREOVER, TH IS INDEPENDENT VERFICIATION RELATES TO STOCK STATEMENT DATED 31.01.2010 ALLEGEDLY MADE ON 4.2.2010 BUT NOT TO TH E STOCK STATEMENT DATED 20.03.2010 ON THE BASIS OF WHICH A DDITION HAS BEEN MADE . HENCE, NO RELIANCE CAN BE PLACED ON THE INDEPENDENT STOCK VERIFICATION. V) ON PAGE 6 OF THE COUNTER COMMENTS, THE LD. DR HAS S TATED THAT THE VALUE OF THE STOCK HAS BEEN MENTIONED AT STOCK STATEMENT DATED 31.03.2009 AT RS.12,62,06092/- BUT THE ASSESS EE NEVER STATED THAT THE STOCK STATEMENT WAS INFLATED AND IT HAS ONLY STATED BY THE ASSESSEE THAT IT IS UNSIGNED. BUT IN THIS REGARD, THE ASSESSEE HAS ALL ALONG STATED THAT THE STOCK AS PE R STOCK STATEMENT HAS BEEN INFLATED TO AVAIL CC LIMIT FROM THE BANK. THE PHYSICAL VERIFICATION OF THE STOCK HAS NEVER B EEN PROVED BY THE DEPARTMENT. HENCE, THIS COUNTER COMMENT OF THE LD. DR IS ALSO FACTUALLY WRONG. VI) THE LD. DR HAS AGAIN RELIED ON THE DP REGISTER FOR THE AY 2009-10 AND ACCORDING TO HIM THE BRANCH MANAGER SIG NED THE D.P.REGISTER IN TOKEN OF HAVING PHYSICALLY VERIFIED THE STOCK AND THE SAME IS FURTHER COUNTER SIGNED BY THE CHIEF MA NAGER AT THAT TIME. BUT THE ASSESSEE IN HIS COUNTER COMMENTS HA S BROUGHT 66 OUT THE VITAL DEFECTS IN THE DP REGISTER, WHICH HA S BEEN DISCUSSED (SUPRA). HENCE, THIS DP REGISTER HAS NO A UTHENTIC VALUE AND THE COMMENTS OF THE LD. DR ARE LIABLE TO BE REJECTED. VII) THE LD. DR HAS ALSO STATED THAT THE ASSESSEE HAS TR IED TO RELY ON THE DECISION OF THIS BENCH IN THE CASE OF MUNISH KU MAR BANSAL AND ACCORDING TO HIM, THE FACTS OF THIS CASE ARE NO T APPLICABLE TO THE FACTS OF THE PRESENT ASSESSEE. BUT THE ASSESSEE HAS BROUGHT TO THE NOTICE OF THE BENCH THAT IN THE ABOVE SAID CASE , THE ADDITION HAS BEEN DELETED AND NO FURTHER RELIANCE HAS BEEN P LACED. MOREOVER, REGARDING DIFFERENCE OF RS.1,73,16,531/- POINTED OUT BY THE LD. DR, THIS ISSUE IS COVERED BY THE FINDIN G THAT THE ASSESSEE HAS FILED INFLATED STOCK STATEMENT. VIII) ACCORDING TO THE LD. DR, THE ASSESSEE HAS STATED TH AT THE AUDITED ACCOUNTS FILED WITH THE BANK ARE THE SAME AS WITH T HE INCOME TAX DEPARTMENT AND BECAUSE OF THIS FACT, IT WAS IN THE KNOWLEDGE OF THE BANK THAT THE ACTUAL STOCK AS ON 1 3.03.2009 AND 20.03.2010 WAS MUCH LESS THAN THE STOCK AS PER STOCK STATEMENT BUT NO ACTION WAS TAKEN AS PER STOCK STAT EMENT SUBMITTED TO THE BANK. AS PER LD. DR, THE COMMENTS OF THE ASSESSEE HAS NO RELEVANCE. BUT THIS FACT IS IMPORTA NT BECAUSE THE BANK HAS NOT TAKEN NOTE OF DIFFERENCE IN STOCK . IX) THE LD. DR HAS GIVEN COMMENTS ON HYPOTHECATION OF S TOCK, WHICH HAS ALREADY BEEN DISCUSSED IN THIS ORDER SUPR A. X) THE LD. DR HAS FURTHER STATED THAT THE ASSESSEE MAD E BLANKET CLAIM THAT IT HAS SHOWN INFLATED STOCK FOR THE AY 2010-11. THIS IS IN CONTRADICTION TO THE COUNTER COMMENTS OF THE LD. DR ON 67 PAGE 4 THAT NO SUCH CLAIM WAS MADE BY THE ASSESSEE IN AY 2010-11. XI THE SAME FACTS HAVE BEEN DISCUSSED IN RESPECT O F OTHER CASES WHICH ARE BEFORE US AND THE FINDINGS ALREADY RECORD ED ABOVE SHALL APPLY ACCORDINGLY TO ALL OTHER CASES MENTIO NED HEREINABOVE, MUTATIS MUTANDIS. 24. IT IS A FACT ON RECORD THAT THE CREDIT FACILITY HAS BEEN EXTENDED BY THE BANK TO THE ASSESSEE AGAINST THE HYPOTHECATION OF S TOCK AND NOT AGAINST PLEDGE OF STOCK, IN WHICH THE CONTROL AND POSSESSIO N 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 RECORD TO P ROVE THAT EXTRA PURCHASES HAVE BEEN MADE BY THE ASSESSEE AT ANY POINT OF TIME . THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE AUDITED IS NOT UNDER DISPUTE AN D NO DEFECT BY THE AUDITOR HAS BEEN POINTED OUT. IT IS THE REAL INCOME WHICH C AN BE TAXED, WHEREAS IN THE PRESENT CASES ALL THE ADDITIONS ARE MADE ON CO NJECTURES AND SURMISES. 26. TIME AND AGAIN BEFORE BOTH THE AUTHORITIES BELO W, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THE EXPLANATION THAT TH E STATEMENT HAS BEEN SUBMITTED BEFORE THE BANK AUTHORITIES ONLY ON ESTIM ATED BASIS TO AVAIL OF THE BANK LOAN AND THERE IS NO OTHER PURPOSE. THIS CONTE NTION OF THE ASSESSEE HAS NOT BEEN REBUTTED AT ANY POINT OF TIME BY THE AO O R BY THE LD. DR. IT IS A 68 FACT THAT THE AO AS NOT POINTED OUT ANY DEFECTS IN THE BOOKS OF ACCOUNT AND IN FACT, THE AO HAS NOT INVOKED THE PROVISIONS OF S ECTION 145(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 ON PHYSICA L VERIFICATION OF THE STOCK AND NO DOCUMENTARY EVIDENCE HAS BEEN BROUGHT ON REC ORD THAT THE STOCK MENTIONED IN THE .DP REGISTER BY THIRD PARTY I.E. B ANK AUTHORITIES, HAS BEEN MAINTAINED ON PHYSICAL VERIFICATION OF THE STOCK, M AINTAINED BY THE ASSESSEE 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 BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT, IN THE CASE OF DEVGAN RICE & GENERAL MILLS ( SUPRA) WAS WITH REGARD TO THE PROCEEDINGS U/S 148 OF THE ACT AND WHETHER T HE SAID PROCEEDINGS U/S 148 OF THE ACT COULD BE INITIATED ON THE BASIS OF I NFORMATION REGARDING INFLATING THE VALUE OF THE STOCK IN THE BANK STATE MENT WAS RECEIVED FROM THE BANK AFTER COMPLETION OF ASSESSMENT U/S 143(3) OF T HE ACT.. THE HONBLE HIGH COURT HAS HELD THAT THE REOPENING IN SUCH CASE S CAN BE DONE. HOWEVER, THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF DEVGAN RICE & GENERAL MILLS (SUPRA) WAS WITH REGARD TO A D IFFERENT CONTEXT AND DID NOT PROVE THAT THE ASSESSEE HAD MADE UNEXPLAINED IN VESTMENT U/S 69 OF THE ACT. 69 28. MUCH RELIANCE HAS BEEN PLACED BY THE LD. DR ON THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SMT. SHAKUNTLA THUKRAL VS. CIT REPORTED AT 366 ITR 644. AS REQUIRE D ORDER OF THE CIT(A) IN THE CASE OF SHAKUNTLA THUKRAL WAS PLACED ON REC ORD BY THE PARTY AND ON PERUSAL OF THE SAME IN PARA 2.11 TO 2.18 AND AT PAG E 4 OF CIT(A)S ORDER, IT WAS FOUND THAT THE BOOKS OF THE ASSESSEE WERE NOT A CCURATE BECAUSE OF SPECIFIC DEFECT OF NON-RECORDING OF SALES IN THE B OOKS OF ACCOUNT .POINTED OUT. IN PARA 2.8 AT PAGE 6 OF CIT(A)S ORDER IN TH E CASE OF SHAKUNTLA THUKRAL, STOCK STATEMENT FILED ON 04.07.2007 HAS BE EN REPLACED BY OTHER STOCK STATEMENT WHICH ESTABLISHES THAT NO STOCK INV ENTORY WAS PREPARED AT THE CLOSE OF THE FINANCIAL YEAR, WHEREAS THERE ARE 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 ORD ER THAT THE HIGHER STOCK AS ON 31.03.2005 WAS GIVEN FOR THE PURPOSE OF MAKING PAYMENT FOR IMPORT OF MACHINERY CANNOT BE ACCEPTED AS THE PAYMENT FOR PUR CHASE OF MACHINERY HAD ALREADY BEEN RELEASED IN 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 PHYSICAL INSPECTION CARRIED OUT BY THE BANK AUTHORITIES IN R ESPECT OF ASSESSEES STOCK AT QUARTERLY INTERVALS IS AVAILALE AND SUCH FINDING S HAS NOT BEEN REBUTTED 70 BEFORE THE ITAT OR BEFORE THE HONBLE HIGH COURT. B UT IN THE PRESENT CASE IN VIEW OF OUR FINDINGS HEREINABOVE, NOTHING 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 CA SE OF SMT. SHAKUNTLA THUKRAL (SUPRA), IT HAS BEEN STATED BY THE LD. CIT( A) THAT THE ASSESSEE HAS NOT DISPUTED THE STOCK OF THE VALUE WHICH WAS SUBM ITTED 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 INFLATED TO GET THE CASH CREDIT LIMIT FROM BANK. THUS, IN THE CASE OF SMT. SHAKUNTAL THUKRAL (SUPRA) , THE AO AFTER POINTING OUT DEFECTS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE A CATEGORICAL FINDING HAS BEEN GIVEN THAT THE BOOKS OF ACCOUNT ARE NOT ACCURA TE AND MEANING THEREBY 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 HAVE 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 RELI ED UPON THE PHYSICAL INSPECTION CARRIED OUT BY THE BANK AUTHORITIES IN R ESPECT OF ASSESSEES STOCK AT QUARTERLY INTERVALS, AS MENTIONED HEREINABOVE AN D SUCH FINDINGS HAVE NEITHER BEEN REBUTTED BEFORE THE LD. CIT(A) OR ITAT OR HONBLE HIGH COURT. 71 BUT IN THE PRESENT CASE, THE ASSESSEE HAS ESTABLISH ED 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 THUKRAL (SUPRA), THE LD. CIT(A) HAS RECORDED THE FINDING THAT THE ASSESSEE H AS ACCEPTED THAT FACT THAT THE STOCK AS PER STOCK STATEMENT AS ON 31.03.2005 WAS LYING IN THE PREMISES OF THE ASSESSEE.. BUT IN THE PRESENT APPEAL, THE A SSESSEE ALL ALONG STATED BEFORE THE AUTHORITIES BELOW AND BEFORE US THAT TH E 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, WHICH HAS NOT BEEN DONE IN ANY OF THE CASE REFERRED TO HEREINABOVE. 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 PRESENT CASE. 32. THE DECISIONS RELIED UPON BY THE LD. CIT(A) OF THE HONBLE PUNJAB & HARYANA HIGH COURT, IN THE CASES OF M/S.SANTOSH BOX FACTORY, M/S. SIDHU RICE MILLS AND IN THE CASE OF M/S. DEVI DAYAL R ICE MILLS ARE SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE AS THE REVENUE AS THE REVENUE HAS NOT BROUGHT ON RECORD DURING THE ASSESSMENT PROCEED INGS OR BEFORE THE LD. CIT(A) OR EVEN BEFORE US THAT PHYSICAL VERIFICATIO N OF THE STOCK HAS ACTUALLY 72 BEEN DONE AND ACCORDINGLY STOCK STATEMENTS SO SUBMI TTED BEFORE THE BANK AUTHORITIES AND DP REGISTER CANNOT BE RELIED UPON. 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 A CCOUNT OF DIFFERENCE IN THE VALUE OF CLOSING STOCK FURNISHED TO THE BANK AN D THE VALUE OF THE STOCK FOUND IN THE BOOKS OF ACCOUNT FURNISHED TO THE INCO ME TAX AUTHORITIES INFLATED STOCK WAS HYPOTHETICAL AND NOT PLEDGED AND THE BANK OFFICIALS HAD NOT VERIFIED THE STATEMENT SHOWING INFLATED STOCK SO PRODUCED BY THE ASSESSEE. THE ADDITION ON ACCOUNT OF DIFFERENCE FUR NISHED TO THE BANK AS PER BOOKS OF ACCOUNT U/S 69B OF THE ACT CAN NOT BE SUST AINED. CONSEQUENTLY, THE APPEAL WAS DISMISSED BY THE HONBLE GUJRAT HIGH COU RT AGAINST THE SAID DECISION, THE REVENUE WENT IN APPEAL BEFORE THE HO NBLE SUPREME COURT AND THE HONBLE SUPREME COURT VIDE ITS ORDER DATED 13.12.2008 DISMISSED THE SLP FILED BY THE DEPARTMENT. 34. SIMILAR DECISIONS HAVE BEEN MADE BY VARIOUS CO URTS 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) IV) ITO VS. DEVI DAYAL RICE MILLS REPORTED IN 75 TTJ 24 (ITAT, AMRITSAR BENCH. V) CIT VS. SIROHI STEEL ROLLING MILLS, REPORTED IN 200 CTR 595 (ALL.) 73 VI) ASHOK KUMAR VS. ITO, REPORTED IN 201 CTR 178 ( J & K) VII) CIT VS. DAS INDUSTRIES, REPORTED IN 303 ITR 199 (AL L.) VIII) CIT VS. SRI PADMAVATHI COTTON MILLS, REPORTED IN 23 6 ITR 340 (MAD.) IX) JAI SHARDA RICE MILLS. VS ITO REPORTED IN 36 ITD 25 4 (ITAT, ASR.) X) CIT VS. RIDDHI STEEL AND TUBES (P) LTD. REPORTED I N 220 TAXMAN 148 (GUJ.) XI) CIT VS. APCOM COMPUTERS P. LTD. REPORTED IN (2007) 292 ITR 630 (MAD.). 35. IN THE FACTS AND CIRCUMSTANCES, THE ARGUMENTS M ADE BY THE LD. DR IN HIS WRITTEN SUBMISSIONS AND COUNTER SUBMISSIONS CA NNOT HELP THE REVENUE AND ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN THE CASE OF M/S. ISHAR INFRASTRUCTURE DEVELOPERS (P LTD . IN ITA NO.198(ASR)/2013 IN THE IMPUGNED YEAR. 36. DURING THE ASSESSMENT YEAR 2010-11, THE AO REJ ECTED THE PURCHASE ACCOUNT ONLY WITHOUT REJECTING COMPLETE BOOKS OF AC COUNT AND THIS ISSUE WAS DECIDED BY THE LD. CIT(A) IN FAVOUR OF THE ASSESSEE WHILE DECIDING THE GROUND NO.2 ON PAGE 7 IN THE CASE OF ISHAR INFRASTR UCTURE DEVELOPERS (P) LTD., BUT THE DEPARTMENT HAS NOT FILED ANY GROUND O F APPEAL AGAINST THIS FINDING OF THE LD. CIT(A) WHICH LEADS TO THE CONCLU SION THAT THE DEPARTMENT HAS NO GRIEVANCE AND THE FACTS OF THE ASSESSMENT YE AR 2010-11 BECOME IDENTICAL TO THE ASSESSMENT YEAR 2009-10 BECAUSE FO R THE ASSESSMENT YEAR 2009-10 BOOKS OF ACCOUNT WERE NEVER REJECTED BY THE AO. THE LD. CIT(A) 74 HAS GIVEN DETAILED FINDINGS ON THIS ISSUE IN HIS OR DER IN PARA 2 ON PAGE 11 & 12, WHICH FOR THE SAKE OF CONVENIENCE ARE REPRODUCE D HEREUNDER: 2. IN VIES OF THE FACT DISCUSSED SUPRA, I FIND THA T ALTHOUGH THE AO RELIED ON THE STATEMENT OF THE BANK MANAGER IN WHICH HE STATED THAT PHYSICAL VERIFICATION OF THE STOCK WAS CARRIED OUT, IN SUPPORT OF HIS FINDING THAT THE APPELLANT POSSESSED LARGER QUA NTITY OF STOCK THAN THE STOCK AS PER BOOKS OF ACCOUNT, BUT THE AO HAS N OT BEEN ABLE TO PROVE THAT THE STOCK LYING AT VARIOUS SITES AT MA DHYA PRADESH AS PER STOCK STATEMENT DATED 20.03.2010 WERE ACTUALLY INSP ECTED/COUNTED TO SUBSTANTIATE THE ABOVE SAID FINDING BECAUSE THE BAN K OFFICERS HAS NOT BEEN ABLE TO PRODUCE THE RECORD OF THE MOVEMENT OF ANY BANK OFFICER FROM BATHINDA TO MADHYA PRADESH AND THE RECORDS REL ATING TO ACTUAL COUNTING OF STOCIK. AS FAR AS THE FINDING OF THE AO THAT THE PHYSICAL VERIFICATION WAS PROVED FROM THE DRAWING POWER REGI STER, I FIND TAT THE DRAWING POWER REGISTER IS NOT AUTHENTIC ON ACC OUNT OF NON RECORDING OF VITAL INFORMATION BY THE BANK OFFICERS WITH REGARD TO DATE OF FILING OF STOCK STATEMENT AND DATE OF PHYSICAL VERIFICATION OF STOCK. THE AO HAS ALSO NOT BEEN ABLE TO REBUT THE CONTENTI ON OF THE A/R OF THE APPELLANT THAT THE STOCK WAS INFLATED IN THE S TOCK STATEMENT TO AVAIL CREDIT FROM THE BANK. THUS, THE ACTION OF THE AO OF RELYING ON THE STATEMENT OF THE BANK MANAGER, THE STOCK STATEMENT AND THE DRAWING POWER REGISTER FOR MAKING ADDITION OF RS.3,06,15,50 4/-, ON ACCOUNT OF DIFFERENCE IN STOCK, IS NOT JUSTIFIED ON FACTS. 37. THERE IS NO REBUTTAL FROM THE DR ON THE ABOVE FINDINGS OF THE LD. CIT(A) IN THE ASSESSMENT YEAR 2010-11. 38. FURTHER, IT IS AN ADMITTED FACT THAT NO STOCK S TATEMENT WAS FILED BY THE ASSESSEE ON 31.03.2010 AND THE LAST STOCK STATEMENT WAS AVAILABLE ON RECORD IS DATED 20.03.2010, WHICH HAS BEEN UTILIZED BY TH E AO FOR MAKING ADDITION ON ACCOUNT OF DIFFERENCE IN STOCK AS PER STOCK DA TED 20.03.2010 AND BALANCE SHEET AS ON 31.03.2010. THIS FACT ALSO GOE S AGAINST THE DEPARTMENT, 75 AS NO ADDITION FOR THE DIFFERENCE IN STOCK AS ON 31 .03.2010 COULD BE MADE BY RELYING ON THE STOCK STATEMENT DATED 20.03.2010. 39. IN VIEW OF THE ABOVE, ALL THE GROUNDS OF THE R EVENUE ARE DISMISSED AND OUR DECISION HEREINABOVE IS IDENTICALLY APPLIC ABLE IN ALL OTHER APPEALS MENTIONED HEREINABOVE I.E. IN ITA NO.536(ASR)/2013 FOR THE AY 2010-11 IN THE CASE OF ISHAR INFRASTRUCTURE DEVELOPERS (P) LT D., IN ITA NO. 199(ASR)/2013 IN THE CASE OF ROYALDEEP CONSTRUCTION CO., IN ITA NO.200(ASR)/2013 IN THE CASE OF M/S. BHALARIA CONST RUCTIONS, IN ITA NO.571(ASR)/2013 IN THE CASE OF M/S. EURO INFRASTRU CTURE & POWER LTD. AND IN ITA NO.457(ASR)/2013 IN THE CASE OF RAM KUMAR B ANSAL. 36. NOW, WE DEAL WITH CROSS OBJECTION BEARING NO.16 (ASR)/2014 FOR THE ASSESSMENT YEAR 2009-10 IN THE CASE OF RAM KUMAR B ANSAL, WHERE IT HAS BEEN ARGUED THAT THE AO IS NOT JUSTIFIED IN RECASTI NG THE TRADING ACCOUNT BY TAKING THE INFLATED FIGURE OF CLOSING STOCK AS PER BANK STATEMENT AND TAKING THE OPENING STOCK AS PER BOOKS OF ACCOUNT. AND IF B OTH THE FIGURES ARE TAKEN AS PER BANK ACCOUNT INSTEAD OF BOOKS OF ACCOUNT, TH ERE REMAIN NO DIFFERENCE AND AS SUCH THE ADDITION MADE IS UNCALLED FOR. IT W AS ALSO CLAIMED THAT THE AO IS NOT JUSTIFIED IN MAKING ADDITION WITHOUT POIN TED OUT ANY DEFECTS IN THE BOOKS OF ACCOUNT MAINTAINED IN THE REGULAR COURSE O F BUSINESS, WHICH ARE 76 DULY AUDITED BY THE AUDITORS AND AS SUCH THE ADDIT ION MADE WITHOUT REJECTING THE BOOKS OF ACCOUNT IS UNCALLED FOR. 37. SINCE BOTH THESE GROUNDS HAVE ALREADY BEEN DEC IDED IN THE MAIN APPEALS HEREINABOVE AND THEREFORE, THE SAID GROUNDS TAKEN IN THE C.O. BEARING NO.16(ASR)/2014 ARE INFRUCTUOUS AND ARE AC CORDINGLY DISMISSED. 38. AS REGARDS GROUND NO.1(II) IN THE CASE OF M/S. EURO INFRASTRUCTURE & POWER LTD, IN ITA NO.571(ASR)/2013 FOR THE ASSESSME NT YEAR 2010-11, WITH REGARD TO CHARGING OF INTEREST FROM DEBTORS. THE FA CTS ARE THAT THE AO MADE AN ADDITION OF RS.6,60,000/- ON ACCOUNT OF NON CHA RGING OF INTEREST FROM DEBTORS TO WHOM NO FRESH ADVANCES HAVE BEEN MADE D URING THE ASSESSMENT YEAR 2009-10 AND THERE IS ONLY OPENING BROUGHT FOR WARD DEBIT BALANCE. IT HAS BEEN ADMITTED BY THE AO THAT NO FRESH ADVANCES HAVE BEEN GIVEN TO DEBTORS DURING THE A.Y. 2009-10 AND THERE IS OPENI NG BROUGHT FORWARD DEBIT BALANCE OF RS.50,00,000/- ON 01.04.2009 IN TH E ACCOUNT OF SH. PANKAJ GARG AND RS.5,00,000/- IN THE ACCOUNT OF M/S. RAM KUMAR BANSAL, WHICH HAS BEEN CARRIED FORWARD AS ON 31.03.2010. 39. THE LD. CIT(A) ON CONSIDERING THE SUBMISSIONS M ADE BEFORE HIM HAS DELETED THE ADDITION, SINCE NO ADVANCE HAS BEEN MAD E DURING THE YEAR AND IT WAS ONLY BROUGHT FORWARD DEBIT BALANCE OUTSTANDING IN THE BOOKS OF ACCOUNT OF THE DEBTORS. 77 40. AFTER HEARING THE PARTIES, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A), SINCE NO ADVANCE HAS BEEN MADE DURING THE YEAR AND AS SUCH NO ADDITION CAN BE MADE. THUS, THE GROUND OF THE REVEN UE IS DISMISSED ACCORDINGLY. 41 IN THE RESULT, ALL THE SIX APPEAL OF THE REVENU E ITA NOS. 198 (ASR)/2013,. ITA NO.536(ASR)/2013, 199(ASR)/2013, I TA NO.200(ASR)/2013 ITA NO.571(ASR)/2013 AND IN ITA NO.457(ASR)/2013 AND C.O. OF THE ASSESSEE BEARING NO.16(ASR)/2014 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON MARCH, 2015. SD/- SD/- (A.D.JAIN) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: MARCH, 2015 PRONOUNCED ON 26/03/20 15 SD/- JM /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEES: I) M/S. ISHAR INFRASTRUCTURE DEVELOP ERS (P) LTD. II) M/S. ROYALDEEP CONSTRUCTON CO (III) M/S. BHALARIA C ONSTRUCTIONS (IV) M/S. RAM KUMAR BANSAL CONTRACTOR (V) M/S. EURO INFRASTRUCTURE & POWER CO. LTD. BATHINDA 2. THE ITO WARDS 1(1)/DCIT, CIR.1, BATHINDA 3. THE CIT(A), BATHINA. 4. THE CIT, BATHINDA. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.